Unlocking Growth: Why Investing in the “Missing Middle” Matters

A new paper from Youth Business International (YBI) highlights a major, yet often overlooked, opportunity to drive sustainable economic growth: investing in young entrepreneurs in the “missing middle.”

Across the world, millions of young people are running viable, revenue-generating businesses with the potential to grow, create jobs, and strengthen local economies. Yet many remain locked out of the finance they need to grow — too large for microfinance but overlooked by traditional lenders and venture capital. This persistent gap is part of a wider $5.7 trillion global small and medium-sized enterprise (SME) financing shortfall, driven not by how capital is currently allocated.

YBI’s paper argues that these early-growth businesses represent one of the most effective entry points for investment. They already demonstrate proven demand and operational viability, making them lower risk while offering significant potential for job creation and economic impact. However, structural barriers, such as lack of collateral, limited credit histories, and narrow investment criteria, continue to exclude entrepreneurs, particularly those from underserved groups including women, young founders, refugees, and rural communities.

To unlock this opportunity, the paper calls for a shift in how growth potential is defined and financed. It highlights three key priorities:

• Redesign capital to better meet the needs of early-growth businesses, including more flexible, patient, and appropriately sized financing
• Pair finance with capability, ensuring entrepreneurs receive the support needed to effectively deploy capital and scale sustainably
• Target underserved entrepreneurs intentionally, embedding inclusion into investment strategies and working with local partners to reach those most often overlooked

Supporting the missing middle is not charity; it is smart, high-impact investment. With relatively modest, well-designed interventions, funders and investors can unlock business growth, catalyse job creation and support more resilient local economies.

YBI is calling on donors, financial institutions, and policymakers to take action by committing targeted capital, rethinking investment criteria, and backing models that combine finance with tailored support.

Read the full paper to explore how we can unlock the potential of young entrepreneurs worldwide.