Bridging the Equity Financing Gap: Coprosperity Fund and the University of California Berkeley Explore New Pathways for SME Growth in Tanzania

How stronger investment readiness, better financial practices, and research collaboration can unlock new opportunities for small businesses

Small and medium-sized enterprises (SMEs) are central to Tanzania’s economic growth, yet access to appropriate financing remains one of the key challenges limiting their ability to scale.

For many entrepreneurs, debt and internal financing remain the most familiar sources of capital. Equity-style financing, while offering an alternative that can be better suited to certain growth-stage businesses, remains less understood and less widely adopted.

At Coprosperity Fund, our experience working closely with small businesses has highlighted an important reality: access to capital is only one part of the equation. Businesses also need the knowledge, systems, financial discipline, and readiness required to use investment effectively.

This issue was at the heart of a recent strategic discussion between Coprosperity Fund and researchers from the University of California, Berkeley.

Exploring the SME Equity Financing Landscape

On 21 August 2026, Fahad Iranga, Investment Advisor at Coprosperity Fund, met with Ziyue Chen and Zixu Chen, PhD scholars in Economics at the University of California, Berkeley, to discuss Coprosperity’s experience providing equity-style financing to small businesses in Tanzania.

The researchers are examining broader questions around firm growth, access to finance, managerial practices, and the constraints that prevent small businesses from expanding. Their interest in Coprosperity Fund stems from its focus on relatively small businesses and its approach of combining financing with structured screening and post-investment support.

The discussion provided an opportunity to bring together two important perspectives: academic research and practical investment experience.

Strong Demand, but a Readiness Gap

Since its launch, Coprosperity Fund has received more than 1000 applications through channels including social media, seminars, and online applications. Applicants move through a process that includes business-plan development, due diligence, and in-person reviews.

However, the experience has also revealed a significant investment-readiness gap.

Many SMEs demonstrate strong entrepreneurial potential but struggle with areas such as:

• Developing realistic financial projections
• Preparing structured and compelling business plans
• Maintaining complete financial records
• Understanding equity and profit-sharing models
• Meeting compliance and documentation requirements
• Maintaining consistent reporting after receiving investment

These challenges do not necessarily indicate a lack of business potential. In many cases, they reflect the realities of operating within an informal business environment where cash transactions, negotiated pricing, and limited record-keeping are common.

This distinction is important.

The challenge is not simply whether SMEs want financing. It is whether businesses are equipped to receive, manage, and report on that financing effectively.

Equity Is Not a One-Size-Fits-All Solution

One of the key insights from the discussion was that equity financing should not automatically be viewed as the best option for every business.

Different businesses have different financial characteristics and financing needs.

Businesses with relatively stable cash flows may be better positioned for debt financing, while businesses facing greater uncertainty but possessing significant growth potential may benefit more from profit-sharing or equity-style models.

This highlights the importance of helping entrepreneurs understand not only how to access finance, but also which type of finance is appropriate for their business.

For SMEs, making the right financing decision can influence cash flow, ownership, risk exposure, growth capacity, and long-term sustainability.

Beyond Funding: Supporting Businesses After Investment

At Coprosperity Fund, our role does not end when financing is provided.

Portfolio companies are regularly monitored against agreed performance targets. Where persistent underperformance is identified, businesses may enter Coprosperity’s internal “ICU Process”, providing more intensive financial, operational, and marketing support to help realign the business.

This approach reflects a fundamental belief:

Investment should be accompanied by the right support systems.

Small businesses operate in complex environments, and investor requirements must be balanced with the realities faced by entrepreneurs. Effective post-investment support therefore requires a practical understanding of business operations, financial management, market conditions, and the capacity of entrepreneurs to implement change.

Building a More Investment-Ready SME Ecosystem

The discussions with the UC Berkeley researchers identified two potential areas for collaboration.

1. A Comparative Financing Study

The proposed study would examine businesses using different financing models—including equity, debt, and alternative financing—to better understand factors such as growth prospects, cash-flow stability, and management capacity.

For Coprosperity Fund, the findings could also contribute to improving how businesses are assessed and matched with appropriate financing options.

2. An Equity-Readiness Training Module

A second proposed initiative is the development of a practical training programme focused on helping SMEs understand what it means to become equity-ready.

Potential areas would include:

• Understanding equity financing fundamentals
• Financial modelling and projections
• Business planning
• Compliance and documentation
• Financial reporting
• Communicating effectively with investors

The objective would be not simply to educate entrepreneurs, but to determine whether targeted training can meaningfully improve investment readiness and application outcomes.

A Shared Commitment to Unlocking SME Growth

The future of SME financing in Tanzania will require more than increasing the supply of capital.

It will require a stronger connection between finance, knowledge, business capability, research, and ongoing support.

The engagement between Coprosperity Fund and University of California Berkeley researchers represents an opportunity to deepen our understanding of these issues and explore practical approaches to improving the way SMEs access and use capital.

For Coprosperity Fund, the goal remains clear: to support businesses not only in accessing capital, but in building the capacity and systems needed to grow sustainably.

By combining investment experience with evidence-based research, we can work toward a more informed, inclusive, and effective SME financing ecosystem—one where entrepreneurs are better prepared for investment and investors are better equipped to identify and support businesses with genuine growth potential.

The journey from financing to sustainable growth begins with readiness.