Why capital alone does not create an investment market

The global impact-investing market was estimated at $1.571 trillion in assets under management in 2024. In its State of the Market 2025 report, the GIIN subsequently reported compound growth of 21% over six years and 11% in the most recent observed year. Its 2025 survey covered 429 organisations across 54 countries.

Having worked on both sides of the investment relationship, I see that capital scarcity explains only part of the investment shortfall. The remaining gap lies between available capital and a genuinely executable transaction.

A market’s primary asset is information

An investor cannot invest in what cannot be assessed. In a mature market, much of the infrastructure is invisible: sector data, transaction histories, governance practices, legal documentation, comparable transactions, analysts and firms capable of conducting due diligence.

The weaker this infrastructure, the more expensive each decision becomes. In 2025, UNDP identified hundreds of SDG-related investment opportunities across Africa alongside white spaces: market or policy constraints still preventing private capital from being deployed. An economic opportunity is not yet a transaction. Between the two, investability must be established.

I observed this directly while leading We Take Part, the French crowdfunding platform I founded and obtained AMF authorisation for under the European ECSPR framework. In that environment, the quality of a pitch could never substitute for the quality of information. European rules specifically require information presented to investors to be accurate, clear and not misleading.

This regulatory discipline reinforced a central conviction: an investor does not finance an impressive promise, but a trajectory that can be properly assessed. Understandable financial forecasts. Identifiable governance. Explicit risks. Consistent use of funds. Evidence-based assumptions.

Financial sophistication cannot compensate for a weak investment chain

Guarantees, first-loss structures, catalytic funds, subordinated debt, blended finance and co-investment vehicles all have a role. The mistake arises when they are expected to solve problems that are not fundamentally financial.

A guarantee can absorb part of a risk, but it cannot produce reliable accounts. A concessional tranche can improve a risk-return profile, but it cannot create governance. A vehicle can aggregate capital, but it does not automatically generate a pipeline of investable transactions.

The IFC reiterates this in its 2025 note on blended finance: these mechanisms work best as part of a broader approach that also improves market conditions and coordinates donors, development finance institutions, the private sector and platforms. Financial architecture is sometimes designed before establishing whether enough viable opportunities exist to use it.

This is particularly relevant in economies seeking greater investment in energy, infrastructure, agriculture, local processing and SMEs. Sustainable finance has a practical role here: organising risk, incentives and capital flows around productive assets and measurable economic transformation.

Investment capabilities must improve actual decisions

Training more people is not sufficient. A programme creates value only if it subsequently changes how investments are sourced, analysed, compared, documented, structured or monitored.

Across the capability-building programmes to which I contribute, the same requirement consistently emerges: developing screening frameworks, due-diligence checklists, investment memoranda, committee scorecards, risk registers and ESG frameworks simple enough to be used in practice.

These tools do not replace judgement. They make it explicit. They also clarify why an opportunity is declined, what information is missing and what should be improved before reconsideration.

Local investors also possess information that international capital often underestimates: knowledge of behaviour, distribution networks, actual creditworthiness, operational constraints and management quality. Capability building should not turn local investors into replicas of their London or New York counterparts. It should enable them to formalise their informational advantage.

Transaction depth matters more than billion-dollar announcements

A market becomes mature only when it can reproduce transactions. That is the distinction between an isolated deal and an investment ecosystem.

Partech’s 2025 report illustrates how technology capital remains concentrated in a limited number of African markets. This concentration is not explained by economic size alone. The most active markets generally combine stronger deal flow, more investors and intermediaries, and financial infrastructure capable of absorbing larger tickets.

Success should therefore not be measured solely by the amount raised. How many opportunities reach an initial assessment? How many pass due diligence? How many can be presented to several investor categories? How many are properly monitored after investment? How many generate a subsequent transaction?

An investment system becomes effective when it can generate transactions without reinventing the process each time.

Capability building is market infrastructure

This distinction becomes especially important when working with local investors. The issue is not a lack of financial knowledge. More often, they operate with inconsistent tools, incomplete information and processes that depend heavily on individual experience. Two analysts can therefore review the same opportunity, ask different questions and produce recommendations that cannot be meaningfully compared.

Through investment-capability programmes in the Caribbean, I have seen how a shared vocabulary improves the quality of dialogue. A screening framework may appear unremarkable, but it requires explicit criteria. An investment memorandum separates facts, assumptions and judgement. A committee scorecard identifies disagreements. A risk register distinguishes a documented risk from a vague concern.

This work is often described as training. I view it instead as market infrastructure. It reduces coordination costs across stakeholders and increases the ability to reproduce investment decisions. This is precisely what ecosystems need to move from occasional opportunistic investments towards a more consistent practice.

Sustainable finance must connect to this infrastructure

The same principle applies to climate, impact and ESG. Across many emerging markets, these topics are still treated either as donor requirements or as communications narratives. Both approaches overlook their substantive investment relevance.

Climate risk can affect an asset’s useful life, insurance, operating costs or cash-generation capacity. Weak governance can erode the value of an otherwise well-positioned company. Energy dependency can compress margins. A fragile supply chain can turn a growth assumption into a liquidity risk.

These considerations therefore belong within the investment decision. They should be integrated into due diligence, financial scenarios, portfolio monitoring and risk-sharing mechanisms. Sustainable finance becomes useful when it improves capital allocation rather than adding another reporting layer.

Public and private actors must share the investment chain

Public institutions often finance visible initiatives: calls for proposals, programmes, investment vehicles, accelerators and funding allocations. Private investors finance opportunities consistent with their risk-return mandate. Between them lies a less visible layer: transaction preparation, data, structuring, coordination and monitoring.

This is often where the investment chain breaks down. The public sector should not replace private investment decisions. It can, however, finance functions the market does not yet support sufficiently: technical assistance, project preparation, data production, targeted guarantees and shared standards. Private investors have an equally clear responsibility: communicate their criteria, ticket sizes, exclusions, governance expectations and information requirements earlier.

When these responsibilities are better allocated, capital moves with less friction. Not because risk disappears, but because it becomes clearer, better distributed and easier to document.