“We didn’t run out of risk capital, or risky ideas. We ran out of people willing to fund the very first one.”

In an age where every corner has a startup looking to get funded, we see more and more of the same: well-funded startups raising even more capital at larger and larger valuations, while smaller startups keep running out of runway.

This sector calls this gap “the missing middle”: too big for a grant, too early and too risky for a bank or a mainstream investor. This gap has only grown larger over the last few years, as the unicorns of yesteryear move toward their eventual market listing and VC exit at a multiple of their investment.

Venture capital was originally built on leveraging first-mover advantage and was willing to take bets nobody else would. They used their capital as a lever to help seed the giants we know and use in our daily lives. Today, however, those same VC circles want to fund only proven ideas and products with established track records. The “first mover” approach has been replaced with a “fast follower” mindset.

The onus of bridging this gap is now shifting on to the development finance institutions and multilaterals — money that was built for patience, not risk. Slow money. Careful money. Money that fills out forms before it backs a wild idea.

The part nobody says out loud is that founders stuck in this gap don’t just lose funding. They lose the right to run like a business. They get pushed into grants, into partnerships, into the language of “impact,” while everyone still expects capitalist returns on the books. All of the return, none of the risk.

You can’t ask someone to build like a startup and fund them like a charity. That simply doesn’t work.