Across Africa, early-stage tech companies are increasingly seeking debt, yet the market remains concentrated in larger deals and Seed to Series B firms needing sub-USD 5 million debt tickets are underserved. Demand is strong, but access to affordable, fit-for-purpose debt is limited.

Startups need debt products, eligibility criteria, and due diligence processes tailored to early-stage realities. At the same time, debt providers must balance innovation in products and investment processes to meet company needs with the need to build commercially sustainable, scalable models. Debt providers serving early-stage companies face significant cost, FX risk, and limited upside sharing. Structural barriers, including scarce on-lending capital, FX risk from the mismatch between capital and company revenues, shallow investment pipelines, and regulatory gaps, constrain growth. While underwriting innovation is emerging, scaling early-stage debt sustainably requires ecosystem-level reform, not just provider innovation. 

Shifting the market for early-stage debt in Africa requires a dual strategy: strengthening existing and emerging specialist providers while addressing structural ecosystem gaps. The report “Landscape Study on Debt Financing to Tech-enabled Startup and Scale-up Companies in Africa,” developed by FMO Ventures in partnership with Dalberg, outlines seven actionable pathways, including capitalizing and de-risking specialist funds through blended finance; validating concessional-return debt models to reach underserved companies; incentivizing banks to expand local-currency lending; advocating for supportive legal and regulatory reforms; improving market data transparency; expanding technical assistance to strengthen investor pipelines; and reinforcing early-stage equity markets to unlock complementary debt and equity-linked debt products.

Together, these measures can enable early-stage debt to become a sustainable, scalable, and complementary source of capital for Africa’s innovation economy.

Read the full report to explore the analysis and recommendations in detail.