(tl;dr) East Africa’s startup scene is booming – but many incubators and accelerators are stuck in a cycle of donor dependence, generic programmes and weak investor trust. A new William Davidson Institute study maps these system failures and, more importantly, presents 25 concrete solutions: from revenue-generating “acceleration as a service” and sector‑specific support, to venture studios, better impact measurement and genuine co-creation between ESOs, donors and investors. If you work in enterprise support, impact investing or development cooperation, this is essential reading – and a wake‑up call to rethink how we fund and run entrepreneurship support in Africa.
East Africa’s entrepreneurship ecosystem is at an inflection point. While startups across the region are pioneering solutions in fintech, agritech, health and climate innovation, the organisations that exist to support them – Enterprise Support Organisations (ESOs) such as incubators and accelerators – are under severe structural strain.
A new study by the William Davidson Institute (WDI) at the University of Michigan, based on in-depth research with over 40 ecosystem stakeholders in East Africa, offers one of the most detailed systems-level diagnoses of these challenges to date – and, crucially, documents 25 concrete solutions that are already being proposed or piloted in the region. This post draws primarily on that WDI report, “Reimagining the Future of Enterprise Support Organizations in East Africa”.
The State of the Ecosystem: Impressive Growth, Deep Fault Lines
East Africa has become one of the continent’s most dynamic startup regions. Kenya alone hosts a large number of ESOs, and across East Africa there are now well over a hundred accelerators and incubators. More broadly, the region has emerged as a key cluster of tech hubs and innovation spaces, with Kenya attracting a leading share of the venture capital flowing into East African startups.
Yet beneath this dynamism lies a set of interlocking structural problems:
- Chronic grant dependence: Many ESOs rely on short-term, restricted donor grants for the majority of their budgets, leaving little room for experimentation, adaptation or long-term strategy.
- Generic, duplicative programming: The market is crowded with cohort-based programmes that look and feel the same – often designed around donor reporting needs, not entrepreneurial reality.
- Erosion of trust: Entrepreneurs are tired of “yet another accelerator” that does not address their real pain points. Investors often do not trust the quality of the pipeline emerging from ESO programmes.
- Talent constraints: Low salaries and precarious funding make it hard for ESOs to attract and retain staff with real entrepreneurial or investment experience, leading to high turnover and loss of institutional memory.
These issues reinforce each other in a vicious circle. Entrepreneurs, short of cash and time, are unwilling to pay for low-value programmes. ESOs, unable to monetise their services, double down on donor grants. Donors, under pressure to show large numbers of “supported firms”, push for more generic, short-term programmes. The result is an ecosystem that looks busy on paper – but delivers less impact than it could.
How the WDI Research Was Done – and Why It Matters
The WDI study is grounded in 35 confidential interviews with ESOs, investors, entrepreneurs, donors and intermediaries, complemented by a focused literature review and a participatory session at Sankalp Africa 2025 in Nairobi.
The research focuses on three core questions:
- How can ESO programming be improved to meet entrepreneurs’ goals?
- How can ESOs become financially sustainable?
- How can the ecosystem reframe what ‘success’ means for ESOs?
Instead of stopping at problem diagnosis, WDI uses these questions to structure a catalogue of 25 solutions – all drawn from practice, and all framed with their strengths and weaknesses.
The Four Big Buckets: How the 25 Solutions Are Organised
The 25 solutions sit in four strategic domains:
- Improving ESO financial sustainability
- Improving ESO programme design
- Strengthening leadership, governance and impact management
- Strengthening the wider entrepreneurship ecosystem
What follows is a practitioner-focused walkthrough of each cluster – and an assessment of their potential.
- Making ESOs Financially Sustainable
The first group of solutions tackles the funding model head-on: how to move beyond precarious grant dependence and build revenue models that align with value creation for entrepreneurs.
- Acceleration as a Service
ESOs develop fee-based services that entrepreneurs are willing to pay for – for example deep support on sales and distribution, recruitment of specialised staff, or investment readiness linked to concrete fundraising milestones.
- Potential: Strong. There is clear willingness to pay for bespoke, technically robust support that demonstrably moves the needle on revenue, cost control or fundraising.
- Risks: Requires highly skilled staff and robust impact tracking. Guaranteeing outcomes in volatile markets is difficult. Pricing must be calibrated carefully to avoid excluding early-stage and under-resourced founders.
- ESO Hub Model
Instead of in-house delivery, ESOs host a hub where vetted service providers offer support directly to startups, with the ESO acting as convenor and quality gatekeeper.
- Potential: Can diversify revenues (platform fees, commissions) and expand the range of services without heavy fixed costs.
- Risks: Differentiating the hub from existing networks is hard; quality assurance is demanding; and without strong curation it can degenerate into a confusing marketplace.
- Taking Equity
ESOs accept equity stakes as all or part of their compensation for participating firms.
- Potential: Aligns ESO incentives with long-term startup success and can be attractive for growth-stage firms.
- Risks: In many African markets, equity is illiquid and may never generate returns. ESOs need fund management capabilities and governance structures. Over-reliance on equity can skew support towards “VC-style” ventures and away from less flashy but impactful SMEs.
