The truth about why it’s tough to help the missing middle
Erika Boll, Global Development Incubator
The 'missing middle' - or companies that are early in their development or have moderate growth potential - have a hard time raising the appropriate capital they need to grow. Often they lack the financial acumen to assess and identify financing. They struggle to know where & how to access capital – including the type of investor, where to find them, and what information is required to start the conversation. Additionally, enterprises lack capital to pay for external support to facilitate the transaction. At the same time, the supply side - investors - struggle to find pipeline that fits their investment thesis, including challenges with 'fit' (e.g. sector, growth potential) as well as 'readiness' (e.g. business and financial acumen of the entrepreneur and team, professionalism of processes and systems, etc.). Transaction advisory services – which we define as a subset of investment readiness services – are a critical part of supporting the missing middle, yet are rarely emphasized as part of the solution. They not only connect entrepreneurs to investors, but they also provide essential services to prepare enterprises to successfully raise the capital they need and prepare the company in defining the strategy and operations needed to absorb the investment. This panel will explore the truth around challenges and innovations in transaction advisory for the missing middle. Specifically, it will (1) unpack the various kinds of transaction advisory business models and the challenges specific to supporting the missing middle, (2) share examples of promising models, and (3) discuss opportunities to scale transaction advisory services, with an aim to increase the flow of capital to the missing middle.
Africa, capital advisory, impact investing, small and growing businesses, technical assistance
- Drew von Glahn (Collaborative for Frontier Finance)
Speakers will be confirmed but to include: USAID PACE, Capria, local transaction advisors from East Africa, the Collaborative for Frontier Finance, and Miller Center