Missing Middle – Segmenting Enterprises to Better Understand Their Financial Needs Summary Report

SGBs typically seek external financing in the range of $20,000 to $2 million for a range of purposes—to support early stage growth, expand operations, finance working capital, and acquire new assets— but struggle to access forms of capital that meet their needs. According to the International Finance Corporation (IFC), small and medium enterprises in low- and lower-middle income-countries face a $930 billion financing gap (see “Enterprise credit gap” graphic on page 5).1 Accessing financing is particularly challenging for certain types of SGBs, 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. Such businesses often face a fundamental mismatch between available financing and their specific needs.