Each of these roles is necessary, and together they reflect a sector that is engaged and serious about progress. Yet when their efforts are not intentionally aligned, essential components of inclusive finance — capital, product design, data and market access — fail to reinforce each other. Pilots stall before they can scale, risks accumulate rather than being absorbed across partners, and communities remain exposed to shocks that a coordinated response could help mitigate.

The Barriers to Multi-Stakeholder Alignment Are Real

Many of the systems underpinning inclusive finance were not built for multi-stakeholder alignment. Institutional partners often operate under different mandates, timelines and risk tolerances, shaped by their own internal priorities and performance frameworks. Even when organizations pursue the same goal, coordinating efforts can be a challenge.

These structural constraints hinder innovation and weaken responsiveness. When capital is tied to institution-specific KPIs and budget cycles, when data and insights aren’t shared broadly, and when partnerships are defined around narrow roles rather than shared results, even the best-intentioned initiatives struggle to gain momentum.

Silos also limit visibility into what is happening beyond individual functions. A funding decision may make sense inside a single organization, or a product may perform against internal metrics, even as barriers elsewhere in the value chain quietly erode results. This makes it harder to pinpoint where bottlenecks are occurring, why impact fails to materialize or how resources could be redirected more effectively.

FINCA and FLUID: A Case Study in Collaborative Innovation

FINCA’s partnership with FLUID responds directly to these barriers, providing an example of how incentives, learning and execution can be aligned to overcome organizational silos.

FLUID is a fintech startup that works to increase income and economic resilience for farmers in Africa, by providing customized input packages that boost yields, while ensuring fair market access. Its model combines technology, data and infrastructure to bridge the gap between traditional finance and agricultural communities. Our collaboration grew out of an early catalytic investment in FLUID by FINCA’s impact investing arm, FINCA Ventures, which supported FLUID’s early-stage growth and sparked a chain reaction across FINCA’s broader teams and networks.

The groundwork for this collaboration had been laid by FINCA’s Poverty Eradication Lab team, which was applying research and human-centered product design to explore how to ease African farmers’ cash-flow constraints and risk exposure. That work pointed to the need for a more holistic, in‑kind financing approach that combined inputs, services and market access. The initial investment in FLUID reflected that need, leading to a successful joint pilot that generated a financing model that is now creating value for farmers and investors alike, while also establishing the conditions for closer collaboration between our two organizations.

As our respective efforts converged, the relationship shifted beyond a traditional investor‑company dynamic. FLUID’s technology and commercial networks access gave FINCA’s Poverty Eradication Lab an opportunity to test the products it was developing under real-world conditions, and our pilot program leveraged each organization’s strengths to co-develop an integrated financing offering for rice farmers in Ghana. Instead of conventional cash loans, participants would receive an in-kind package of inputs, mechanization services, agronomic training and guaranteed market access, with repayment for these services and inputs tied to their harvested produce.

FLUID’s platform provided the digital backbone — capturing granular data, supporting credit assessment for in-kind financing and enabling real-time adjustments — while its teams handled delivery. FINCA’s Poverty Eradication Lab funded the pilot and the associated learning needed to test the model in practice. At the same time, FINCA and FLUID’s combined teams explored ways to engage our respective strategic partners across the financial inclusion ecosystem to support and expand this work.

Alignment Built for Pressure, Not Perfection

On the ground, the FINCA-FLUID integrated financing approach is already demonstrating how combining finance, inputs, services and market access can reduce risk in smallholder agriculture by tackling volatility at its source rather than after losses occur. In northern Ghana, 77 farmers joined the initial pilot last year, achieving 23% higher yields, income gains of up to 140% and 95% repayment at the end of the harvest cycle.

Encouraged by strong first-season results, FINCA and FLUID expanded the model into a second season, increasing participation, acreage, and engagement from women and youth. Yet a sharp drop in rice prices, driven by currency movements and weaker demand for local production, reduced farmer incomes and revealed a critical vulnerability at the point of sale.

In the second season, 63% of participating farmers saw weaker outcomes, and only 32% earned positive net income after repaying all costs, although average net profits would have remained positive under first-season pricing conditions. Despite this, farmer participation remained high, with participants still earning average incomes more than 30% higher than those of farmers outside the program.

Rather than undermining the model, this stress test clarified where the system needed to be improved. By combining financing, delivery and data into a single effort, FINCA and FLUID were able to adjust the pilot by strengthening off-taker arrangements, refining the product design and increasing resilience to future shocks.

The lesson is straightforward: Even well-designed products are tested by forces beyond any one organization’s control. The real test of collaborative innovation is not whether the initial plans hold, but whether partnerships are built to learn, adapt and improve under real-world conditions.

What It Takes to Make Synergy Work 

Beyond confirming the viability of an integrated approach to agricultural finance, the FINCA-FLUID pilot points to broader insights about tackling complex challenges that apply far beyond agriculture and our two organizations.

Even when stronger coalitions emerge, collaboration without the right tools and financial infrastructure can only go so far. Many inclusive finance providers have been slow to move past conventional lending models built around static credit assessment, rigid repayment schedules and limited use of real-time data — a framework for managing risk that has changed little over the decades. These approaches do not reflect the irregular cash flows, production risks or market volatility that low-income entrepreneurs navigate every day. The people inclusive finance seeks to serve are resourceful and entrepreneurial, and providers must match their ingenuity with similarly innovative financial tools.

However, agile product design is only part of the equation. Across emerging markets, the providers serving low-income populations depend on capital that is scarce, expensive and poorly matched to their operating realities. Under these conditions, sustaining affordable finance is difficult, regardless of product quality. Addressing this challenge will require providers, investors and partners to rethink how capital is sourced and structured, introducing greater flexibility and risk-sharing.

Finally, better outcomes depend on internal alignment, because fragmented organizations cannot build cohesive partnerships. Organizations must treat data as connective tissue, making it easier to adapt quickly and manage risk collectively. As collaborative partnerships build trust and iterate, they must prioritize transparency and shared decision-making, creating space to surface mistakes and learn from them collectively.

Inclusive finance will not achieve its goals through isolated efforts. The barriers are systemic, and they demand systemic solutions. The foundation for these solutions is there. What comes next depends on how boldly and collaboratively we choose to build.

Seth Spiro is Chief Product Officer at FINCA; Moustapha Seck is the Founder and CEO of FLUID.

Photo credit: Sashkinw

There is broad agreement on the goal: Africa needs electricity not just to connect households, but to power jobs, industry and long-term growth. The real debate — which has unfolded on NextBillion and at other publications and events across the sector — is about how to get there.

Some argue that, given limited public resources and grid constraints, electrification efforts should prioritize industrial clusters first, with household access following later. Others push back against the idea of this sort of trade-off, emphasizing the importance of reaching underserved populations.

In many ways, both sides are right. But both also miss a critical point: The challenge is not simply whether to prioritize households or industry, or whether to pursue both. It is about understanding how electrification, electricity demand, income generation and productivity actually evolve in practice — and determining how best to balance the different technologies, delivery models, financing structures and timelines involved in boosting energy access across the continent.

