Learning Lab

SME Ventures and the Collaborative for Frontier Finance have partnered to curate a collection of open-source resources which can be accessed by fund managers operating in emerging markets at various stages of their vehicle’s lifecycle.

The portal is a repository of resources and templates organized by the stage of a vehicle's lifecycle, incorporating content for: Investment thesis and set-up, capital raising, team, track record, investment process, operations, ESG, impact and SME support.

We invite you to explore the portal, watch the video to learn more, and share feedback on how we can improve the tool going forward.

African Fund of Fund Platforms: Building the small business finance ecosystem

A new group of public and private fund of funds platforms are achieving system-level changes by efficiently moving institutional capital to local small business growth funds in their markets. Six of those platforms including 2X Global (pan-African), Venture Capital Trust Fund (Ghana), MSMEDA (Egypt), SA SME Fund (South Africa), 27four Black Business Growth Fund (South Africa) and CFF share insights as to the role they are playing in addition to capitalising this new intermediary segment. 2X Global.

• Full report

CFF Annual Local Capital Provider Survey 2023

• Full report

• Summary

This year's publication highlights the increasing influence of local capital providers throughout Africa and the Middle East. It categorises the small business finance asset class, delineating their pivotal role in supplying growth capital to businesses and reveals the strategies fund managers are using to build track record, address fund economics and raise capital. The 60 survey rrespondants aim to secure $1.5 billion in capital, following their investments in 1200 businesses to date.

CFF Annual Local Capital Provider Survey 2022

• Full Report

• Summary infographic

The CFF has developed this survey to assess the “state-of-play” with regard to the small business financing sector in Africa and the Middle East. It is designed to better understand the emerging class of LCPs who are a heterogeneous group of indigenous fund managers using alternative structures to provide capital to SGBs in their local markets. This flagship publication builds on the initial edition published in 2020, highlighting the market movement that has taken place during that time and revealing new insights into this asset class.

Unlocking Local Pension Fund Capital for Small Business Finance

The purpose of this report is to highlight some of the work of market builders working closely with pension fund industry bodies in South Africa, Ghana and Zambia to unlock capital for small business finance in Africa. There is a shortage of growth capital for small and growing businesses in African markets, which can be partially filled by local institutional investors, particularly local pension funds. While pension funds have historically been deterred by the risk profile, many are considering the de-risked opportunities in this market segment to achieve diversification, returns and local economic development. The report is valuable for market builders and pension funds as they seek to learn from colleagues and peers with regard to this emerging opportunity.

Launch of Nyala Venture

In partnership with the Collaborative for Frontier Finance (CFF) and the facility manager, a Joint Venture of Cardano Development and Total Impact Capital Europe, FSDAi will provide the critical anchor funding for Nyala Venture.

Nyala Venture will bridge the funding gap left by other institutions, by targeting a new class of capital providers serving small and growing businesses, particularly those which are led by women or are applying a gender lens investment strategy in Nigeria, Ghana, Kenya, Senegal, South Africa, and Uganda.

The facility will be highly flexible with its investment funds to meet the innovative approaches of these local capital providers. Funds will be available in the form of debt or equity. In addition to the investment capital, technical assistance funding will be made available to these managers to assist with capacity strengthening. FSDAi is also funding the development of the Frontier Capital Learning Lab, which will document and share the learnings of these local capital managers and their small business portfolios over the coming years.

Fund of Funds Vehicles for Small and Growing Businesses Report

• Full Report

• Executive Summary

A consortium of partners, initiated by the World Economic Forum Global Alliance for Social Entrepreneurship and including the Collaborative for Frontier Finance, the Global Steering Group for Impact Investing and the Sustainable Development Investment Partnership, worked with Impact Investing Ghana to accelerate the design and implementation of a Fund of Funds (FoF) investment vehicle that could address some of the key barriers to growth finance for small and growing businesses in Ghana.

This report is intended for investment and market-building teams developing FoF and wholesale capital structures. The purpose of this report is to share key learnings from the FoF design process, and general insights and tools drawn from a wider group of nine FoFs. This report is not intended to provide a systematic methodology on FoF design but rather highlights some key pain points for practitioners to address when designing or investing in an FoF.

The New Operating Environment Facing Latin American Capital Providers

Collaborative for Frontier Finance, Sonen Capital, Fondo de Fondos, and Dalberg - 2020 

To better understand the impact of COVID-19 on Latin American impact-oriented capital managers targeting micro, small, and medium enterprises (MSMEs), the Collaborative for Frontier Finance, Sonen Capital, Fondo de Fondos, and Dalberg conducted a survey of capital managers supporting MSMEs in the region. 

The survey reveals an expanding network of LatAm capital providers, who support their portfolio companies’ growth agenda pre- and post-COVID-19. In particular, the report focuses on the current plans by local capital providers to both support their portfolios and to expand their own resources and AUM. In addition, the report provides an update on how the capital providers are thinking about impact in terms of gender and employment.

