According to SEAF, a global impact private equity manager, every $1 invested in SGBs generates $13 in the local economy.

SGBs are the engines of shared prosperity; they drive growth, promote sustainability, and support equity around the world. Their ripple effect on the local economy includes job creation, payments to suppliers, income for distributors, taxes to local governments and more. SGBs traditionally constitute the largest portion of the employment base, hire the greatest number of new employees, and provide the majority of a country’s goods and services.

Defining Small & Growing Businesses

SGB enterprises span a diverse range of sectors and business models—from rural agricultural cooperatives to innovation-driven startups to well established, multigenerational small family businesses in sectors like retail, trading, and manufacturing—and are managed by an equally diverse range of entrepreneurs.

Employment

SGBs generally employ between 5 and 250 people. 

Financing Needs

SGBs’ financing needs generally range from $200,000 to $2 million. 

Opportunity-Driven

Are operated by opportunity-driven (as opposed to necessity-driven) entrepreneurs.  

Commercially Viable

Are commercially viable with potential for growth, and employ non-family members.

SGB Potential

The positive impact of SGBs on local economies

The growth of small and growing businesses (SGBs) has a significant positive impact on the broader communities that they serve.

Increased Economic Growth

SGBs drive economic growth by creating jobs, paying taxes, purchasing from local suppliers and selling to local and global distributors.

Strengthened Supply Chains

SGBs link local communities to global markets. Producers get access to a larger markets and corporations get a sustainable supply of critical resources.

Improved Access

SGBs innovations offer market-based solutions to bringing critical goods, services and capital to base of the pyramid (BOP) customers. 

Equality & Empowerment

Entrepreneurship is a powerful force for autonomy and self empowerment. SGBs create jobs in their local communities, often in remote and/or poor regions. 

The "Missing Middle"

While SGBs are the engines of local economies, accessing financing is particularly challenging for many of them, such as early stage ventures and businesses with moderate growth prospects, that are stuck squarely in the “missing middle” of enterprise finance: They are too big for microfinance, too small or risky for traditional bank lending, and lack the growth, return, and exit potential sought by venture capitalists.

This lack of risk capital to the missing middle substantially diminishes the growth potential of these enterprises, generating profound negative impact on employment, the development of a middle class, and tax revenues that are essential to a country’s development. A vibrant middle economy is a key element in job creation, on the job training, poverty reduction, wealth creation, sustainable economic growth, and stability.

Defining Small & Growing Businesses

SGB enterprises span a diverse range of sectors and business models—from rural agricultural cooperatives to innovation-driven startups to well established, multigenerational small family businesses in sectors like retail, trading, and manufacturing—and are managed by an equally diverse range of entrepreneurs.

Precedent Challenge

The nascent markets of the SEA Region have resulted in a lack of precedent. Best practices are often poorly or never defined. Use cases are often hard to find. Due diligence is expensive for investors and market data is often incomplete or of poor quality.

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    Difficulty assessing the risk-return profile of enterprises

    Investors have difficulty assessing the risk-return profile of enterprises in this space due to the companies’ lack of track records and a general lack of information about their operations and management.

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    Lack of segmentation approaches and frameworks

    The lack of meaningful differentiation when assessing a heterogeneous population of SGBs contributes to confusion in the market and misaligned expectations around risk, financial returns, exit prospects, and impact potential for SGBs.

Matching Challenge

Most investors have a tight investment focus in terms of sector, enterprise stage, ticket size and return expectations. From the perspective of the enterprises, there is limited information available regarding potential investors. 

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    Venture Capital growth models

    Traditional venture capitalists may apply standard venture capital growth models to enterprises with very different paths to maturity.

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Preparation Challenge

SGBs are often not prepared to seek investment as they face a host of issues relating to their own investment readiness, ranging from a lack of robust growth strategies to poorly defined business plans to insufficient human capital to problematic financial accounts and systems.

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    Maecenas consectetur nisl vel porta tristique. Curabitur vel urna sodales, elementum urna quis, faucibus augue. Fusce convallis ipsum vel finibus accumsan. Etiam ut felis et dui eleifend scelerisque. Cras pharetra est ex, non facilisis dui iaculis pulvinar. Vivamus fermentum turpis a magna tempor, sed ornare neque sagittis. Morbi et urna ac felis laoreet tincidunt id id lectus. Curabitur efficitur congue est at porta.
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    Maecenas consectetur nisl vel porta tristique. Curabitur vel urna sodales, elementum urna quis, faucibus augue. Fusce convallis ipsum vel finibus accumsan. Etiam ut felis et dui eleifend scelerisque. Cras pharetra est ex, non facilisis dui iaculis pulvinar. Vivamus fermentum turpis a magna tempor, sed ornare neque sagittis. Morbi et urna ac felis laoreet tincidunt id id lectus. Curabitur efficitur congue est at porta.

Communication Challenge

SGB enterprises span a diverse range of sectors and business models—from rural agricultural cooperatives to innovation-driven startups to well established.

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    Maecenas consectetur nisl vel porta tristique. Curabitur vel urna sodales, elementum urna quis, faucibus augue. Fusce convallis ipsum vel finibus accumsan. Etiam ut felis et dui eleifend scelerisque. Cras pharetra est ex, non facilisis dui iaculis pulvinar. Vivamus fermentum turpis a magna tempor, sed ornare neque sagittis. Morbi et urna ac felis laoreet tincidunt id id lectus. Curabitur efficitur congue est at porta.
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    Curabitur vel urna sodales, elementum urna quis
    Maecenas consectetur nisl vel porta tristique. Curabitur vel urna sodales, elementum urna quis, faucibus augue. Fusce convallis ipsum vel finibus accumsan. Etiam ut felis et dui eleifend scelerisque. Cras pharetra est ex, non facilisis dui iaculis pulvinar. Vivamus fermentum turpis a magna tempor, sed ornare neque sagittis. Morbi et urna ac felis laoreet tincidunt id id lectus. Curabitur efficitur congue est at porta.
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    Fusce convallis ipsum vel finibus accumsan
    Maecenas consectetur nisl vel porta tristique. Curabitur vel urna sodales, elementum urna quis, faucibus augue. Fusce convallis ipsum vel finibus accumsan. Etiam ut felis et dui eleifend scelerisque. Cras pharetra est ex, non facilisis dui iaculis pulvinar. Vivamus fermentum turpis a magna tempor, sed ornare neque sagittis. Morbi et urna ac felis laoreet tincidunt id id lectus. Curabitur efficitur congue est at porta.

    Startup East Africa (SEA L3C) builds communities that scale the impact of innovative market-based solutions supporting Small & Growing Businesses (SGBs) by providing the infrastructure for identifying and acting on shared value opportunities.

    ADDRESS

    New York | Boston | Nairobi

    EMAIL

    info@sea.africa