Africa’s creative economy has a missing middle in investment. This keeps the ecosystem in an awkward place where capital is available but often isn’t deployed effectively.
Readiness Capital' is the right frame. The ambition and the money are both real, what's missing is the layer that makes the market legible enough for that capital to actually land. Until someone builds that, I suspect most of these pledges keep circling the same safe bets instead of reaching the missing middle.
Is the core issue not that the creative sector is competing for a small pool of investor $$$ against other sectors that have more proven business models already.
In the creative sector it still feels like the unit economics are very hazy on the continent. How does the investor make their bank back - how many models are replicable?
Thank you! You're right about the haziness of the unit economics, but part of that is what the essay addresses. For unit economics to become clearer, the sellers (in this case, creative entrepreneurs) need to better understand product thinking/development, and part of that is pricing and business modelling. But for them to get to that point, they need financial systems that enable trial and error (what the big corps call R & D). The lack of clarity we are seeing is the same as there was in the early days of several industries pre-maturity, and this one is no different. Yes, the CCIs in Africa have been around for ages, but mostly as soft power mechanisms, not really as strong economic drivers.
terrific and insightful article. I think there's a lot of institutional amnesia about what the problems truly are and how to solve it. we need more cultural practitioners/experts working in DFIs.
Such an important conversation. I really like the Readiness Capital recommendation, that’s something I’ve been trying to articulate for a while. A big issue is creative enterprises are expected to exist and function like standard enterprises and it’s simply not the case in theory or practice. There must be a better approach to understanding value creation and capture in creative enterprises and the answer to most of these questions lies in engaging the businesses that are stuck in limbo. At the end the day, Creatives just want to create. There has to be better systems in place for understanding and measuring the value being created and education to support translation into real commercial prosperity. Great article
I agree that there's a big gap between how creative enterprises function and how they are expected to function, but I think that for this ecosystem to grow, we need to figure out what actual productising looks like. The industry needs to be willing to "bend" to some demands of the capital that is available for it to be able to then ask that capital to bend to its will. Almost like a chicken and egg situation.
Exactly that. Concessions must be made on both sides. That’s where education and support in translating the value captured to proper commercial prosperity comes in. That’s why that Readiness Capital model makes so much sense. Because it’s one thing to create something valuable, it’s another (expensive) thing entirely to create and implement structure and systems that makes value capture repeatable and sustainable
Exactly that. Concessions must be made on both sides. That’s where education and support in translating the value captured to proper commercial prosperity comes in. That’s why that Readiness Capital model makes so much sense. Because it’s one thing to create something valuable, it’s another (expensive) thing entirely to create and implement structure and systems that makes value capture repeatable and sustainable
Thanks for an interesting and perceptive article. The big gap between small funding and DFIs and international player ticket size is documented in many sectors. However, it is great to read here and elsewhere about how the creative sector is creating more investment opportunities and for the references if we want to learn more.
Thanks for your comment, Tom! Indeed, the issue is across many industries, but perhaps more pronounced to me as this is the one I cover. Also tells me how impactful readiness capital could be in the long run.
Readiness Capital' is the right frame. The ambition and the money are both real, what's missing is the layer that makes the market legible enough for that capital to actually land. Until someone builds that, I suspect most of these pledges keep circling the same safe bets instead of reaching the missing middle.
Insightful article.
Is the core issue not that the creative sector is competing for a small pool of investor $$$ against other sectors that have more proven business models already.
In the creative sector it still feels like the unit economics are very hazy on the continent. How does the investor make their bank back - how many models are replicable?
Thank you! You're right about the haziness of the unit economics, but part of that is what the essay addresses. For unit economics to become clearer, the sellers (in this case, creative entrepreneurs) need to better understand product thinking/development, and part of that is pricing and business modelling. But for them to get to that point, they need financial systems that enable trial and error (what the big corps call R & D). The lack of clarity we are seeing is the same as there was in the early days of several industries pre-maturity, and this one is no different. Yes, the CCIs in Africa have been around for ages, but mostly as soft power mechanisms, not really as strong economic drivers.
Yeah interesting dilemma all round! Lot's of work for us to do on the continent I guess
terrific and insightful article. I think there's a lot of institutional amnesia about what the problems truly are and how to solve it. we need more cultural practitioners/experts working in DFIs.
Agree!
Dear David,
I'm restructuring the CCIs and Sports Industry in DR Congo.
I'd like to exchange more about it with you.
Lemme know if you wanna be part of rebuilding of the CCIs and Sport industry of the heart of Africa.
Here my whatsapp and email: +243977600798, fbmweze@gmail.com
Lemme know your availability and if you are insterested.
I just sent you an email!
Such an important conversation. I really like the Readiness Capital recommendation, that’s something I’ve been trying to articulate for a while. A big issue is creative enterprises are expected to exist and function like standard enterprises and it’s simply not the case in theory or practice. There must be a better approach to understanding value creation and capture in creative enterprises and the answer to most of these questions lies in engaging the businesses that are stuck in limbo. At the end the day, Creatives just want to create. There has to be better systems in place for understanding and measuring the value being created and education to support translation into real commercial prosperity. Great article
I agree that there's a big gap between how creative enterprises function and how they are expected to function, but I think that for this ecosystem to grow, we need to figure out what actual productising looks like. The industry needs to be willing to "bend" to some demands of the capital that is available for it to be able to then ask that capital to bend to its will. Almost like a chicken and egg situation.
Exactly that. Concessions must be made on both sides. That’s where education and support in translating the value captured to proper commercial prosperity comes in. That’s why that Readiness Capital model makes so much sense. Because it’s one thing to create something valuable, it’s another (expensive) thing entirely to create and implement structure and systems that makes value capture repeatable and sustainable
Exactly that. Concessions must be made on both sides. That’s where education and support in translating the value captured to proper commercial prosperity comes in. That’s why that Readiness Capital model makes so much sense. Because it’s one thing to create something valuable, it’s another (expensive) thing entirely to create and implement structure and systems that makes value capture repeatable and sustainable
Thanks for an interesting and perceptive article. The big gap between small funding and DFIs and international player ticket size is documented in many sectors. However, it is great to read here and elsewhere about how the creative sector is creating more investment opportunities and for the references if we want to learn more.
Thanks for your comment, Tom! Indeed, the issue is across many industries, but perhaps more pronounced to me as this is the one I cover. Also tells me how impactful readiness capital could be in the long run.