Collaborative for Frontier Finance

🎉 Congratulations to the DFIs and Foundations who took part in the Growth Firms Alliance inaugural meeting, From Transformation to Transaction: Financing Platforms for SMEs, held in The Hague (Dec 3–5). The event was a rare and important opportunity for funders across the continuum of capital to collaborate and advance market creation. CFF, as an ecosystem builder and thought partner representing a network of over 120+ Africa & MENA-based fund managers, was pleased to participate in these discussions. Here are some of our key takeaways: ⏳ Need for Speed Moving beyond individual transactions to embrace collaborations across the continuum of capital is critical for driving market-level change. 🤝 Alignment We were inspired by the enthusiasm and alignment around the LAUNCH+ Capital platform. The platform provides fund managers with world-class fund administration capabilities, reducing the time and cost of setting up fund vehicles. It is particularly valuable at the early stages of a fund's investment journey, enabling managers to focus on building a strong investment team, sourcing great companies, and supporting firm growth. 💡 The Power of Partnership DFIs and Foundations have an unparalleled opportunity to collaborate in ways not previously explored. Such partnerships are vital to drive systemic change and unlock transactional opportunities that accelerate market development. At CFF, we look forward to continuing to foster meaningful engagements between and among fund managers, foundations, DFIs development agencies, and local pension funds to address critical gaps and create pathways for joint action. #MarketCreation #EmergingMarkets #SmallBusinessFinance

💡 Understanding the “Missing Middle” in SMEs I just finished an insightful report by Omidyar Network and the Collaborative for Frontier Finance on segmenting “missing middle” SMEs, and it’s a must-read for anyone working in this space. 📊 The report presents a typology of SMEs that clarifies the diverse landscape of small and medium enterprises—an area critical to economic growth but often underserved by traditional financing. Key Takeaways: SMEs in the “missing middle” are defined as businesses that: 1️⃣ Require $20K–$2M in financing 2️⃣ Are led by opportunity-driven (not necessity-driven) entrepreneurs 3️⃣ Are commercially viable with growth potential 4️⃣ Employ non-family members Despite their potential, SMEs face a staggering $930 billion financing gap in low- and lower-middle-income countries, according to the IFC - International Finance Corporation. Yet, not all SMEs are the same. The report categorizes them into four distinct types, each with unique characteristics and needs. At One Earth Future Foundation, our focus is on Dynamic Enterprises: 🔹 Established companies with proven business models 🔹 Seeking to grow via market share, efficiency, and incremental innovation 🔹 Too large for microfinance, too small for banks, and outside VC growth thresholds This market remains underserved, but there’s hope! 🚀 The report highlights emerging innovators using data and technology for cost-effective underwriting and providing debt capital paired with technical assistance. 🌍 For anyone passionate about SME development in frontier markets, I highly recommend exploring this report. It provides practical insights and strategies for addressing the “missing middle.” https://lnkd.in/g2Sb3uQ2

MEDA (Mennonite Economic Development Associates) , Momentus Global, Stafford Law Attorneys and Samawati Capital Partners, in partnership with the Bertha Centre for Social Innovation and Entrepreneurship and Collaborative for Frontier Finance, invite you to join us for a lively round table discussion about our study on Africa as a jurisdiction for domiciliation of investment vehicles. The findings from the report being presented offers an evidence-based analysis of the potential and strategic pathways to increasing domiciliation of investment vehicles in African jurisdictions. The objective is to engage in dialogues about how African domiciliation can unlock and diversify local and international capital flows, whilst strengthening the African investment ecosystem to create bottom-up impact, economic growth and employment opportunities for African youth and women. Led by an exceptional and diverse panel of experts, we will be in conversation about the systems-level action and co-ordination required to strengthen institutional capacity – across regulatory bodies, pension funds, Development Finance Institutions, investment vehicles, MSMEs, ecosystem builders and other capital providers – to drive local fund domiciliation and capital mobilisation. PS: There is an in-person and Zoom option for attendance https://bit.ly/4ev8XuA SuperReturn

