Transforming Innovation Financing

Introducing the IDIA Capital Continuum

We know that innovators and entrepreneurs are essential to advancing Africa’s prosperity. They create new jobs, introduce critical technologies, and drive locally rooted solutions to global challenges. But for too many, the pathway to impact remains uncertain. Funding often arrives too late, in the wrong form, or not at all. And when capital is available, it can be mismatched to the realities of growing a business in complex, underdeveloped markets.

At present, the channels through which financial capital is made available to innovators in progressing their solutions to scale are siloed, at times duplicitous and overall insufficient in providing a smooth and coherent pathway of support. The burden sits largely on the shoulders of the innovator to research the different types and levels of financing available, which can be challenging due to a lack of accessible, up to date information; a lack of standardized language and terminology; and insufficient clarity around the investment criteria through which funding-related decisions are made. Each agency also requires completion of their own application form and due diligence checks that often demand significant time and repetitive effort on the part of the innovator. Even when awards are finally determined, the complexities of the contracting process on both sides (particularly among innovators, where investment experience is typically low) can then add many more months to the process, to the point that it can often be as long as 6-12 months between application and investment commencement.

To address this problem, IDIA is working with initial sponsorship from GIZ to scope and test a new approach to enhancing how innovators and entrepreneurs can access and arrange different types of capital for transformative social impact. It introduces the creation of a ‘Capital Continuum’ across the IDIA network – a structured approach through which the various types of capital IDIA member agencies have to offer is sequenced and connected to provide a smoother, faster pathway to impact. It is designed to improve both the visibility of the funding that is available and its connectivity across IDIA member agencies so that an innovator/entrepreneur can more efficiently plan, access and sequence their transition between the different funders and capital products they need as they progress along the various stages of the IDIA Scaling Framework. Ideally, a comprehensive Capital Continuum will engage a range of funders diverse enough to make available the full range of concessional and non-concessional capital that may be required, including to bridge the ‘missing middle’ where so many innovators/entrepreneurs currently struggle to find support.

If you are interested in exploring collaboration with IDIA on the capital continuum, please contact us below.