FMO, the Dutch bank focused on entrepreneurial development, has launched a $4 million African fund targeting early-stage businesses in Ghana, Nigeria, and Tanzania, signaling a novel approach to impact investment in sub-Saharan Africa.
The Africa Ecosystem Catalysts Facility (AECF), a partnership between FMO, Village Capital, a US-based impact investment firm, and the Netherlands Enterprise Agency (RVO), aims to address the persistent funding gap hindering the growth of nascent enterprises in the region. Unlike traditional investment models, the AECF will channel capital through locally-led Entrepreneur Support Organizations (ESOs), embedding investment decisions within existing regional expertise.
“This collaboration marks a strategic shift for both RVO and FMO,” explained Kars Gerrits, Coordinator of the Orange Corners Innovation Fund at RVO. “By combining our resources, we are tackling a critical bottleneck in these African ecosystems — the limited access to early-stage capital. Our commitment remains firmly rooted in fostering enterprise growth, particularly amongst youth and women entrepreneurs.”
Early-stage companies in these key African markets are increasingly recognised as vital engines for job creation and innovation, addressing challenges ranging from financial inclusion to climate resilience. However, these ventures often struggle to attract investment due to perceived higher risks, limited deal flow visibility for international investors, and structural market barriers.
Locally-led ESOs, which provide crucial mentorship, networking, and capacity building to startups, are acutely aware of these challenges and possess deep understanding of the local entrepreneurial landscape. Despite their intimate knowledge and established networks, ESOs are frequently underutilized in the formal investment process. The AECF seeks to rectify this by placing ESOs at the heart of deal sourcing, due diligence, and investment recommendations.
“We’ve witnessed firsthand for nearly a decade how often investors overlook the invaluable expertise of locally-led ESOs,” stated Susan Nakami, Africa Region Lead at Village Capital. “This facility is not simply about deploying capital; it’s about empowering local ecosystems and forging a more sustainable pathway for high-potential companies to drive genuine economic progress.”
Village Capital will partner with up to two ESOs in each target country, leveraging their insights to identify promising ventures operating in sectors deemed crucial for regional development. The facility will provide a staged capital pathway, supporting companies as they progress from initial revenue generation towards achieving product-market fit and ultimately, scalable growth. This phased approach is designed to mitigate risk and provide tailored support at each stage of the entrepreneurial journey.
FMO, traditionally focused on larger-scale investments, views this partnership as integral to its broader 2030 strategy of market creation. “Our goal is to transform early-stage companies into robust, investment-ready entities,” commented Claire Nyambori, Technical Assistance Officer at FMO. “By working directly with ESOs and businesses, we aim to create meaningful market growth and bolster businesses that are fundamental to the long-term economic trajectory of the region.”
The AECF represents a departure from conventional development finance approaches that often rely on top-down investment strategies. By entrusting local actors with key investment functions, the initiative aims to build stronger, more resilient entrepreneurial ecosystems and ensure capital is deployed more effectively to ventures with the greatest potential for impactful and sustainable growth.
The facility will also serve as a pilot project, carefully monitoring the impact of this capital pathway approach on investee companies and the catalytic role of ESOs. The ultimate ambition is to demonstrate a model that can attract larger funding rounds and solidify the position of ESOs as indispensable players in the African investment landscape.
While the $4 million commitment remains relatively modest in the context of overall development finance flows to Africa, the Dutch bank ’s African fund, in partnership with AECF, introduces an innovative methodology focused on local empowerment. This approach could signal a significant shift in how international capital is deployed to support the continent’s burgeoning startup ecosystem. The success of this initiative will be closely watched by development finance institutions and impact investors seeking more effective and locally rooted strategies for fostering entrepreneurial growth in emerging markets.