The Risk of “Trickle-Down Electronomics”

At the heart of the “industry-first” argument is an implicit assumption that investing in higher-tier electricity for industry will generate jobs and income, enabling governments to expand electricity grids to unserved areas and allowing households to afford electricity over time.

We might call this “trickle-down electronomics.” It’s a contention that echoes “trickle-down economics,” the idea that policies or investments that benefit those at the top of an economy will eventually benefit those at the bottom.

It is an appealing idea in theory, for both economies and electrons, but evidence and experience suggest that it rarely works in practice.

Some advocates argue that electrification efforts should target a “Modern Energy Minimum” to drive the continent’s economic growth agenda. This minimum level of electricity consumption is often understood as Tier 4 or greater in the World Bank’s Multi-Tier Framework, which refers to electricity capable of powering refrigerators, machinery and enterprises.

That ambition matters, but it overlooks a basic constraint: Most rural African households today cannot afford or meaningfully use that level of service, even when it is available. Across sub-Saharan Africa, even when rural households are connected to the grid, most consume electricity at Tier 1 or Tier 2 levels. In Ethiopia, three-quarters of rural grid-connected households use only Tier 1 appliances. In Liberia, even grid- and mini-grid-connected households primarily use electricity for basic services such as lighting, televisions and fans, consistent with Tier 1 levels of access.

Further, recent research in Rwanda, published in “Nature,” finds that grid electrification alone does not automatically drive large increases in electricity use or income, particularly where affordability constraints persist.

Focusing too narrowly on electricity consumption as a measure of success also risks missing an important shift. Appliances and devices are becoming more efficient, meaning smaller systems can now support greater productivity. Slower growth in consumption does not necessarily imply slower economic progress. It may just be that people can do more with less energy — a topic we’ll explore later in this article.

Why This Is Not Just a Sequencing Debate

It would be easy to frame this as a disagreement about sequencing: whether households should come before industry, or vice versa. But that framing is too narrow.

Electricity systems are not homogenous, and they are not constructed in a linear manner. They are built piece by piece, with the sequence and type of delivery model determined by geographic and spatial factors, energy sources, cost structures and financing models.

Transmission and distribution grids are one such delivery model. Grid infrastructure is capital-intensive, reliant on public sector financing and often slow to expand. As a result, it makes sense to concentrate grid investments where they have the highest off-take (i.e., the most buyers of the most electrons the power lines can carry), and where they can deliver the highest economic returns — such as industrial clusters, urban centers, and the productive corridors through which freight is transported and stored.

Decentralized solutions — including standalone off-grid solar, mini-grids or emerging technologies like mesh grids — are alternate and viable delivery models. They are modular, faster to deploy, and often represent the least-cost option for reaching underserved communities, particularly in hard-to-reach areas. They also rely heavily on private capital, reducing the burden on constrained public budgets.

The question, then, is not which priority comes first, but how to optimize different delivery models, technologies, markets and financing structures at the same time.

Productive Use Starts Earlier Than We Think

The same logic applies to productive use of energy. Electricity is a necessary enabler for all economic or income-generating activity that drives development. The case for prioritizing industry rests on its potential to produce economic impact. But this risks getting into trickle-down territory, and it under-values the vibrant economic activity happening at the micro- and small-enterprise levels.

Productive use of energy does not begin only at the factory gate. It starts with farmers using solar irrigation pumps, traders extending business hours thanks to solar lights, small shops keeping cola cold and fish fresh, and anyone with a laptop connecting to digital sources of income. These activities may not resemble large-scale industry, but they are the backbone of most African economies and the primary sources of income for millions. In sub-Saharan Africa, the vast majority of jobs are in the informal economy, meaning productive use of energy is already happening at the household and microenterprise level. Sometimes, these activities occur in places that could or should be connected to the grid, but are not, as in the case of this neighborhood in Nairobi.

Tier 1 and Tier 2 access, often dismissed as “basic,” enable these forms of productivity. They support human capital development, digital inclusion and microenterprise growth. They help build the workforce and demand base that larger industrial systems ultimately rely on.

Additionally, today’s Tier 1 systems are not what they were 10 years ago. Advances in solar efficiency, battery durability and appliance design are transforming what small systems can deliver — while also lowering costs. Lithium-ion batteries, driven by the global electric vehicle revolution, now dominate the off-grid market and can last eight to 10 years. Battery prices have fallen by more than 90% since 2010, and they continue to decline, reaching record lows in 2025. Meanwhile, the VeraSol certification process, initially launched by the World Bank, has established an internationally recognized measure for product quality and truth in advertising, with Verasol-certified systems offering improved durability and safety.

At GOGLA, we’ve seen many member companies extending warranties, building repair networks, and introducing second-life battery programs that create local jobs and reduce waste. These innovations mean today’s Tier 1 systems are future-ready, capable of powering homes, microbusinesses, farms and digital devices. The next decade could see entry-level kits that irrigate crops, cool produce and provide internet access in even the most remote communities. Advances in technology are enabling physically small systems to outperform their size and reshape the perception of what solar energy kits can do.

In that sense, early-stage energy access is not downstream of economic transformation. It is part of how that transformation begins and grows.

At the macro level, the benefits of this access are equally significant. The off-grid and distributed renewable energy sector already supports hundreds of thousands of jobs and could create more than 400,000 additional positions by 2030. It strengthens energy security, reduces reliance on imported fuels, improves human capital through better health and education, and contributes to climate resilience. Plus, scaling off-grid solar could lead to climate-positive growth.

Unlike premature grid expansion — which can strain already-stretched utilities when revenues from low-demand customers fail to cover costs — off-grid solar leverages the potential to tap much-needed investment from the private sector while expanding access sustainably.

Addressing the Resource Constraint

A central question in this debate is whether pursuing both household and industrial electrification is realistic given limited public resources. This concern is valid.

But the question is not whether public resources should be used, it’s how they can be used most effectively.

Grid expansion for industrial use requires significant public investment, long timelines and complex coordination along the generation-transmission-distribution value chain. These infrastructure investments should be targeted at the industrial clusters, urban centers and economic corridors where they can deliver the greatest economic returns.

Decentralized solutions also require public support, albeit with a different mix of capital. Targeted subsidies, results-based financing, and value-added tax (VAT) and tariff exemptions are essential to close affordability gaps and enable broad-based energy access.

The key difference is that off-grid investments are often lower-cost, faster to deploy, quicker to benefit end users and better able to leverage private capital. Public funding in these markets plays a catalytic role, crowding in private investment and extending access to populations that would otherwise remain unserved.

This distinction matters. It means that supporting household access is not a diversion of scarce resources, but an efficient and high-impact use of them. Ensuring all citizens have access to electricity regardless of where one lives remains a public sector mandate.

Therefore, we do not need to choose between “households first” or “industry first.” We need to allocate public funding and tap private capital strategically across both: grid investment to power industrial growth, and decentralized solutions to expand access, build demand, and strengthen the workforce and economic base that growth depends on.

