Overview

Early-Stage Finance Pillar

Our mission is to build and scale early-stage finance through:

Innovative financing solutions – we will support the demonstration of innovative financing solutions to reach underserved segments, attracting further capital.

Ecosystem development – by building an enabling ecosystem, we will extend the possibility frontier, mobilising funding from broader sources.This focus aligns with FSD Africa’s broader mission across the financing continuum, contributing significantly to Africa’s green transition goals.

In the next five years, ESF foresees a paradigm shift in early-stage finance characterised by:

  • Market segmentation – addressing the diversity of SGBs, progressing the sector towards meaningful growth and creating economic opportunities, especially for young people and women.
  • Expanding alternative capital providers – targeting underserved segments to broaden the financing landscape.
  • Technological adoption – utilising advanced technologies to reduce transaction costs.
  • Supportive ecosystem – enabling the rapid scale-up of early-stage finance solutions.
  • Leveraging climate finance – using climate, carbon, and nature finance to deliver high-impact returns.
  • Domestic capital growth – increasing domestic capital support for SGB sector growth.

Opportunities and challenges

Demand-side

Africa’s small and growing businesses have strong potential but lack sufficient investment. A detailed analysis reveals that different SGB segments (high-growth ventures, niche ventures and dynamic enterprises) require a comprehensive range of financing solutions to match their varying growth pathways.

Supply Side

The current financing landscape shows diversity but also significant gaps between supply and demand, especially in early-stage finance. Addressing these gaps offers strong opportunities to build out the alternative capital provider landscape.

Our strategic approach

  • Drive market-facing innovation using a venture-building approach to test and prove new solutions.
  • Enhance key cross-cutting enablers of market system development.
  • Create diverse solutions to gaps in early-stage finance.
  • Build on existing strong partnerships and investments, collaborating closely with other FSD Africa departments.
  • Core to our strategy, our Venture Finance platform partnership with FSD Africa Investments will mobilise capital into the SGB venture space.

ESF’s portfolio will focus on key growth areas of carbon markets, nature, and energy, driving the growth processes needed across all contexts for Africa’s green transition.

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