- Results-Based Financing
Donors pay ESOs partly or wholly based on outcomes achieved – for instance a certain number of firms reaching profitability or raising follow-on funding.
- Potential: Creates strong incentives for genuine value creation and can legitimise ESO claims of effectiveness.
- Risks: Requires sophisticated impact measurement and careful outcome design to avoid gaming. Cashflow management becomes crucial, as revenue may lag performance.
- Alumni Give-Back and Mutual Trades
Programmes formalise win–win arrangements with alumni – for example alumni mentoring new cohorts, or providing paid services – as a way to reduce costs and reinforce community.
- Potential: Builds peer networks and culture, reduces dependence on external experts.
- Risks: Time-poor founders may not consistently contribute. Without clear structures, quality and reliability are uneven.
Overall: None of these mechanisms is a silver bullet. The most promising ESOs in East Africa will likely blend several of them, while using donor grants more strategically rather than as the default lifeline.
- Fixing Programme Design
The second group of solutions addresses a central critique from entrepreneurs: programmes are too generic, too short and too disconnected from real operating challenges.
- From Pitch Competitions to Relationship-Building
Instead of funnelling founders into endless pitch competitions, ESOs invest in tailored support for investor communication: understanding investor incentives, structuring data rooms, and practising nuanced financial conversations.
- Potential: High, especially for more mature founders. Shifts focus from theatre to substance.
- Risks: Requires staff with real investment experience and strong facilitation skills. Also depends on investors being willing to engage beyond “demo day” formats.
- Specialisation by Sector, Stage or Business Model
ESOs concentrate on clearly defined niches – for example health ventures, climate and clean energy, or agribusiness – or on specific growth stages (idea, startup, early growth).
- Potential: Very strong. Deep sectoral or stage expertise enables more relevant content, better networks and clearer value propositions.
- Risks: Narrow specialisation can limit cross-sector learning and may be vulnerable to changing donor fashions.
- Value Chain-Focused Programmes
Support is designed around entire value chains rather than isolated firms – for example linking farmers, processors, logistics providers and fintechs in agrifood chains.
- Potential: Can create powerful synergies and de-risk investment by strengthening multiple nodes in a system.
- Risks: Complex to design and manage; differing maturity levels across firms can strain partnerships. Often more naturally suited to a venture studio model.
- Tackling Systemic Market Failures
ESOs work with donors, investors and entrepreneurs to address underlying market constraints – such as missing infrastructure, regulatory bottlenecks, or fragmented data – rather than only firm-level issues.
- Potential: Transformative where conditions allow. Positions ESOs as strategic ecosystem builders rather than project implementers.
- Risks: Requires patient capital, sophisticated facilitation and a tolerance for ambiguity that many grant frameworks still lack.
- Longer-Term, Carefully Matched Mentorship
Rather than ad hoc, short-term volunteer mentoring, ESOs curate longer-term relationships with mentors who have directly relevant experience and are incentivised to engage meaningfully.
- Potential: Entrepreneurs consistently rate high-quality, context-aware mentorship as one of the most valuable supports they can receive.
- Risks: High cost in time and money; risks of power imbalances and dependency; requires robust matching and ongoing oversight.
- Extending Programme Duration
Programmes move from short, intensive cohorts to longer journeys with phases, follow-up and practical implementation support.
- Potential: Enables learning–doing–reflecting cycles and more realistic timelines for change.
- Risks: More expensive, and founders may struggle to commit over longer periods if design is not highly responsive to their schedule and needs.
- Full-Stack Support Across the Growth Pathway
ESOs offer integrated, “full-stack” services from ideation to scale – combining technical assistance, capital, governance support, and market access. Venture studios in Africa and beyond are beginning to show that such models can deliver higher survival and faster scaling rates for portfolio ventures.
- Potential: High, particularly in venture studio models.
- Risks: Very resource-intensive. Risk of over-centralisation and reduced entrepreneurial autonomy if not designed carefully.
Overall: The programme design solutions are some of the most immediately actionable. The highest-leverage changes combine specialisation, deeper mentoring and more realistic programme timelines, rather than chasing one grand redesign.
III. Strengthening Leadership, Governance and Impact Management
The third cluster focuses on what happens inside ESOs: their leadership, governance and approach to measuring – and learning from – impact.
- “Incubators of Incubators”
Specialised organisations or networks provide targeted support to ESOs on strategy, governance, programme design and sustainability – through peer-learning cohorts, advisory support or structured capacity-building programmes.
- Potential: Can accelerate the professionalisation of ESOs and help avoid repeating past mistakes.
- Risks: Funding and positioning are delicate; if not done with humility and partnership, there is a risk of “consultancy parachuting” rather than genuine capacity transfer.
- Strategic Talent Management
ESOs invest deliberately in attracting staff with entrepreneurial and investment experience, and in making ESO careers attractive to such profiles.
- Potential: Essential. Without credible, experienced staff, even the best programme designs stay on paper.
- Risks: High-quality talent is expensive and in demand; if funding remains unstable, retention will suffer. Secondments and part-time roles can help, but are not a substitute for a viable ESO career path.