Moving Beyond False Trade-Offs

The debate around which electrification strategies Africa should pursue is an important one — and it has deep implications for the continent’s ambitious Mission 300 electrification initiative. It is right to question whether connection targets alone are sufficient, and to push for outcomes that include jobs, productivity and economic growth.

But we should be cautious about replacing one oversimplification with another.

The risk of trickle-down electronomics is not that it prioritizes industry too highly: It’s that it assumes development will unfold in a neat, linear sequence, where benefits automatically diffuse from large-scale investments to households over time. The reality is more complex.

Electricity access, economic growth and productivity evolve together, often unevenly. Policies and investments must reflect that complexity.

Africa’s energy future will be built through a combination of grid expansion, mini-grids and off-grid solar. It will be financed through a mix of public and private capital. And it will depend on both industrial growth and the ability of households and small businesses to participate in the energy economy.

But it will decidedly not be delivered by trickle-down electronomics. It will be built by powering people and economies in parallel, not waiting for one to catch up with the other.

Ryan Kilpatrick is Director of Strategic Communications and Advocacy, and Patrick K. Tonui is the Head of Policy and Regional Strategy at GOGLA.

Photo credit: inkoly

The Valley of Death describes the persistent gap between early-stage capital and the type of scale-ready financing that social enterprises need to grow. It is where promising ventures stall: not because their impact is lacking, but because the capital available to them is not fit-for-purpose.

We all talk about it, but we rarely slow down enough to unpack why it persists, and what role each of us can play in closing it.

Choosing Collaboration Over Comfort

That’s why it is so encouraging that eight organizations — Acumen, Global Partnerships, Halcyon, Kiva, MCE Social Capital, Miller Center for Global Impact, Open Road Impact, and Village Capital — made a deliberate choice last year to step out of their silos and participate in an unusually open and trusting collaborative study, to better understand why the Valley of Death persists. 

This type of research is rare. The organizations involved in this collaboration are peers and, in many ways, competitors. We often compete on the fundraising side. On the funding side, we’re seeking to invest in some of the same entrepreneurs. All of us operate under scrutiny from donors who want efficiency, scale and measurable outcomes. That made this collaboration inherently uncomfortable — and also necessary.

“We picked the hard path,” shared Caroline Bressan, CEO of Open Road Impact, at a recent webinar covering the project. “Weighing the trade-offs between financial return, impact and risk, on a daily basis, is heavy.” As Bressan told the virtual room of over 300 attendees, we made this uncomfortable leap in order “to build more of a community among impact-first investors and step into the unknown together in pursuit of shared learning.”

Making the Invisible Visible

From the outset, the group recognized that we are all facing the same economic struggle to resource ourselves while providing entrepreneur-centric, impact-first capital. The question was whether that shared struggle stems from the same underlying causes. To begin addressing that question, we needed to establish a common baseline — and that required data.  

Daniel Waldron, Director of Insights at Acumen, another contributor to the study, explained the value of taking a data-centric approach: “You should never underestimate the importance of quantifying a problem, even if each of us felt we had a fairly good understanding of it. The data makes a case that anecdotes cannot. And I think if we’re proposing big solutions down the road, they need to be built on a firm foundation.”

The eight participating organizations agreed to focus the lens inward, contributing individual fund data to better understand the true cost of their impact-first models. As far as the group knew, no one had ever attempted a comprehensive cost analysis across multiple impact-first funds — i.e., funds that prioritize impact over financial returns. We agreed that the data would be anonymized and that any findings would be developed and approved by consensus among the contributors. No one organization could be identified or compared to another. Nor could anyone claim sole ownership of the shared findings. 

The trust within the group made it possible to surface and compare highly sensitive operational and cost information that is rarely provided across potential competitors. For Amy Bell, Chief Financial Officer of MCE Social Capital, one of the eight participating organizations, that trust was foundational: “The partners in this group feel a deep alignment with each other, as we share a relentless commitment to centering impact. As such, we are glad to speak candidly about costs because we trust that collaboration and sharing insights will help us all become more successful, which only serves to further the positive impact we have collectively on the world.”

What We Learned About the True Cost of Impact-First Investing

We also named our work together, choosing to title the study “The True Cost of Impact-First Investing” because we wanted to lift the hood and see what it actually takes to run impact-first funds. Our hypothesis was that the Valley of Death persists because the funds that aim to close the gap are themselves underfunded, and impact-first funds are capitalized and judged against market-rate vehicles that operate using different underlying economics. If we could use the power of numbers to illustrate the true cost of impact-first investing, we could make the case that paying for this cost is one of the highest-leverage uses of philanthropic capital out there. 

Our early findings, shared with a standing-room-only audience at SOCAP 2025, reframed a common conversation in the industry. Contrary to long-standing assumptions, the impact-first funds in the study matched or outperformed mainstream commercial fund benchmarks in operational efficiency on a cost-per-investment basis. This result suggests that impact-first investors are just as rigorous in our financial practices and underwriting as mainstream financial providers, and that “impact-first” is not code for lacking rigor.

However, the findings also revealed an area where the fund economics diverge on traditional efficiency metrics: cost per dollar deployed. This metric assesses how many cents it costs a fund to move $1 of capital. In our study, impact-first funds exhibited a cost per dollar deployed that was 2-3 times higher than the mainstream commercial fund benchmarks. 

Does that mean impact-first funds are inefficient? No — on a per-investment basis, we already demonstrated their comparability. So what is that extra cost paying for?

Impact-first funds make smaller investments and provide more hands-on support, so each dollar carries a higher portion of fixed costs. Commercial funds deploy larger amounts per deal and spread those same costs across more capital, while offering less additional support to investees. This extra cost is fundamental to the impact-first investing model, not an inefficiency that we should optimize away. I believe it represents the true cost of closing the Valley of Death. 

For philanthropic funders, resourcing impact-first funds therefore becomes a powerful point of leverage. By helping these funds do more, they can extend their impact far beyond what direct giving alone can achieve — providing fit-for-purpose capital that helps social enterprises cross the Valley of Death to grow and thrive.

Co-Creating What Comes Next

These insights are the result of eight organizations with 170 years of combined institutional experience taking a leap of faith together. And we are just getting started. 

For Waldron, the process of working through the analysis collectively was almost as valuable as the results. “It was wonderful to hear such a brilliant group of people wrestle not just with the fundamental economics of our work, but also how we need to position those fundamentals to the outside world. Going through a difficult process together builds fellowship, and that is an invaluable thing to have when you’re trying to change the status quo.” 

This year, the founding group is expanding to include additional funds and partners, with the goal of building a shared, practitioner-led research infrastructure that can inform how capital is deployed. We hope this marks the beginning of a coalition built not on top-down, one-off reporting, but rather through a horizontal, evolving, practitioner-driven movement toward radical transparency and collaboration across a sector that has long needed both. 

Brigit Helms is the Executive Director of Miller Center for Global Impact.

