Africa’s Blue Economy already generates close to $300 billion a year and supports nearly 50 million jobs, with African Union projections putting that figure at $405 billion and 57 million jobs by 2030. The sector is real, priced, and growing.
Yet most ocean-impact startups that make it through an accelerator, prove a working model and start generating revenue still hit a wall the moment they try to raise capital to scale.
That wall is the missing middle, and closing it for good will take more than any single type of capital provider, or any single instrument, acting alone.
Where Startups Get Stuck
The instinct is to explain the missing middle as a risk problem: these are risky businesses, so of course capital is hard to find.
That’s rarely the full story. Two things are usually happening at once.
First, the capital on offer doesn’t match the startup’s actual risk profile: a bank’s collateral requirements or a fund’s growth thesis simply weren’t built for the shape this business is in. Second, there’s a real deficit of proof: the startup hasn’t yet generated the track record, audited numbers, or repayment history that would let a conventional lender or investor underwrite it.
The problem is usually not that the company is too risky. It is that the capital structure is wrong for the risk profile, and that there is a deficit of proof.
The missing middle, then, isn’t a fixed price range. It’s the gap between a startup graduating out of grants and acceleration, and a startup becoming investable enough for conventional commercial capital to say yes.
Risk appetite is what puts capital providers on either side of that gap. It sets three things: what evidence they require, which instruments they will use, and what return they need in exchange.
Across sub-Saharan Africa, the broader SME financing gap sits at an estimated $331 billion, based on IFC, AfDB and World Bank data, and the mechanism is identical at startup scale: a business that has outgrown grants and friends-and-family money before it has built the proof a bank or fund will lend or invest against.
Why No Capital Source Can Close It Alone
A bank asks for collateral an early-stage aquaculture or ocean-tech startup rarely has, and it prices in currency risk on top. Several African currencies have seen double-digit depreciation against the dollar in the past two years.
A venture fund asks a different question: can this become a large, high-growth company within five to seven years? Most Blue Economy startups aren’t shaped to answer yes to that question at the point they need their first real check, even when their business model is sound.
A DFI or foundation can move capital that neither of those two will touch, but grant and concessional funding alone was never designed to reach every startup at the volume and speed a growing pipeline needs.
What Blended Finance Brings To The Table
Blended finance is the use of catalytic capital from public or philanthropic sources to draw private-sector investment into deals it wouldn’t otherwise fund on its own. It isn’t one instrument. It spans concessional grants, guarantees, matching mechanisms, revenue-based and subordinated debt structures, and technical assistance layered alongside capital, each suited to a different piece of the risk a startup carries at a different stage of its growth.
This isn’t theoretical for the Blue Economy.
- The Blue Economy for Resilient Africa Program, launched at COP27, mobilised $13.5 million for blue carbon pilot projects in Ghana’s mangroves by combining public and concessional sources.
- Sanlam’s Blue Frontier Fund shows the same logic in practice. The team started with a straightforward private debt product, then found that strong Blue Economy businesses were still too early to service pure debt. So they built a structure pairing grant funding with private debt, piloted it inside an existing fund, and eventually let it stand on its own.
Asset-financing specialists like Keyo Ventures offer a third instrument. They finance the hardware and infrastructure a business owns, rather than the business itself. That suits capital-intensive, asset-backed ventures, which neither a standard loan nor an equity cheque fits well.
What It Takes to Bridge the Gap for Startups Specifically
No single one of those instruments closes the missing middle by itself. What closes it is a capital stack: several forms of capital, each priced for the specific risk it’s suited to absorb, deliberately sequenced and connected rather than left standing alone or competing for the same investors.
- Concessional grants and guarantees absorb the earliest risk no one else will touch.
- Revenue-based or subordinated structures pick up once a startup has some proof but not yet a bankable track record.
- Technical assistance runs alongside all of it, building the evidence base a startup needs to graduate to the next layer.
- Commercial equity and growth capital can then enter once sufficient risk has been addressed and the company has generated enough evidence to make the investment proposition compelling.
OceanHub Africa’s Blue Loop Facility sits at the earliest layer of that stack: interest-free loans of up to $30,000 co-funded by the Coca-Cola Foundation and the DOEN Foundation, structured so a startup repays on success rather than treating the capital as a subsidy. It’s built to absorb the risk a bank or fund won’t take at this stage.
The Blue Loop Financing Facility is one layer, not the whole answer. Closing the missing middle across a full pipeline means connecting instruments like it to the catalytic and investment capital around it. Each layer answers a different financing need, and carries the company to the next one.
Where This Leaves Investors
The missing middle isn’t a reason to wait for a startup to de-risk itself, and it isn’t solved by any one instrument, however well designed. It’s closed by a stack, deliberately sequenced and connected. The commercial investors, DFIs, foundations, and corporates working out where they fit in that stack, rather than trying to close the gap alone, will be the ones sourcing the strongest Blue Economy deal flow before the rest of the market catches up.
The Blue Loop Facility is OceanHub Africa’s working answer at the earliest stage, carrying a clear lesson alongside it: capital, financial readiness, and investor readiness need to evolve together, not in isolation.
The Catalytic Bridge Facility is the next layer up. It isn’t another standalone fund. It’s the catalytic layer of a broader Blue Capital Stack, connecting African ocean entrepreneurs to the capital they need at each stage of their journey. It uses a limited amount of catalytic capital to help ventures cross specific financing thresholds, mobilise additional capital and generate the evidence required to build a scalable financing model for Africa’s Blue Economy.
We’re looking for catalytic partners to help us test whether a small amount of the right capital can unlock private investment at scale across Africa’s Blue Economy.
If that’s a question you want to help us answer, let’s talk. Drop a message to our Investment team here.
