Unlocking private debt for African startup growth.

The increasingly essential role of targeted debt solutions to unlock the next wave of growth for Africa’s tech-enabled businesses

Across Africa, tech-enabled startups and scale-ups are revolutionising sectors from fintech to  agriculture, driving innovation and meaningful economic progress. However, as these businesses move beyond their initial phase, they face a major obstacle: the lack of accessible debt financing, often called the “missing middle”. 

 This gap is precisely why we established GIF Growth. By providing a USD $1–$5 million private debt fund, we aim i to bridge this divide, enable scalable growth, and support a thriving entrepreneurial ecosystem on the continent.

The funding gap in African startup financing

African startups have shown their capability to scale and deliver economic value. However, as these businesses mature, their funding needs evolve.  While early-stage equity is vital for initial growth, it becomes expensive and dilutive as companies scale. Debt financing should ideally complement equity, providing capital for working capital, receivables, and assets without forcing founders to give up substantial ownership. Yet, when seeking expansion capital, they often fall between two extremes: their needs are too large for microfinance and standard SME products, but too small or unconventional for traditional banks and large debt funds. 

Debt Is increasing—but not at the right levels

Debt is becoming more prominent in African startup financing, with venture debt making up 38% of VC deals in 2024, up from 25% in 2022. Early-stage debt totalled $1 billion across 60 transactions, with an average deal size around $16.7 million—triple the typical equity deal. 

Despite this growth, capital remains concentrated in larger deals. This leaves the sub-$5 million range neglected, even though high-growth startups need this ticket size for working capital and steady expansion.

What startups need from Debt

A recent study funded by the European Commission, which GIF contributed to, found that African tech startups need flexible, medium to long terms solutions: 

• 73% seek loans longer than two years, 64% prefer terms over three years
• 38% need debt to smooth working capital (receivables and inventory)
• 35% use it for fund on-lending (crucial for fintechs).
• 15% require it for CapEx and infrastructure.

Naturally, founders prefer local currency to avoid foreign exchange risk, and repayment schedules that match their cash flows—such as seasonal or bullet structures, rather than the rigid, hard-currency loans designed for established corporations.

Why the $1–5M range is underserved

Local banks remain the main providers of local-currency funding but tend to favour larger, asset-heavy borrowers due to conservative collateral requirements. This creates a barrier to funding for early-stage, tech-enabled companies, who rarely fit this profile.  Whilst specialist debt providers exist, they often focus on narrow segments or shift upmarket, leaving the $1–5 million ticket size underserved.

Without solutions focused on this specific range, many promising African start ups and scale-ups companies remain underfunded—caught between loans that are too small and facilities that are too large or inaccessible. 

The opportunity: financing the next generation

This funding gap is exactly why GIF Growth was established. With over a decade of providing early-stage equity, we have seen first-hand how a lack of access to smaller debt can stall a  company’s development. 

We are pleased to have contributed to the FMO (Dutch Entrepreneurial Development Bank recent study on unlocking early-stage debt financing in Africa. The evidence is clear: access to $1–5 million loans is not just another financial product, but critical infrastructure for Africa’s next generation of tech-enabled businesses. 

By providing flexible, appropriately sized, sector-sensitive capital, GIF Growth addresses this gap, helping to build a more inclusive, resilient, and investable entrepreneurial ecosystem. At GIF, we believe that a smaller ticket private debt fund unlocks growth, supports job creation, and enables the continent’s brightest startups to fulfil their potential.