- Redefining Success and Broadening Metrics
Beyond jobs, revenue and capital raised, ESOs track indicators such as long-term survival, ecosystem connectivity, founder satisfaction, quality of mentoring and contributions to inclusive and sustainable growth.
- Potential: Unlocks more nuanced understanding of what works and why; enables ESOs with “unfashionable” but important portfolios to articulate their value.
- Risks: More complex measurement can overwhelm limited staff capacity. Comparability across ESOs becomes harder, which some donors may resist.
- Demand-Led ESO Outcome Reviews
Entrepreneurs, investors and donors co-create frameworks for reviewing ESO performance against clearly articulated, context-specific outcomes.
- Potential: Strong in terms of accountability and learning. Could help weed out consistently underperforming ESOs and concentrate resources on effective ones.
- Risks: Politically sensitive; requires neutral facilitation and robust data systems. Poorly implemented reviews can create perverse incentives or discourage transparency about failure.
- Using Established Frameworks such as SCALE
ESOs and donors adopt frameworks like Argidius Foundation’s SCALE, which codify good practice in business development services and are already used in multiple markets.
- Potential: Helpful as a common language and starting point, especially for donors designing support to ESOs.
- Risks: Frameworks can be applied mechanically without sufficient adaptation to local context; effectiveness depends heavily on implementation quality.
Overall: These solutions are less visible but deeply consequential. Without stronger leadership, smarter metrics and deliberate talent strategies, financial and programme reforms will struggle to take root.
- Strengthening the Wider Ecosystem
The final group acknowledges that ESOs do not operate in a vacuum. Markets, policies, funding flows and relationships all shape what is possible.
- Facilitated Multi-Stakeholder Dialogue
Neutral intermediaries convene ESOs, investors, entrepreneurs, donors and sometimes government to surface tensions, align expectations and co-create responses.
- Co-Creating ESO Programmes
Instead of top-down calls for proposals, donors and investors sit with ESOs and entrepreneurs to jointly design programme objectives, curricula and selection criteria.
- Shared ESO Capacities
ESOs collaborate to share functions such as monitoring and evaluation, legal services or curriculum development, thereby reducing duplication and building common standards.
- Pre-Competitive Collaboration and Collective Voice
ESOs join forces in alliances to advocate on policy issues, negotiate with donors and share learning in a structured way.
- Graduation Pathways Across ESOs
Deliberate design of “pathways” where entrepreneurs move from one ESO to another as they grow – for example from an ideation incubator to a sector-specific accelerator, then to an investment-readiness programme.
- ESO Rating and Quality Systems
Development of a transparent system to assess ESO quality – for example through peer review or third-party accreditation – to help entrepreneurs and funders identify high-quality support providers.
- Policy Engagement and Co-Design
ESOs and their networks work with public agencies to shape policies on taxation, business registration, innovation incentives and public procurement in ways that benefit startups.
- Donor Learning and Systems Change
Donors invest in internal learning, examine their own role in reinforcing fragmentation, and shift from project-centric to system-centric funding approaches.
Overall: Ecosystem-level solutions are the most complex but also the most high-leverage. They require courage from all sides to question entrenched practices and power dynamics – including those in the international development industry itself.
Six Emerging Trends to Watch
Across these solutions, six trends stand out:
- A shift towards real-time value creation, with ESOs iterating programmes based on live feedback rather than static logframes.
- The rise of venture studios and full-stack support models, which offer integrated capital and hands-on support.
- Increasing co-creation between donors, ESOs and investors, rather than one-way commissioning.
- Growing specialisation, with ESOs narrowing their focus by sector, stage or business model.
- The spread of systems-change practices, with more actors looking beyond individual projects to the underlying rules and relationships.
- A nascent culture of donor humility and reflexivity, as funders start to question how their own practices shape the ecosystem.
What This Means for Practitioners, Donors and Investors
The WDI research and the 25 solutions are not a checklist to be implemented wholesale. They are a toolbox and an invitation to rethink roles.
- ESOs need to clarify their value proposition, blend funding models, invest in their people and treat impact measurement as a strategic function rather than a reporting chore.
- Donors need to move from outputs to outcomes and systems, design with – not for – local actors, and align incentives with long-term ecosystem health.
- Investors need to engage with ESOs as genuine partners, examine their own biases and adapt expectations to local market realities.
Recommended: Webinar on Reimagining the Ecosystem, 29 January 2026
To delve deeper into these issues, the William Davidson Institute and the International Trade Centre are hosting a webinar on “Reimagining the Entrepreneurship Ecosystem in East Africa”.
The event will share key findings from the research and highlight practical, systems-level solutions to make entrepreneurship support in East Africa more effective, sustainable and inclusive.
Registration and details:
NextBillion event page – Reimagining the Entrepreneurship Ecosystem in East Africa
https://nextbillion.net/calendar/reimagining-the-entrepreneurship-ecosystem-in-east-africa/
Main source:
William Davidson Institute (University of Michigan), Reimagining the Future of Enterprise Support Organizations in East Africa, 2025 – prepared in partnership with regional stakeholders and presented through a joint WDI / International Trade Centre webinar series.