Financing Technology Enterprises in the Developing World

In developing countries, SMEs have great difficulty in obtaining the necessary financial resources to effectively scale up and grow their businesses. For SMEs competing in the ICT industry and ICT-enabled (ICTE) activities, the challenge of accessing growth capital is particularly acute. In the ICT/ICTE sector, industry specific aspects often limit the access to finance such as the high-tech nature of the business, which magnifies the informational asymmetries, or the intangible nature of assets that can be leveraged as collateral for loans.

This report, "Financing Technology Entrepreneurs & SMEs in Developing Countries: Challenges and Opportunities" by infoDev, traces the nature, extent, and root causes of the financing gap that plagues SMEs in the ICT/ICTE industry in developing countries. Results from this study confirm the existence of a financing gap, in the sense that seemingly well deserving ICT/ICTE operators have limited or no access to external financing when the stage of development of firms, the particular features of the various sub-sectors, and the conditions prevailing in different countries are taken into account.

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