Trudging with Zebras through the Valley of Death


If there’s one message that we consistently hear from social entrepreneurs, it’s that there’s a very real shortage of the right kind of capital investment adapted to the needs of their enterprises.

Manka Angwafo is one such entrepreneur. She founded Grassland Cameroon in 2016 to help improve the livelihoods of smallholder farmers like her grandmother. We first met Manka 4 years ago when she joined one of our accelerators, and we’ve been partnering with her ever since.

Manka is an example of many social entrepreneurs we work with who struggle to access the billions of dollars purported to be dedicated to impact investing. A huge funding gap exists for these enterprises. And this gap is even more deeply felt by Black- and women-led businesses and those operating in very challenging frontier markets like Cameroon.

That said, ADAP Capital put a convertible note into Grassland, proving that Manka can attract small investments and pass due diligence but then can’t attract the next stage. She’s very quickly back on the fundraising hamster wheel, just like most of the entrepreneurs we work with.

The reality is that these enterprises are zebras, not unicorns. As defined by Zebras Unite, zebra companies, “unlike their mythical cousins, are real; are both black and white, striving for both profit AND purpose; come in many different stripes, representing the diversity of their founders and the problems they are solving; are collaborative and feisty as they build businesses that are better for the world; and do so while taking care of their workforce, their communities, and their environment.” Yet impact investment is failing zebra companies even though these revenue-generating businesses are implementing market-based solutions to solve complex social problems — poverty, climate change, gender inequity, and a host of other social ills.

So why does this funding gap exist for Manka and others like her?

Well, there are four reasons:

  1. There’s a stage gap. These enterprises are too far along for the small challenge grants or microcredit readily available in the frontier and emerging markets where we work. But they’re not yet large enough to be targets of the impact investing ecosystem.
  2. The instruments aren’t the right ones. Most funds still follow typical VC structures — equity investments searching for unicorns, mostly in fintech and other hockey stick sectors — not steady-growth zebras like most of our social enterprise partners. The terms are just really unfavorable for these companies — both equity with too much dilution and bank loans with unreasonably high interest rates.
  3. There’s fragmentation in the market. Each funder has its own investment thesis, geography, sector, instruments, etc. — making it nearly impossible for all but the most connected social entrepreneurs to tap into. As a result, most find it incredibly difficult to navigate.
  4. And finally, no one wants to go first. Everyone is waiting for someone else to lead.

So what’s Miller Center’s role in all this? 

We recognize that the enterprises we accelerate are zebras navigating this veritable valley of death. And we want to ensure that we’re not accelerating them to nowhere. Our 2025 strategy aims to double the average amount of funding raised by our entrepreneur partners by becoming the “go-to” partner on the demand side for capital in this segment — ensuring that these social enterprises are investment ready and connecting them with the right flavor of capital at the right point in time of their growth trajectory.

But to be successful, we decided we also needed to get involved on the supply side. So in early 2021, we launched an in-depth research study to dig into these gaps. And we came up with a solution. Miller Center Invest! We designed two windows: an Innovation Fund for earlier stage enterprises and a Growth Fund — essentially affordable debt — for slightly later stage enterprises starved for working capital.

We believed we had unique competitive advantages that would allow us to do what others in the ecosystem hadn’t been able to.

  • We have a pipeline — a verified, diligenced, pre-qualified pipeline of hundreds of social entrepreneurs.
  • We’re part of a university. So we have access to faculty and students who could provide research and analysis to reduce diligence costs, with the added bonus of cultivating the next generation of social impact leaders.
  • We have a network of 300+ high-quality, dedicated volunteer mentors who de-risk opportunities over the long term.
  • And we’d had success with small funds. We launched Truss Fund in partnership with Beneficial Returns in response to the COVID crisis and have deployed almost $3 million in small, catalytic loans.
  • John Kohler, one of our Executive Fellows, is one of the thought leaders on alternative structures such as variable payment obligation, a type of revenue-based lending.
  • And we’re based in Silicon Valley with all of the resources that implies.

So here we are, a year and a half later, and we’re stuck! At least on the Growth Fund/affordable debt front.

We understand the gaps and social entrepreneurs understand the gaps. But, as it turns out, there are reasons for those gaps. We found ourselves failing. We couldn’t meet our investors’ expectations of 4-5% returns PLUS cover the extensive administrative and legal costs of setting up a relatively small fund, WHILE ALSO meeting the needs of our social enterprise partners for AFFORDABLE debt. We also wanted to work with a mainstream impact investing fund manager for their specialized expertise and complementary networks. But we couldn’t escape their traditional underwriting criteria, which eventually meant that the only enterprises that could meet those criteria could already access debt on better terms. In the end, instead of being catalytic, we essentially found ourselves doing the opposite — coming in with senior, expensive debt.

How do we move forward?

We’re not giving up on the affordable debt side. But we’re going back to the drawing board on the growth fund — taking a step backward to figure out the answer to our original question: How might we drive the right flavor of capital to the entrepreneurs we work with at the right time in their growth trajectory?

And we would broaden that question to the entire impact investing ecosystem. How can we ensure a seamless continuum of support for entrepreneurs? We need more innovation, smaller funds, and a LOT more collaboration among ourselves. We have to recognize that accompanying these zebras across the valley of death requires a much more creative application of philanthropic funding — tapping into Donor Advised Funds (DAFs) and institutional concessional or blended funding to make sure that we’re able to have the impact at scale that we all seek.

Miller Center is starting down this path by launching our Innovation Fund, a catalytic fund that reflects the true needs of the entrepreneurs we work with.

  • We’re going first to demonstrate our confidence in the social enterprises and de-risk investment for others.
  • Small ticket sizes of $50,000 – 250,000 match the capital needs of many entrepreneurs without overwhelming them with unsustainable liabilities.
  • Our focus is on funding zebras, not unicorns, for their ability to make meaningful change in their communities.
  • By providing a non-dilutive, non-equity-based instrument, we’re offering the right instrument at reasonable terms.
  • And using philanthropic capital through innovative recoverable grant structures ensures the preservation of capital.

Miller Center is looking for partners who can support these kinds of enterprises, working both upstream and downstream from this market segment, to create a seamless continuum of support. Please join us.  Let’s accompany these zebras — like Manka — so that they’re no longer trudging but rather galloping out of the valley of death and changing the world to make it a better place!

For more information, contact


Note: This article is adapted from a Micro-Talk given by Brigit Helms at the ANDE Annual Conference 2022.

Photo Credits:

  1. Grassland Cameroon
  2. Miller Center for Social Entrepreneurship: 2022 April In-Residence Cohort
  3. Rachel Claire | Pexels