WEBINAR #6 Peer exchange on Investment Readiness for Early-Stage Businesses

Context

Many early-stage businesses struggle to access financing not only because funding is scarce, but because they are often unprepared to meet the requirements and expectations of investors and lenders. While entrepreneurs may have promising ideas, they frequently lack the financial records, business systems, market validation, growth strategies, and investment materials needed to demonstrate readiness for external capital.

Entrepreneur Support Organizations (ESOs) play a critical role in helping entrepreneurs bridge this gap. By strengthening investment readiness, ESOs can increase entrepreneurs' chances of successfully accessing grants, loans, angel investment, and other forms of financing.

The IYBA-SEED Peer exchange on Investment Readiness for Early-Stage Businesses: Preparing Entrepreneurs to Access Finance brought together Entrepreneur Support Organizations (ESOs) and Financial Support Organizations (FSOs) to explore this challenge from the perspective of finance providers. The session aimed to strengthen ESOs' capacity to prepare entrepreneurs for financing opportunities by examining how different providers assess business readiness, the common gaps that prevent promising businesses from accessing capital, and the practical support ESOs can provide.

The exchange featured Alex Kiragu Karimi of Sidian Bank, Kenya, who provided the perspective of a commercial lender, and Egla Ntumba of MS Fit Ventures, South Africa, who shared an investor perspective. Their presentations were followed by a facilitated discussion and breakout groups in which participants reflected on the challenges they see among the entrepreneurs they support.

Key Themes and Takeaways 

The peer exchange explored what makes early-stage businesses genuinely ready to access finance, drawing on the perspectives of a commercial bank, an investor, and participating ESOs. While the financing models and assessment criteria discussed differed, several cross-cutting themes emerged around how entrepreneurs can be better prepared, where readiness gaps persist, and how ESOs and financial institutions can work together more effectively.

Finance Readiness Goes Beyond Access to Capital

The discussion reinforced that access to finance is not only about whether capital is available. Entrepreneurs also need to demonstrate that their businesses are capable of using that capital effectively. From a banking perspective, this includes reliable financial records, demonstrated cash flow and repayment capacity, a viable business model, evidence of market demand, and disciplined business operations. From an investor perspective, readiness also depends on whether the business is seeking the right type of capital for its stage and needs. 

Matching the Business to the Right Type of Finance

A recurring issue was that entrepreneurs do not always have a clear understanding of what kind of financing is most appropriate for their business. Debt, equity, and grants each come with different expectations and assessment criteria. Entrepreneurs may therefore approach a financier with a strong business idea but an unsuitable financing request, unrealistic projections, or limited understanding of what the capital provider will assess. Helping entrepreneurs identify the right financing instrument is an important part of finance-readiness support. 

Strong Business Fundamentals Matter More Than a Good Pitch

Participants highlighted that many entrepreneurs struggle to translate a promising opportunity into a credible business case. Weak business planning, poor financial records, limited documentation, and a lack of long-term financial planning can make it difficult for lenders or investors to assess the business. The discussion suggested that finance readiness should therefore focus first on strengthening the underlying business, including its records, systems, planning, market evidence, and governance, rather than concentrating only on pitch decks or applications. 

Finance Readiness Should Start Before a Financing Opportunity Emerges

One of the strongest themes from the exchange was the need to move away from “just-in-time” preparation. Sidian Bank illustrated a six-month readiness journey that begins with cleaning financial records and separating personal and business finances, followed by building a banking relationship, preparing realistic projections, and developing a credible business case. Participants similarly emphasized that ESOs should begin preparing entrepreneurs earlier and track readiness over time rather than waiting for a specific financing opportunity. 

Financial Literacy Needs to Be Embedded in ESO Support

Financial literacy emerged as a core area where entrepreneurs continue to need support, including understanding financial products, credit assessment, borrowing costs, cash-flow management, and the implications of compound interest. Participants emphasized, however, that financial literacy should not begin only once individuals become entrepreneurs or enter ESO programmes. 

There is a need to integrate practical financial education more systematically into school and education curricula so that these skills are developed across society from an earlier stage. This points to an opportunity for ESOs to build stronger linkages with public institutions and education actors to advocate for and contribute to broader financial literacy initiatives. Within their own programmes, ESOs can complement these efforts through longer-term mentoring and individualized follow-up that helps entrepreneurs apply financial concepts to the realities of their businesses.

Practical Preparation Can Strengthen Engagement with Investors and Lenders

The speakers also identified concrete ways ESOs can help entrepreneurs prepare for financing conversations. These include supporting founders to compile a data room, practise pitching and responding to questions, refine pitch decks, develop realistic cash-flow projections, and use tools such as investor-engagement CRMs to track relationships and follow-up. These practical steps can help entrepreneurs arrive at financing conversations better organized and better able to respond to due diligence requirements.

