There is an estimated $1 trillion “missing middle” investment opportunity in emerging markets.¹
The missing middle is a global challenge for small and growing businesses (SGBs) that are too big for microfinance and informal local investors, and too small or too risky for banks, private equity firms, development finance institutions and other direct investors, which are usually focused on financing later stage and larger companies. In emerging markets, SGBs typically need different kinds of financing of $300,000 to $3 million to grow their companies.
In addition to the lack of missing middle capital, these SGBs also need local partners who are fully aligned to help them succeed in addressing the many challenges they face to scale up. SBGs need partners who can support their growth to further develop strong professional networks that include deep experience in business execution, knowledgeable mentors, talent as the enterprise further developments, proper technological infrastructure, more attractive unit economics, the requisite skills to generate operational efficiencies, and more.
Many of the pioneering attempts to address the missing middle have been through government-funded “SME Funds,” such as GroFin, Business Partners International, Small Enterprise Assistance Funds, Intellegrow, and Vistaar. Among DFIs, International Finance Corporation (IFC) has been a lead investor in many emerging market funds.
Capria offers an innovative new approach to address the missing middle opportunity. We invest in and support our growing network of highly-vetted, locally-based, small business finance institutions (SBFIs) that will provide capital for hundreds of high-growth SGBs in many of the emerging markets in Africa, Latin America, and Asia.
Know more about Capria’s thinking on SBFIs
Know more about Capria’s thinking on SGBs