CFF was glad to participate in Friday's Expert Meeting on SME Financing, "Unlocking Financing for the Missing Middle," organized by UN DESA. This critical conversation gathered input to shape next year’s Finance for Development agenda. CFF's contributions centered on the following 3 messages: 📌 Spotlight on Small Business Growth Funds CFF highlighted an important yet overlooked segment: the emerging asset class of Small Business Growth Funds. These funds target growth-oriented SMEs and the “missing middle” with tailored, innovative financing. Through our peer network, CFF supports these funds in addressing the financing gap and driving impact. 📌 Aggregator Platforms: A Bridge to Local Capital CFF emphasized the pivotal role of aggregator platforms, such as fund of funds, in bridging institutional capital and small businesses. These platforms are key to mobilizing local capital, mitigating FX risks, and efficiently channeling diverse financing needs. Governments must invest in creating capital pools to design and refine these platforms, while DFIs should step up and provide catalytic funding. 📌 A Call to Innovate SME Financing To truly unlock SME potential, it is necessary to shift away from relying solely on banks. Nonbank financial institutions (FIs) are better suited to serve the “missing middle” with agile, customized solutions. Emerging programs like Zambia’s Small Business Growth Initiative, where we are a design partner, showcase how local innovation and alignment can drive success. The path forward is clear: empower local solutions, build bridges to capital, and rethink how we support SMEs—the engines of economic growth. #FinanceForDevelopment #SMEs #MissingMiddle

🌍 Global Impact through Local Investment 💡   Last week, on the sidelines of the Global Impact Investor Network (GIIN) Forum in Amsterdam, CFYE, in partnership with Collaborative for Frontier Finance (CFF) and Impact for Breakfast - The Netherlands , hosted a breakfast meeting to explore the role of investors in empowering small – and growing businesses (SGBs), driving job creation for youth. Despite their role as engines of economic growth, SGBs face a $930 billion financing gap, often deemed too risky for traditional banks and too small for major investors, which is why we work with partners like Acumen, Balloon Ventures, and WIC capital to target this gap.   Joined by 40 investment professionals, we, along with Balloon Ventures and Acumen, shared research insights working with SGBs in Uganda and Senegal, igniting debates around the extent of informality in jobs, the challenges in capturing indirect employment impact, and highlighting how targeted investment and advisory support can create decent jobs.🚀   We’re excited to continue contributing to these intriguing conversations that are likely going to be continued through CFF’s research on quality jobs!💪 Thank you to our wonderful speakers David Hernández, Gila Norich, Joshua Bicknell, and Kate Montgomery!

In case you're in Amsterdam next week for #giinforum and are working on #impactinvesting #earlystageinvesting #missingmiddle and #youthemployment, please keep reading: Together with Impact for Breakfast - The Netherlands Collaborative for Frontier Finance Balloon Ventures Acumen, Challenge Fund for Youth Employment is hosting a breakfast session on Thursday 24th of October, close to the GIIN Forum venue, on the role that early-stage investors and missing middle financiers play in boosting youth employment through their investments and advisory work with small and growing businesses. If you want to hear from and discuss with amazing speakers from these organisations, we still have a few spots left! Please send me a DM in case you want to join! Joshua Bicknell Kate Montgomery Gila Norich Arnold Byarugaba L David Hernández

https://lnkd.in/e8P_x8ZX 🌍 The recent Nobel Prize in Economics awarded to Daron Acemoglu, Simon Johnson, and James Robinson underscores the vital role of strong, inclusive institutions for sustainable prosperity. CFF is privileged to collaborate with local institutions that recognize the importance of financial and system-level innovation. Their commitment to embracing innovation are often decisive in creating mechanisms that foster growth and prosperity within their local markets. Let’s continue to work together to unlock the potential of a vibrant small business finance market across Africa and MENA! #emergingmarkets #governance #SMEs

https://lnkd.in/e8P_x8ZX 🌍 The recent Nobel Prize in Economics awarded to Daron Acemoglu, Simon Johnson, and James Robinson underscores the vital role of strong, inclusive institutions for sustainable prosperity. CFF is privileged to collaborate with local institutions that recognize the importance of financial and system-level innovation. Their commitment to embracing innovation are often decisive in creating mechanisms that foster growth and prosperity within their local markets. Let’s continue to work together to unlock the potential of a vibrant small business finance market across Africa and MENA! #emergingmarkets #governance #SMEs

