The report draws from analysis of over 135 SME funds and interviews with more than 35 stakeholders in the SME fund ecosystem to share insights on fund performance, models, and structures across Africa, the current fundraising environment for SME funds, and more.

Key Takeaways: 

1. **The SME fund ecosystem has expanded and matured over the past decade.**  
It has become more geographically diverse, spans multiple asset classes, and is attracting an increasing number of skilled professionals—marking a significant shift from 15 years ago.  

2. **Launching and managing an SME fund comes with structural challenges.**  
SME fund managers face difficulties in delivering risk-adjusted, market-rate returns to LPs due to high transaction costs, limited liquidity, and exposure to country-specific or macroeconomic risks.  

3. **Fund managers are addressing these challenges, leading to improved returns.**  
SME funds launched since 2015 have, on average, delivered stronger gross returns compared to earlier generations of funds.  

4. **Despite a tough fundraising environment, fund managers are finding new ways to attract capital.**  
Blended finance models have become a key mechanism for LPs to invest in high-risk sectors (such as agriculture), emerging industries (such as climate adaptation), and frontier markets.  

5. **Further research is needed on the performance of African SME investments.**  
Advancing knowledge in this space will require greater collaboration within the sector to generate more comprehensive data and insights.  

How can African SME funds mobilise more capital?

Argidius Foundation; Investisseurs & Partenaires (I&P)