Structural Barriers Can Limit Readiness Even When the Business Has Potential

Participants stressed that not all financing barriers can be solved through capacity building. The challenge is not only the availability of finance, but also how financing is distributed and who is able to access it. Entrepreneurs may face collateral requirements, high costs for licences and certifications, limited access to digital infrastructure, language and literacy barriers, and difficulties navigating formal registration processes. These barriers can disproportionately affect rural and informal entrepreneurs, while youth entrepreneurs may lack the assets required as security for conventional loans.

 As a result, available financing may remain concentrated among businesses and entrepreneurs that are already better positioned to meet formal financing requirements. These challenges point to the limits of placing responsibility for “readiness” solely on the entrepreneur and highlight the need to consider whether financing mechanisms and eligibility requirements enable equitable access across different types of entrepreneurs.

Digital Literacy Is Increasingly Part of Finance Readiness

As registration, certification, record-keeping, and financial services increasingly move online, digital capability is becoming closely connected to financial readiness. Participants noted that entrepreneurs may have access to digital hubs or tools but still lack the skills or confidence to use them effectively. This suggests that ESOs may need to integrate digital literacy alongside financial literacy and business development support. 

Stronger ESO-Financier Relationships Can Improve Preparation and Referrals

Participants called for more systematic and two-way collaboration between ESOs and financial institutions. ESOs need clearer information on financing criteria, credit assessment, and the reasons applications are rejected so that they can better align their support with what financiers actually require. At the same time, ESOs can play an important role in identifying and building relationships with the types of financiers that are best suited to the profiles, stages, sectors, and financing needs of the entrepreneurs they support.

 Participants also highlighted opportunities for ESOs and financiers to co-design investment-readiness processes and programmes, allowing the perspectives and constraints of both entrepreneurs and finance providers to inform how support is structured. This collaboration should also help financiers better understand the realities entrepreneurs face and explore more appropriate financing approaches, including placing greater emphasis on the underlying value and potential of a business rather than collateral alone and providing more patient forms of capital. Building these relationships before entrepreneurs urgently need finance can enable earlier feedback, stronger referrals, and better alignment between businesses and appropriate financing opportunities.

Recommendations for ESOs

Help entrepreneurs identify the right type of capital

Support entrepreneurs to determine whether equity, debt, grants, or a combination of financing instruments is appropriate for their business model, stage of growth, and financing needs. Different forms of capital serve different purposes and come with different expectations, making it important to avoid a mismatch between the business and the financing being pursued. 

Tailor finance-readiness support to the type of capital being sought

Preparation should reflect what different capital providers assess. Businesses seeking equity may need to demonstrate a strong team, product-market fit and market potential, while businesses seeking debt need to demonstrate predictable revenues, stable cash flows, liquidity and, where required, collateral. Grant financing may require stronger impact measurement, governance and reporting systems.

Help entrepreneurs develop and maintain an investor-ready data room

Support founders to organize the financial, legal, governance and business documentation that investors may request. Having this information readily available can make the due diligence process more efficient and demonstrate stronger business preparedness. 

Strengthen entrepreneurs’ ability to communicate their business case

Provide opportunities for entrepreneurs to practise pitching and responding to questions, while helping them develop clear and concise pitch decks. Encourage entrepreneurs to “fall in love with the problem” by developing a deep understanding of the challenge they are addressing and being able to clearly articulate its scale, relevance, and implications for their target customers. This can help entrepreneurs build a stronger business case that demonstrates not only what their solution is, but why it is needed and the value it can create.

Promote more user-centred business development

Support entrepreneurs to use design thinking and other user-centred approaches to better understand the problems and needs of their target customers, test assumptions, and adapt their products or services to strengthen product-market fit. ESOs can help entrepreneurs engage potential users throughout the development process rather than designing solutions based primarily on their own assumptions. At the same time, ESOs and relevant ecosystem actors should explore ways to simplify documentation and registration processes and help entrepreneurs navigate compliance requirements, while maintaining the standards needed for formalization and access to finance.

Support realistic financial projections and valuations 

Help entrepreneurs test the assumptions behind their financial projections and valuations before approaching potential financiers. Unrealistic valuations and inaccurate projections can undermine the credibility of an otherwise promising business.

Help entrepreneurs manage investor engagement systematically

Encourage founders to treat fundraising as an ongoing process rather than a single pitch or application. An investor-engagement CRM can help entrepreneurs identify potential investors, track conversations and follow-up, and manage relationships throughout the fundraising process.

Prepare entrepreneurs for the full financing process, not only the pitch

Finance-readiness support should extend beyond presentation skills to preparing entrepreneurs for due diligence, legal documentation and the broader fundraising process. Entrepreneurs should be equipped to review terms carefully, ask appropriate questions and make informed financing decisions.
 

Download the presentation of this peer exchange