It was great to join the DCED Global Seminar in Nairobi last week! 🎉 #CFF Founder and CEO, Drew von Glahn, participated in an insightful panel discussion on innovative pathways for SME financing, alongside Freddy Bob-Jones (Aceli Africa), Audrey Desiderato (Mirova SunFunder), Rory Tews, and Krisztina Tora (GSG Impact). The panel explored key system-level changes focused on: ✅ Catalytic capital from DFIs and philanthropic foundations ✅  The evolving role of local banks, ✅ The growing involvement of impact investors ✅ Advocacy and knowledge-sharing from GSG Impact National Partners and other field builders. 🚀 At CFF’s side event workshop, we explored how our network of 100+ small business funds are helping to bridge Africa’s access to capital gap. Special thanks to Kenya Climate Ventures (KCV), a CFF network member, for their inspiring presentation on portfolio companies driving change at the intersection of climate and gender! After a set of engaging discussions workshop participants generated the following takeaways: 1️⃣  Blended finance is essential to unlock the full potential of this emerging sector. 2️⃣  DFIs should examine how their strategies can better engage local institutional capital (e.g., pensions and insurance companies). 3️⃣  Improved regulations and investment structures in-country will change private sector behavior, leading to more investment flows 4️⃣  Tailored business development and capacity-building programs are essential—it’s time to move away from “one-size-fits-all” approaches 5️⃣  Ecosystem-focused, shared learning is vital to growing this asset class It was an inspiring week of collaboration! Thanks, Donor Committee for Enterprise Development, and especially Harald Bekkers for having us! #DCED #SMEFinancing #AfricaGrowth #BlendedFinance

Are you a fund manager based in Africa or MENA who invests in small and growing businesses? We invite you to complete CFF's annual Early Stage Capital Provider Survey https://lnkd.in/digmy9uj This survey is a crucial source of information for CFF and other market players. We rely on this data when advocating for better SME financing solutions and when designing new platforms and vehicles that cater specifically to the needs of Africa's small business fund managers. We would appreciate it if you participated in this effort. See the 2023 survey report here https://lnkd.in/dweXzgPh If you are interested in learning more about the CFF Early Stage Capital Provider Network https://lnkd.in/dEW69VGC, its benefits, and how to join, please feel free to reach out to Arnold at Arnold@frontierfinance.org East Africa Private Equity & Venture Capital Association (EAVCA), The Egyptian Private Equity and Venture Capital Association, Southern African Venture Capital & Private Equity Association (SAVCA), AVCA - The African Private Capital Association, FSD Africa, Mastercard Foundation Africa Growth Fund, Women in African Investments - WAI Group, Advancing Women in Investing, African Venture Philanthropy Alliance (AVPA), Catalytic Capital Consortium, 2X Global, GVCA, Middle East Venture Partners (MEVP), Middle East Venture Capital Association, Central Africa Markets Venture Capital & Private Equity Association (CAMPEA), African Crowdfunding Association, ABAN, Investors of the Mediterranean, Impact Investing Ghana, Impact Investing Kenya, Impact Investing SA, Zambian National Advisory Board for Impact Investment (NABII), Samawati Capital Partners, Villgro Africa, ViKtoria Ventures, VestedWorld, Oryx Impact, Verod-Kepple Africa Ventures, Unicorn Growth Capital, Theia Ventures, Renew Capital, Mirepa Investment Advisors, Inua Capital, Grassroots Business Fund, Five35 Ventures, Aisiki Capital