Photo: imtmphoto

However, this paradigm fails to recognize the power of monitoring data to inform strategy and insights — and in the case of our organization, to enable funders and other ecosystem players to better understand the needs of local enterprises in emerging economies.

For over 25 years, Root Capital has financed and built the capacity of agricultural small- and medium-enterprises (agri-SMEs) to grow smallholder prosperity and climate resilience. In that time, our commitment to data has supported the learning and insights that have established us as a leader in our sector. As we embark on a new strategy with significant impact ambitions, we are leveraging our monitoring data to answer fundamental questions about how to best serve our clients in the coming years.

Below, we’ll discuss how our efforts to unify and standardize our monitoring system across global programs have prepared Root Capital to pursue this strategy, while enhancing our understanding of our agri-SME clients.

An SME Support Model Built on Data

Root Capital has a history of leveraging data to maximize our impact. Eight years ago, we pioneered the model many impact investors use today to optimize their portfolio’s impact while balancing their financial stability. This model directs our financing to where it is most impactful: 90% of Root Capital’s financing in 2025 went beyond what commercial markets offer, meaning 90% of our loans filled a financing need unmet by commercial lenders. Beyond this financial additionality, these resources serve as a catalyst for systemic change, enabling a portfolio where 64% of clients are gender-inclusive businesses and more than 540,000 hectares are maintained under sustainable management. Embedding impact data into our business model allows us to ensure that we continue to meet these targets.

We also co-founded the Council on Smallholder Agricultural Finance (CSAF, a leading peer network of 17 agri-SME financiers), and we continue to support it by co-leading initiatives to expand SME financing, and highlighting the importance of sharing reliable monitoring data to improve our collective market understanding.

These efforts are fed by robust data collection practices, which we apply across the two (often-overlapping) groups of agri-SME clients we work with: both the clients we lend to in our impact investing work, and the ones we support through our free advisory service programs. We integrate data about these enterprises’ environmental, social and governance (ESG) practices, business reach, and organizational capacities into every client touchpoint.

Data is how we uphold our role as an impact investor, bridging the “missing middle” of agricultural finance by providing essential capital and capacity-building services to enterprises that are too small or high-risk for traditional commercial banks, yet too large for microfinance. For example, a loan cannot close until we have collected, reviewed and approved the ESG data needed to verify that the client has a positive impact on their community. Likewise, data informs our efforts to select enterprises to support through our advisory services, and also informs the services we offer them. This tight feedback loop of data drives our decisions — a process that is made possible by setting clear expectations about the data we collect, and explaining to clients from the outset how providing this information helps us effectively support them and their communities.

Our commitment to data ensures that we reach the agri-SMEs that drive smallholder prosperity. It also gives us the platform to be a thought leader within the sector, as we back our impact claims with hard evidence and share learnings from our progress with other investors and ecosystem players. And importantly, by incorporating data generation directly into our core business processes, we produce impact data as a seamless byproduct of our work. This prevents it from becoming an additional burden on our clients or our budget, which is a common issue with the heavy monitoring and evaluation systems typically required by donors and funders.

Why a Unified Approach to Monitoring Data Yields Clear Value

Root Capital is not unique in the scope of our work, which spans across 13 countries in three regions. Yet we stand out for having a single, unified monitoring system that covers all the data we collect. Our monitoring data is standardized globally and embedded into tools that are used by all our client services teams. That means one team member collects the same information for a coffee enterprise in Honduras as another team member collects for a macadamia processor in Kenya. With this “top-down” model, Root Capital doesn’t need to create an ad-hoc monitoring system for each project, grant or loan, helping us to avoid repetitive or misaligned data collection. This approach also allows us to map our global indicators to a donor’s standards, in cases where philanthropic funders or other impact investors are subsidizing our loans through a blended finance model.

However, we didn’t always take this approach. For years, our monitoring system was bifurcated, with each program offering distinct indicators. We opted for this approach because Root Capital’s “capital + capacity” model — which pairs the financing (capital) and the training (capacity) agri-SMEs need to thrive — yields programs with distinct monitoring needs. For instance, our lending programs conduct rigorous financial, social and environmental due diligence, whereas our advisory services programs undertake thorough diagnostics to identify agri-SMEs’ training needs.

The challenge in measuring these different programs was that our principal monitoring data was only collected from lending clients. For these clients, we developed Social and Environmental Metrics (SEMs) that included around 60 key business indicators like: annual revenue, payments to producers, volume of crop purchased, and employees and farmers (disaggregated by gender and age). From the SEMs, we are able to quantify our overall impact, but we can also go further — for example, by identifying agri-SMEs within our portfolio that advance gender equity.

To extend these benefits to our other programs, in 2022 we embarked on a two-year project to build our capacity to collect SEMs from all clients. The time and money we invested in this project yielded a worthy result: 2025 was the first year we had SEMs for all clients reached by Root Capital across our loan portfolios and advisory service programs — a milestone in our history as a data-driven organization. Investing in our unified data system delivers long-term cost efficiencies: Our four-person Monitoring team is able to control data quality via reviews at the country and global levels. It also maximizes the usefulness of monitoring data for robust programmatic insights: For example, we have also used monitoring data to evaluate our Gender Equity Advisory Services, revealing that these services genuinely increased women’s participation in our training. For an organization that serves over 250 agri-SMEs per year with more than 500,000 affiliated farmers, this unification of data collection has unlocked notable economies of scale.

Finding New Opportunities to Leverage Monitoring Data

Starting in 2026, Root Capital is embarking on a three-year strategy that focuses on segmenting our services to more directly address the distinct needs of early- vs. mature-stage agri-SMEs. Our Advisory Services team was already using a proprietary segmentation tool to identify which trainings were best suited to our clients’ needs. However, we determined again that we needed a more systematic tool that worked across both our Lending and Advisory Services programs to segment all clients.

Inspired by the multidimensional indices that are commonplace in development economics, we developed the Enterprise Development Index (EDI) to segment all clients according to their stage of business development. We were eager to capitalize on the fact that we had secured SEMs data for all clients, so we developed the EDI tool to leverage existing monitoring data and administrative sources so that we would not burden staff and clients with additional data collection requirements.

The EDI assesses a client’s performance across six dimensions that Root Capital views as essential to understanding an agri-SME’s level of business development:

• Size and reach
• Financial capacity
• Operational and sector capacity
• ESG strength
• Business resilience
• Local context

Each dimension is composed of three to five indicators for a total of 23 indicators. Each indicator is normalized on a two-decimal scale of zero to one, and averaged to create a composite index. The EDI is not normative, because a higher score does not necessarily imply a “better” enterprise. Instead, it is more descriptive, as scores simply denote different levels of business characteristics. Consequently, Root Capital’s services are not designed to drive an increase in EDI scores. Instead, our goal is to use the EDI to establish a measure of a business’ current capacities and reach, allowing us to understand their short-term needs and fitness for receiving our different services.

Based on the index, a client falls into one of two portfolios:

• Accelerator Portfolio: Early-stage agri-SMEs building their bankability to secure their first-ever loan and enable growth.
• Growth Portfolio: Mature-stage agri-SMEs expanding their capacity to drive rural resilience.