The survey provides ideas and opportunities to further support local impact-oriented capital providers that are addressing today’s realities and tomorrow’s opportunities. 

Emerging Market Small & Growing Business Capital Provider’s Survey Results

Collaborative for Frontier Finance - 2020

To better understand impact of COVID-19 on small and growing businesses and the local capital providers that support them, the Collaborative for Frontier Finance, with the support of Visa Foundation, conducted a survey of capital managers that target SGBs in emerging markets. The survey is a snapshot of this critical sector pre- and post-COVID-19 in their local economies – and in particular, what is happening with the gender-oriented impact sector. The results offer a pathway for systemic change by supporting highly effective local capital providers that prioritize gender-oriented investments.

Insights on SME Fund Performance: Generating learnings with the potential to catalyse interest and action in SME investing

Shell Foundation, Omidyar Network, and Deloitte - 2019

This report highlights key findings from a SME fund performance study which analyzed data from 365 funds across 5 development finance institutions (DFIs). Historically, lack of data on the risk, return, and impact of SME investments has kept additional capital from flowing into SME segments in emerging markets. Through its data analysis, this report seeks to establish realistic expectations for development outcomes and financial returns, thereby encouraging the flow of capital into SME segments.

Closing the Gaps - Finance Pathways for Serving the Missing Middles

2019

The Collaborative for Frontier Finance and its founding members have produced a follow-up report to the “Missing Middles: Segmenting Enterprises to Better Understand Their Financial Needs” which identified four distinct families of SGBs each with diverse characteristics and external financing needs.  The new report: “Closing the Gaps: Finance Pathways for Serving the Missing Middles” identifies five alternative approaches or “pathways” for providing finance that meets the diverse needs of each SGB segment and investor. It also highlights critical actions that ecosystem stakeholders can take to help support these approaches as well as newly emerging ones that together can help fill the financing gaps within each SGB segment.

The Missing Middles - Segmenting Enterprises to Better Understand their Financial Needs

Omidyar Network and the Collaborative for Frontier Finance - 2018

This report aims to help investors, intermediaries, and entrepreneurs better navigate the complex landscape of SGB investment in frontier and emerging markets. Segmenting the SGB market into multiple “missing middles” will help more effectively diagnose the distinct financing needs and gaps faced by different types of enterprises – and in turn, will enable the industry to better focus on scaling the financing solutions that are most needed to empower these enterprises to meaningfully contribute to inclusive economic growth.  

Reaching deep in low-income markets: Enterprises achieving impact, sustainability, and scale at the base of the pyramid

Omidyar Network and MacArthur Foundation - 2017

This report explores 20 enterprises that serve people who are living at the bottom of the pyramid to better understand the impact, sustainability, and scale of these businesses. The research aims to help provide transparency and guidance to advance the broader field of funding for businesses serving the deep BOP.

The State of Early Stage Investing and Opportunity for Venture Debt

Global Development Incubator - 2016

Omidyar Network and the Global Development Incubator conducted a study with 50+ fund managers, fieldbuilders, and other intermediaries to detail the size of the market for SGB investments, existing debt and equity structures and products, progress by local and international investors, and success factors. It includes recommendations for the sector based on the gaps identified in interviews. 

Investing in Africa's Small and Growing Businesses: An Introduction to Private Equity in Africa

I&P - 2015
The handbook is a tool to foster the development of early-stage SME investment in Africa and encourage the rise of new investors on the continent. The primary objective of this handbook is to provide an operative document for the future investment companies of the continent, and is intended for investors, entrepreneurs and anyone interested in the field of SME financing in Africa.

Innovations in Financing Structures for Impact Enterprises: Spotlight on Latin America

Transform Finance - 2017

This report outlines the specific problems with traditional financing structure for impact enterprises, including how investment funds and deal structures are innovating to alleviate the capital gap, and recommendations for how fund managers, investors, entrepreneurs, and others can engage with these alternatives to collectively increase our impact. The report highlights 16 cases across Latin America.

New Perspectives on Financing Small Cap SMEs in Emerging Markets: The Case for Mezzanine Finance

Dutch Good Growth Fund - 2016

In search for new models to provide risk capital, mezzanine finance, which blends elements from traditional Private Equity (PE) and debt financing into a unique product, provides an additional offer in the SME finance ecosystem for missing middle entrepreneurs. This studyprovides an understanding of the specificities, diversity (and complexities) of it, critical to spur innovative thinking on both the fund managers and investors sides so products may be improved and models may be more scalable.

Private Credit Solutions: Mezzanine Financing in Emerging Markets

EMPEA - 2014

EMPEA’s first in-depth look at the role that private credit plays in supporting the development of small- and medium-size companies across the emerging markets, and in offering institutional investors a means of accessing this growth.