Like “Social Enterprise”, the “Missing Middle” has become one of those broad terms within social finance, taking on multiple meanings depending on the context its used in. What does the Missing Middle mean, and why does it matter as social finance grows worldwide?
A recent Monitor Institute report, in collaboration with Acumen Fund, identifies a “Pioneer Gap”: a deficiency of funding available at the higher risk, earlier stages of venture development, as compared to later stage ventures with proven models and markets. This article suggests that risk tolerant philanthropic funding will be key to bridging this gap.
Over the last 18 months, we have been piloting a model we call “Proving Capital” at the Catalyst Initiative, funding high potential ventures in East Africa to test and validate their models, strengthen operations, and connect with impact investors. To date we’ve described this as “Pilot to Proof of Concept” funding, and we couldn’t agree more with the analysis put forward by Monitor.
If you’re trying to launch your social venture, you’re probably well aware that it can be tough to find “proving capital” – funding to get you from pilot to proof of concept.
We started Global Catalyst Initiative to help fill this gap. We work with early-stage social ventures to help them get from pilot to proof of concept through funding and support. This January, we finished our second round of funding.
We’re always learning, and after our second round, we noticed some trends that put successful applicants over the top. Here are 5 lessons that help guide our funding process that might be helpful for other early-stage social ventures looking for funding.