To prepare for our three-year strategy, we developed, validated and implemented the EDI across our entire portfolio in just under a year. We were able to meet this need for deeper strategic insights with such agility by relying on current monitoring data, and by leveraging the confidence and readiness built over years of investing in our global monitoring system. By re-imagining how we use this monitoring data, Root Capital now has a forward-looking tool that delivers the insights needed to boost client outcomes — further fueling smallholder prosperity and resilience.

Conclusion

Monitoring data is a material cost; every dollar spent on collecting this data is a dollar not spent on direct programming. At Root Capital, this natural tension encouraged us to maximize the utility of our monitoring data in order to better inform the design and delivery of our services. With the EDI, we tapped into one of our richest resources (our data) so that we can meet agri-SMEs where they are, with interventions that are right-sized for their capacities and needs.

We hope the EDI will be another sector-leading framework to add to Root Capital’s long history as a learning organization. While we further build upon these efforts, we hope other practitioners will take inspiration from our model by examining their existing monitoring data and envisioning bold ways to leverage it to drive effective decision making.

Juan Taborda Burgos is Director of Impact Monitoring, Evaluation and Learning (MEL); Scott Caple serves as a Senior Analyst in Impact Monitoring; and Jorge Bouchot is the Senior Manager of Research and Impact Evaluation at Root Capital.

Photo credit: LENblR

To be clear, the problem is not a lack of promising social enterprises or ambitious entrepreneurs, but a scarcity of enterprises that have the connections to meet investors, and the internal systems and capacity to put impact capital to work.

The Missing Ingredient: Investment Facilitation

Impact investing can generate both financial and social returns at smaller ticket sizes, but in Africa, it often focuses on larger companies — such as expat-founded and expat-led ventures — that already possess the capacity required to pass international due diligence. Meanwhile, African-led small and medium enterprises (SMEs) struggle to produce the sophisticated financial models and social impact management and measurement expected during due diligence. Even SMEs that can meet the technical standards that impact investors demand often lack the network that helps well-connected expat-led businesses find investment opportunities. As a result, many promising SMEs are locked out of the investment market. 

A critical solution is the investment facilitation provided by specialized business advisory service providers (BASPs). These advisors deliver the strategic, technical and networking support African SMEs need to demonstrate their potential to capital providers. In addition to other services like legal and human resources, BASPs communicate the compelling investment opportunities SMEs represent through “deal rooms” — a series of documents such as financial statements, pitch decks, contracts and policies that allow potential investors to understand the enterprise’s growth potential. BASPs also act as transaction advisors, connecting enterprises with investors and accompanying the enterprise through the process of the deal.

The Impact of BASPs

The success of Ghanaian agribusiness Mariseth Farms demonstrates how impact can be scaled when innovative funding is combined with business advisory services. Mariseth, an enterprise founded by Marian Ofori Twumasi and focused on local farmers, had grown organically but needed outside investment to continue scaling.

After receiving strategic business advisory services from our advisory firm, Pangea Africa, the company was able to raise $850,000 from three impact investors in 2024/25, accelerating its growth and impact. Mariseth’s earnings tripled in 2025, a sharp increase that would not have been possible without access to working capital from these impact investors, which has enabled it to procure more agricultural produce from smallholder farmers. 

This growth demonstrates the efficiency of the BASP approach, as the facilitation costs we incurred to get Mariseth investment-ready were low, about 3% of the investment value. Additionally, this support unlocked both private capital and social returns: Mariseth now works with 9,255 smallholder farmers, compared to 1,550 at the end of 2023. And by providing pre-financing for high-quality inputs (e.g., drought tolerant seed), mechanization services and fair market prices, it contributes directly to farmers’ resilient livelihoods, food security and gender equity. 

BASPs’ effectiveness has also been quantified in research: USAID’s Financial Inclusion in Ghana program reported that BASPs in the project’s network successfully facilitated $45.1 million in financing for 529 agribusinesses. Additionally, TechnoServe, a global pioneer of business advisory services that closely tracks impact data, reported that their advisory services in 2024 delivered an average of $7.60 in increased revenue for farmers and small businesses for every $1 invested in their programs. 

While BASPs are key to strengthening the quality and quantity of the deal pipeline, financing these providers themselves has been challenging. Development partners tend to view advisory services as a commercial activity, and are reluctant to provide them with ongoing grant financing — meanwhile SMEs have limited ability to pay for these crucial services themselves. And though some BASPs have solved this funding challenge through a performance-based compensation model, this approach makes it difficult to scale, as BASPs don’t typically have the risk tolerance or working capital to work on a deferred fee basis.

The Innovation: A Mechanism that Addresses the Market Failure and Incentivizes Results 

To resolve this market failure, a systemic intervention is needed to scale up investment facilitation support from BASPs. To that end, organizations like Social Finance International, a not-for-profit innovative finance advisor, work with funders to address this need by redesigning funding to create the right market incentives and ensure that risk sits with the right party.

To further advance these efforts, Social Finance International and Pangea Africa are currently laying the groundwork for a new financing mechanism with a results-based revolving “evergreen” transaction advisory facility defined by three key criteria of success:

• The financing mechanism should solve the BASP financing market failure described above, and build in long-term financial sustainability.
• BASPs should be incentivized to provide high-quality investment facilitation support that delivers a successful investment round.
• No party should take on more risk than it has an appetite for.

The new facility would be seed-funded by donors. It would provide grants or contracts to BASPs to provide SMEs support, with minimal upfront cost to the SME. However, the upfront funding would only partially cover the BASPs’ expenses, so participating BASPs would have an incentive to catalyze successful transactions, as these would be further rewarded by a results-based bonus from the transaction advisory facility when the SME closes an investment. 

At the same time, there would be no free lunch for SMEs. In return for receiving business advisory services with reduced upfront fees, the SME would commit to paying a success fee back to the revolving facility, financed from the investment. The facility would hence be replenished from successful transactions.

 In this approach, all parties’ incentives are aligned:

• The BASP would have an incentive to perform well: Linking a share of its payment to a successful investment would improve the accountability and cost-effectiveness of its services. This approach would also deepen BASPs’ engagement with SMEs, creating a sense of shared responsibility. The smaller financial risk and larger financial reward (through the results-based bonus) could also encourage new BASPs  to enter the market.
• The SME would pay reduced upfront fees and would similarly take on no financial risk, but in return for a successful transaction, it would give up a pre-agreed share of the investment raised.
• Investors would be crowded in: They are always looking for a pipeline of prospective investees — and this pipeline is costly to build in Africa, where the ecosystem is not as well structured. The facility would address this challenge, enabling investors to ultimately close more deals with African SMEs, without requiring them to pay for the services directly.
• The revolving facility itself would take on significant financial risk by pre-paying transaction advisory costs, but that risk would be somewhat mitigated by the prospect of replenishment through a percentage of the investment when deals are closed.

