Small and medium enterprises are vital to economic growth and job creation in South Africa. Despite having over 3.2 million micro, small and medium enterprises, employing an estimated 13.4 million people and contributing 40% of national GDP, we still have one of the highest SME failure rates in the world, as high as 70%-80%. Changing this narrative by providing them with the right support structures is critical.
Author: Noluvo Nela, partner and fund head at Edge Growth Ventures
The persistent ‘missing middle’ funding gap, where businesses are often considered too large for grant funding, yet too risky for traditional commercial finance, remains an ongoing issue. What happens to these companies is that they cannot access finance to enable them to grow, with many having to rely on risky, unsuitable modes of capital to get by, which in many cases just exacerbates their risk of failure. As of the 2025 financial year, 60% of our deployed capital at Edge Growth has fallen within this ‘missing middle’ category.
At Edge Growth, we have learnt that integrated solutions like this create long-term, consistent impact, rather than short-term financial relief. While funding is essential to closing this gap, combining financial support with skills development, market access and strategic partnerships can be far more effective in enabling SMEs to scale sustainably.
But what does this look like in practice, beyond the theory, and how does it translate into tangible, real-world outcomes?
One example is Edge Growth’s Ignite Fund, which combines investor capital with programmatic support and mentorship for early-stage SMEs in under-served areas such as mining communities. It is set up as a multi-investor fund supported by partnerships with organisations such as RBH, Gold Fields and Seriti. The Ignite Fund, with R161m under management, has already successfully deployed into 29 SMEs.
Black-owned civil infrastructure and engineering company, Lesedi Ko Pele Trading, received funding through this fund in 2023 which allowed it to transition from a Closed Corporation to a Private Company and expand its operations. Funding meant that essential equipment could be purchased, and dedicated post investment support provided mentorship, monthly reviews and structured oversight, assisting them to strengthen governance, sharpen compliance and be more successful at marketing.
The Vumela Enterprise Development Fund, established in 2010 between FNB Business Banking and Edge Growth, also provides innovative finance to black-owned ‘missing-middle’ businesses.
With an accelerate loan of R800,000 through this fund, Monabo Hygiene Services, a 100% black woman-owned cleaning provider and FNB supplier, is another example that demonstrate the impact of collaborative programmes. Besides the capital, The FNB MasterUp programme helped refine the company’s operating model and strengthen business sustainability. This has resulted in Monabo delivering on a major contract at a leading university and expand their job creation drive.
The Edge Growth Investment Readiness Programme is another example of an integrated support model that goes beyond funding and directly tackles the core barriers that define the ‘missing middle’. The programme combines skills development and business strengthening support, including business coaching, strategic planning, financial management support, compliance readiness, and investor-facing profile development, with preparation for actual funding engagement.
Through a diagnostic assessment, Investment Readiness Programme participant Baahi Ba Thabile, a 100% black-owned construction company, was identified as having critical gaps in management accounts, financial statements, compliance and the lack of a clear digital presence.
Addressing these gaps resulted in Baahi Ba Thabile scaling from relative inactivity in 2023 to securing two major contracts in 2025, strengthening governance and positioning the business for sustained growth and future funding opportunities.
Another practical response to the ‘missing middle’ challenge, but with a specific focus and scope, is the Asisa ESD Programme, with Edge Growth as the implementing and investment management partner. This programme provided critical support in the form of business coaching, strategic planning, profile development and funding readiness to South African advisory firm, Imijelo Consulting. This resulted in the company securing a R2.6m interest-free loan, which positioned the business perfectly to expand strategically and explore new markets.
There are so many more examples, both within the Edge Growth ecosystem and beyond, where funding on its own has been shown to be insufficient. Real, sustainable growth happens when capital is combined with capability-building and stronger market connections. There is no doubt that bringing together investment readiness, developmental support and finance can unlock the opportunities SMEs need.
Broadening this impact will require greater collaboration and commitment from additional partners and stakeholders across the investment, corporate, public sector and enterprise development ecosystem. At Edge Growth, we remain open to engaging with like-minded partners to explore opportunities for meaningful collaboration and shared impact.
Edge Growth is a leading SME development specialist and venture fund manager, specialising in developing small businesses and creating jobs and real transformation by connecting corporates and entrepreneurs, growing SMEs by addressing their key constraints: access to finance, markets and skills. Our offering consists of three services areas, designed to achieve maximum impact:
- ESD Strategy for corporates and building SMEs in their value chain
- Investing in and growing SMEs through fund management
- Scaling businesses to full potential through accelerator programmes
Go to www.edgegrowth.com for more information.
