Why raising $50,000 may be harder than $10 million

This article is based on a conversation from Voices & Visions, a podcast produced through a partnership between Tutto Passa Agency and TechCabal, which explores the people and ideas shaping Africa’s innovation economy.

One of the strangest realities of African business is that finding someone to invest $10 million can sometimes be easier than finding someone willing to write a cheque for $50,000. This is according to Francis Nasionba, founder of Nairobi-based investment advisory firm Raising Capital. 

It sounds counterintuitive because smaller investments should, in theory, carry less risk. Small African companies are seeking modest capital to buy another production line, open a new branch, hire five more people, or digitise operations. They are not looking for $10 million, but may be seeking $100,000. 

Paradoxically, Nasionba argues, that may be the hardest cheque to raise in African business today.

“The value of death in fundraising in Africa is anyone raising between a million dollars and $3 million,” says Nasionba in a recorded conversation on Voices & Visions, a podcast backed by Tutto Passa Agency and TechCabal.

“If you’re raising below $50,000, there are many different sources of capital—grants, family, friends, banks. But once you start going above that, especially above half a million dollars, it shrinks significantly.”

The contradiction exposes a deeper flaw in how capital is allocated across the continent. Africa has become successful at attracting global investment capital. Venture funds, private equity firms, development finance institutions, and impact investors oversee billions of dollars earmarked for African businesses. 

Institutional investors

But those pools of capital have largely evolved to fund venture-scale opportunities or projects large…