Further Questions about this Revolving Facility

The proposed revolving facility would be an entirely new approach to scaling investment facilitation services to impactful SMEs in Africa, so some questions still need exploring:

• What do successes and failures of investment facilitation to date tell us about how to align the incentives of BASPs, SMEs and investors — and how to allocate risk?
• What other mechanisms have been piloted for innovative investment facilitation for SMEs in Africa and globally?
• Can investment facilitation unlock opportunities for smaller and informal enterprises and, if so, how can that be incentivized?

Conclusion

Without fresh thinking, impact investment in Africa will continue to fall short of its transformative potential.

The fundamental innovation needed to increase the flow of impact-first investment capital in Africa is not on the supply side but on the demand side. Significant financial and social impact can be achieved when high-quality investment readiness support is available to local SMEs. We need to tackle the market failure that impedes investment facilitators from working with these SMEs to enable greater deal flow.

The proposed revolving facility for business advisory service providers is one way to unlock a flow of capital that could fund the growing universe of African social enterprises. By combining incentives for transaction success with built-in financial sustainability, it aligns all parties around the same goal: more capital for high-impact enterprises.

John Scicchitano is managing director and co-founder of Pangea Africa; Rob Mills is an executive director at Social Finance International.

Photo credit: Jacob Wackerhausen

India’s renewable energy transition started with the goal of reducing dependence on fossil-fuels and promoting carbon-neutral and clean alternatives. In the past decade, the country has seen tremendous growth in its renewable energy sector. The installed capacity of renewable energy has increased rapidly from ~36 GW in FY 2013-14 to ~274 GW in FY 2025-26. In this mix, solar power owns the largest share, with an installed capacity of ~150 GW as of FY 2025-26.

However, this expansion has mainly been led by large, ground-mounted solar projects, often located on agricultural land. While effective in scaling solar capacity, this model has also created an unintended structural disconnect between India’s energy and agriculture sectors. Productive agricultural land is frequently diverted exclusively towards energy generation for projects with projected lifetimes of 20-25 years, thereby limiting its use for cultivation and affecting livelihood opportunities for farmers.

Alongside this shift in land use, farmers’ participation in energy generation has remained limited. Agriculture remains one of the largest consumers of electricity in India, yet farmers have only played a minimal role as decentralised energy producers. In 2019, the Indian government launched the Pradhan Mantri Kisan Urja Suraksha evam Utthan Mahabhiyan (PM-KUSUM) scheme to address this gap by promoting decentralised solar capacity in the agriculture sector. It has three components: Component A supports decentralised, grid-connected solar plants owned by farmers or farmer collectives; component B focuses on standalone solar pumps; and component C addresses the feeder-level solarisation of grid-connected pumps.

Among these three, component A holds the most promise from an inclusive business model perspective. It enables farmers to sell surplus power under long-term power purchasing agreements and opens the door to stable income streams. Yet despite its strong conceptual design, component A has faced implementation challenges, including slower-than-expected uptake and a tendency for farmers to opt for land-use conversion, where their agricultural activity is discontinued in favour of solar generation.

These challenges highlight a deeper limitation in India’s current approach: Namely, its efforts to boost renewable energy use among farmers continue to separate energy expansion from agricultural livelihoods. This makes a compelling case for a different model, one that does not force a trade-off between the two.

Agriphotovoltaics (Agri-PV) offers exactly that possibility, by co-locating solar photovoltaic systems and agricultural production on the same parcel of land to reconcile energy generation with agricultural continuity. By elevating solar panels and optimising their spatial configurations, Agri-PV enables the cultivation of crops beneath or between panel arrays, facilitating dual land use.

However, in India, this idea is still at an early stage, and it continues to place insufficient emphasis on crop yield and farmers’ livelihoods. To realise its full potential, we argue that Agri-PV should be understood not merely as a renewable energy innovation, but as an inclusive business model with transformative potential for low-income farming communities across the country.

Agriphotovoltaics as a farmer-centric innovation

With the agriculture sector employing 46.1% of India’s workforce, it is critical to design Agri-PV as a farmer-centric solution, in which land becomes a dual-use asset rather than a competing one. At its core, the goal of this approach is simple: to allow solar panels to generate electricity while farming continues alongside (or underneath) them. In this model, solar power effectively becomes a highly remunerative “crop” in itself — one that provides predictable income to farmers, regardless of any crop failures or market fluctuations. Beyond income diversification, Agri-PV can also offer micro-climatic benefits. Partial shading can reduce water loss from both the soil and plants, regulate temperatures, and improve soil moisture conditions, potentially enhancing crop resilience.

However, the technology alone is not enough. What ultimately matters is who owns it, who finances it and how is it governed. When farmers retain land rights and participate directly in energy revenues, Agri-PV can act as an inclusive business model that augments their income substantially.

The Current Reality of Agri-PV in India

Currently in India, Agri-PV has three distinct operating models, each with different implications for the inclusion and equity of farmers.

Model 1: R&D-led demonstration projects which are typically installed by research institutions. They largely run-on grant funding, and play a key role in generating agronomic insights, particularly on crop performance under solar panels’ shade across different climatic zones. The main goal of this model is to create proof of concept rather than to directly promote rural livelihood.

Model 2: Developer-led models, which are operated by private developers who lease agricultural land from farmers for 20-25 years, then install Agri-PV systems and manage both the energy and agriculture production. The farmers receive fixed annual rental income, while the developers retain ownership of the Agri-PV system and gain revenue from crop and energy sales. This rental income is often higher than traditional crop income, but it represents only a fraction of the total value generated from energy and high-value agriculture production.

Model 3: Farmer-owned models under PM KUSUM’s component A, which enables farmers or farmer producer organisations (FPOs) to own the Agri-PV system directly. In this case, farmers can install the system on their land, sell electricity directly to the grid under long-term power purchasing agreements and continue cultivating under the panels, thereby retaining income from both sources.

The fundamental difference between these models is about who controls the Agri-PV assets and who captures the value they generate. As Agri-PV scales in India, the choice between these models will determine whether this innovation becomes a pathway for rural livelihoods or not.

Viable Farmer-Centric Business Models

To understand how more farmer-centric models can work into practice, we looked at two emerging examples from different parts of the country. Once such case is in Jaipur district in the state of Rajasthan in western India, and the other in Koraput district in the state of Odisha in eastern India.

1. Rajasthan’s Agri-PV Model

In Rajasthan, an existing ground-mounted solar PV plant was retrofitted into an Agri-PV system under the PM-KUSUM framework, supported by our organisation, Indian Council for Research on International Economic Relations (ICRIER). This involved increasing the level of the panels by installing mounting structures to a height of 3.5 metres above the ground to enable agricultural activity under them. Given that Agri-PV is more capital-intensive than a ground-mounted PV system, this transition required ICRIER to provide around 15% of the total setup costs of this Agri-PV pilot. Our analysis suggests that this ~15% of the capital cost is typically required for retrofitting existing ground-mounted PV systems. Through this approach, farmers can integrate energy revenues with crop income, thereby enhancing overall farm profitability.

