Tech-enabled startups and scale-ups across Africa are transforming sectors such as fintech and agriculture, contributing to innovation, job creation and economic development. However, as these companies move beyond their early stages, many face a significant financing challenge known as the “missing middle” — a gap between small microfinance loans and large-scale institutional debt. This shortage of appropriately sized debt capital often limits their ability to scale sustainably.
While early-stage equity funding plays a crucial role in launching startups, it becomes increasingly expensive and dilutive as businesses grow. Debt financing can provide a more balanced capital structure by supporting working capital, receivables and asset financing without requiring founders to give up significant ownership. Yet many African startups struggle to access suitable debt products, as their funding needs are too large for standard SME loans but too small or unconventional for traditional banks and major debt funds.
Although venture debt is becoming more prominent — accounting for a growing share of venture capital transactions in recent years — the available capital remains concentrated in larger deals. Average debt deal sizes far exceed the requirements of many high-growth startups, leaving the sub-$5 million range underserved. Research supported by European Commission highlights strong demand for flexible, medium- to long-term financing solutions, with founders seeking longer tenures, working capital support, local currency loans to mitigate foreign exchange risks, and repayment structures aligned with cash flow cycles.
Local banks, while important providers of domestic currency financing, typically prioritise asset-heavy and established borrowers due to conservative collateral requirements. Specialist debt providers often focus on niche sectors or larger ticket sizes, further widening the gap for startups requiring between $1 million and $5 million. As a result, many promising businesses remain underfunded during a critical growth phase.
To address this challenge, GIF Growth was established to provide targeted private debt financing within the $1–5 million range. Drawing on experience in early-stage equity investing and insights from research conducted in collaboration with FMO, the initiative aims to deliver flexible, sector-sensitive capital tailored to the needs of African tech-enabled businesses. By unlocking access to appropriately structured debt, the fund seeks to strengthen the continent’s entrepreneurial ecosystem, support job creation and enable the next generation of startups to scale sustainably.