For instance, when the farmer who participated in this pilot engaged in conventional agriculture only, he typically earned INR 41,000 per acre/year. When he installed a ground-mounted PV system, his income from energy generation grew to INR 386,501 per acre/year. But after the Agri-PV installation, his total cumulative returns grew to INR 454,253 per acre/year. Field evidence indicates that this pilot can generate 9-10 times higher income per acre compared to conventional farming, thereby significantly improving the overall financial productivity of the land through complementary income streams from solar and agriculture.

2. Odisha’s Agri-PV Model

In contrast, eastern India is still at a very early stage in its Agri-PV development, with no on-ground deployments or proven business models. Scaling in the region therefore needs a context-specific approach, given challenges such as low farmer awareness, fragmented landholdings that limit economies of scale, and the absence of established, bankable project examples to attract financing.

In Koraput, Odisha, a tribal community-led collective Agri-PV model anchored by a women-centred FPO aims to demonstrate one such pathway. Instead of individual ownership, where small and fragmented land parcels constrain project viability, this approach will aggregate land and resources across multiple farmers to enable scale, shared investment and improved access to infrastructure. This structure is important for securing grid connectivity, which is essential as the electricity generated from Agri-PV systems must be transmitted through the grid and sold or utilised. In this case, aggregation has enabled the development of a 1 MW Agri-PV pilot.

The FPO will also provide collective marketing and aggregation services for high-value crops, including ginger, turmeric, coffee and black pepper. As an anchor institution for this model, it will hold collective ownership and operational accountability for the Agri-PV asset, in contrast to individual farmer-owned models. Revenues generated are expected to be reinvested into business expansion activities and local development initiatives, including the creation of a village corpus fund to help finance community needs and strengthen livelihoods.

Barriers Blocking Scale in Agri-PV

While these emerging models highlight the potential of Agri-PV to strengthen farmer incomes and promote more inclusive outcomes, they also point to a set of challenges that need to be addressed for Agri-PV to scale up effectively.

The first key issue involves payment delays from electricity distribution companies, which can affect cash flows and undermine the confidence of farmers. Moreover, access to finance remains a major bottleneck, as elevated solar panel structures are 15-20% costlier than the conventional ground-mounted systems.

Land-use regulations present another challenge. In many states, regulatory ambiguity creates apprehension among farmers about losing their agricultural land status. This can have significant implications for them, such as reduced eligibility for agricultural subsidies, higher taxation and restrictions on future agricultural use. Additionally, regulatory fragmentation across energy, agriculture, and the government departments responsible for land records and taxation results in overlapping and often uncoordinated approvals, policies and administrative processes, adding to transaction costs.

Lastly, the absence of clear technical and regulatory standards to guide the design, installation and financial structuring of Agri-PV systems further constrains its ability to scale up.

The Way Forward

Addressing these barriers requires a shift towards a coordinated approach that promotes payment reliability and improved access to affordable finance at low interest rates. To that end, India’s policymakers and regulators need to develop new tariff structures and strengthen the financial support mechanisms for Agri-PV. For instance, the financial viability of these systems can be improved through differentiated feed-in-tariffs — where higher tariffs are offered for Agri-PV projects compared to ground-mounted solar projects, to account for their dual-use benefits — along with targeted capital subsidies under dedicated schemes. Evidence from early-stage implementations suggests that such measures can make Agri-PV projects more economically feasible. At the same time, promoting collective ownership through FPOs and cooperatives can further reduce transaction costs, improve access to finance and ensure a more equitable distribution of benefits. Clearly defined regulations that explicitly permit dual land use are critical to building farmer confidence and reducing policy uncertainty. Finally, investments in research and capacity building are essential to adapt Agri-PV systems to local agronomic conditions and improve crop outcomes.

We view Agri-PV as more than just a technological solution. With inclusive ownership and financing models, it has the potential to ease the trade-off between energy security and food security. By enabling simultaneous cultivation and energy generation on the same land, Agri-PV allows farmers to diversify their income without displacing their agricultural activities. For smallholder farmers, the question is not whether renewable energy will grow, but how it will grow and who it will ultimately benefit. If designed well, we believe Agri-PV can ensure that the renewable energy transition will advance both India’s climate goals and its rural livelihoods.

Disclosure: The authors work for Indian Council for Research on International Economic Relations and are involved in implementing the Agri-PV projects on the ground in Rajasthan and Odisha described in this article.

Laxmi Sharma holds a postgraduate degree in Water Science and Policy, and an undergraduate degree in Economics from Shiv Nadar University; Bidisha Banerjee is a Research Associate at Indian Council for Research on International Economic Relations (ICRIER); Subhodeep Basu is a Research Fellow at ICRIER; Ashok Gulati is currently Distinguished Professor at ICRIER.

Photo credit: Jenson

A major reason for this uptake is the growing body of evidence linking diversity to stronger financial performance: 2023 McKinsey research shows that companies in the top quartile for board-gender diversity are 27% more likely to achieve above-average profitability than those in the bottom quartile, while BCG found that organizations with above-average management diversity generate 19% more innovation revenue and stronger Earnings Before Interest and Taxes (EBIT) margins. (EBIT is a measure of a company’s operating profitability, calculated as total revenue minus operating expenses.)

As these numbers show, gender diversity isn’t merely a matter of fairness; it can be a strategic lever for innovation, improved risk management and better returns. However, there is a paradox: While the overall gender-lens thesis gains traction, actual representation of women-led businesses remains stubbornly low within venture capital and private investment portfolios.

Blind spots lead to bottlenecks

Despite many commitments, pledges and gender-lens investing criteria, many investors continue to struggle with the actual representation of women-led ventures in their portfolios. In 2024, women-only founding teams captured just 2.3% of global VC funding, compared with 83.6% for men-only. Even when funded, women-led startups raised checks that were less than half the size of those raised by men on average — US $5.2 million vs. $11.7 million.

So why does this imbalance persist, even as gender-lens investing moves further toward the mainstream? At LeFil Consulting, through our extensive work with ventures, investors and entrepreneurship support organizations, we’ve found that the heart of the problem isn’t a lack of intent but a lack of measurement. Specifically, many investors do not perform a systematic, data-driven diagnosis of their pipeline across the different stages of the investment funnel. Without tracking gender composition and conversion rates at each stage, investors lack visibility into where imbalances arise and instead rely on assumptions rather than evidence when attempting to address them.

Gender bias is built into every stage of the investment funnel

When applying a diagnostic lens, investors often discover structural and behavioral biases woven into each stage of the investment funnel, acting as a filter that reduces the representation of women-led investees. Though they all contribute to the same end result, bottlenecks in each stage need to be addressed differently.

The very first biases appear during sourcing and pipeline identification. Investors often rely on personal networks, which remain predominantly male, resulting in early-stage deal flow that replicates male-dominated patterns. Meanwhile, women-focused accelerators, associations and referrals remain underutilized, leaving investable, women-led companies off the radar of many funds.

Even when a deal enters the funnel, pre-selection often favors familiar archetypes (e.g., repeat founders) in sectors with predominantly male representation, and profiles typically associated with male-led startups. At this stage, many women-led ventures may be screened out, as they do not fit well into the “traditional mold,” before formal diligence begins.

In the due diligence stage, global behavioral research reveals systematic biases: For instance, women founders are more likely to receive prevention-focused questions (e.g., “how do you plan to retain your current customers?”) while men are more likely to receive promotion-focused questions (e.g., “how do you plan to acquire new customers?”). This influences investors’ perception of growth potential compared to the risk level of a given candidate.

At the decision stage, bodies like investment committees remain heavily male-dominated. For example, globally, women comprise around 22% of investment professionals and only around 10-15% of senior decision-makers. A lack of gender diversity increases the likelihood that decision makers will favor founders with familiar backgrounds and leadership styles, and that they’ll base their decisions on subjective “cultural fit” assessments and a constrained view of what constitutes a strong investment, all of which can disadvantage women-led firms.

Even when an investment is made, the deal terms often reflect gender disparities: Women-led firms typically receive smaller funding rounds and lower valuations. These differences both stem from and reinforce perceptions of higher risk and limited growth potential, leading to a vicious cycle over time.

These findings highlight that biases emerge at multiple stages of the investment funnel. Consequently, improving gender diversity requires a holistic understanding of how these biases affect outcomes. Treating gender as a checkbox, without such a diagnosis, risks failing to address the underlying drivers of underrepresentation.

Solutions depend on identifying the bottleneck

Only once a bottleneck is identified can targeted action follow. But a “one-size-fits-all” fix won’t work. The right intervention depends on the specific stage at which the funnel imbalance exists. Here are a few practical steps and recommendations on how investors can correct their course at each stage of the investing process.

Pipeline identification:

• Signal inclusion in communication materials: Revisit the language, imagery and values conveyed in your communication (e.g., your website, pitch decks and outreach documents). Ensure that you explicitly welcome women‐founders and that your calls for applications and investor–founder communications use accessible, collaborative language (avoiding overly technical or skewed framing that may deter non-traditional entrants).
• Diversify sourcing channels: Expand beyond traditional male-dominated referral networks. Partner with accelerators, incubators or ecosystem organizations known for strong representation of women founders.
• Track which channel works best, for what type of applicants: Log the gender breakdown of sourced deals by channel, and by both founder gender and team composition, and monitor how they convert to pre-selection.

Pipeline pre-selection:

• Set transparent criteria: Define evidence-based, standardized pre-selection criteria that reduce subjective judgments and make evaluation more consistent.
• Diversify reviewer teams: Aim for gender parity (or near parity) in review teams; train reviewers on unconscious bias; pilot anonymized or masked applications where feasible.
• Simplify application burdens: Review whether any requirements create undue barriers for smaller or women-led companies; reduce documentation where possible.

Due diligence:

• Revisit thresholds and metrics: Ask whether your typical metrics and benchmarks (such as scale, historic traction or sector) disadvantage women-led firms; consider alternative pathways, smaller ticket thresholds or adjacent metrics.
• Standardize information requests: Provide templates or guided forms for founders to submit materials, with clear guidance on expectations and examples of strong submissions; consider offering optional pre-submission feedback.
• Train diligence teams on framing: Educate teams about prevention- vs. promotion-focused questioning and ensure they balance both types of inquiry; review due diligence reporting for gendered language or framing.
• Track conversion by gender: At the end of diligence, record how many women-led deals were presented versus how many advanced to the investment committee for decision, and identify the “drop-off” rate and key reasons for it.

Investee selection:

• Apply consistent scoring frameworks: Develop and use standardized scoring tools that integrate both financial/operational metrics and softer factors — e.g., values, team management and diversity — ensuring all deals are scored on the same basis.
• Revisit composition of investment committees: Increase gender diversity on the committee; provide unconscious-bias training; rotate membership to avoid homogeneity of perspective.
• Audit outcomes: Every quarter, track deal conversion rates, average deal sizes and other support provided by founder-gender; use these metrics to identify systemic skews and adjust pipeline practices accordingly.
• Set visible targets: Instead of vague commitments, set measurable gender-balance targets at the selection stage (e.g., “X% of our new portfolio companies will be women-led or gender-diverse teams”) and publicly report progress.

Deal structuring:

• Engage founders in designing the terms of their deals: Host “terms-design” focus groups with women-led ventures to identify structuring or contractual elements that act as deterrents or constraints.
• Simplify documentation: Work with legal counsel to streamline term sheets and contracts, clarify language, remove onerous clauses and make the overall process more accessible for founders without formal legal support.
• Tailor structures where needed: Consider smaller ticket sizes, revenue-based repayment or milestone-linked tranches for women-led firms; integrate gender-inclusive targets (e.g., women in senior leadership, gender-segmented customer metrics) into performance or follow-on investment triggers.
• Track financial and non-financial support provided: Monitor whether women-led portfolio companies receive equivalent funding, access to networks, mentorship and follow-on deals; these are often overlooked and can make a material difference in outcomes.

When investors embed a gender-sensitive lens into the pipeline and selection processes, rather than treating gender as a compliance add-on, they can unlock both fairness and performance. Measurement is the gateway: By tracking gender-disaggregated data across each pipeline funnel stage, investors can transform intention into action, unseen bias into visible bottlenecks and lost opportunities into tangible value.

In the end, gender-sensitive investing isn’t just about investing “in women.” It is about investing smarter and in better portfolios by understanding where the pipeline funnel breaks — and designing processes that deliver equitable access and competitive returns.

Michal Januszewski is a Senior Consultant at LeFil Consulting, a boutique consultancy supporting social enterprises in emerging markets.

Photo credit: Jacob Wackerhausen

We interviewed a number of these entrepreneurs and company representatives, asking each of them three questions:

• What are the main challenges you’re facing in running your business?
• What kind of support would help you overcome these challenges?
• What’s one thing you wish funders understood about your business needs?

Their responses reveal some of the innovative approaches and key issues that are emerging in Africa’s vibrant ecosystem of small and medium-sized enterprises. We’ve embedded these video interviews below.

Asnath Gateri at AceleAfrica

Wanja Nyaga at Chanay Agriprocessors

Wanja Nyaga, Founder of Chanay Agriprocessors Limited, shares her experiences pursuing Chanay’s mission to reduce post-harvest losses in agriculture by processing high-quality jams, chutneys and sauces from locally grown produce.

Edgar Edmund Tarimo at Green Venture Tanzania

Marksteve Wangui at Libera Empire

Marksteve Wangui, Director of Partnerships and COO at Libera Empire, discusses the company’s mission of providing passengers in Kenya with reliable, comfortable transport, while empowering bus owners through fleet management and revenue sharing.

Barbra Gaitano at ZanaAfrica

Barbra Gaitano at ZanaAfrica discusses the company’s work equipping adolescent girls in Kenya with menstrual products and other tools they need to safely navigate puberty and unlock their full potential.

James Militzer is the managing editor of NextBillion.