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file:///Users/zakweston/Desktop/The_State_of_Blended_Finance_2020.pdf
Reports from
Catalysing an Impact Investment Ecosystem: A Policymaker’s Toolkit Policy & Advocacy
Enabling ventures to leverage technology for impact
Demand of Capital It analyses the different enabling elements across the lifecycle of impact-tech, and focuses on recommendations to improve the global tech-for-good ecosystem Investing for a better world
Supply of Capital It focuses on recommendations to strengthen the financial services value chain to meet the sustainable development goals
Widening & Deepening the Market for Impact Market Builders It outlines the why and what of impact investing and presents a theory of change for widening participation and deepening practice with practical guidance on actors and levers
Exemplary overview of infrastructure finance for social development
Financial Times IFC awards
Social impact bonds
https://toplink.weforum.org/ project/blended-finance-network
https://www.goodfinance.org.uk/tools-and-resources
Coalition for Green Capital
Review Catalytic capital asana project, including funds to start, investor donors, etc.
Government backed sustainability bonds
Alternative investment management firms
Maybe the hybrid Dana Farber donate/invest fund
/ (Not only is this a fascinating case study, but alternative protein should be their fifth pillar!
Working capital, supply chain finance, reverse factoring, revolving credit facility
Research using the Convergence resource library
Convergence has some upcoming workshops and events, submitted membership request
Need membership to access this resource:
Work with development finance groups
Pull categories from BioFungible overview, table in Evernote
Designing a blended transaction requires two distinct skill sets, one being financial expertise to develop the right financial structure with appropriate risk-return profiles for funders and investors, and the other, sector-specific expertise to determine interventions that can yield the desired development impact.
(Portuguese for Green Receivables Fund) - an organization with sector-specific knowledge needed to partner up with an institution bringing in the financial expertise.
Good Food Labs
This could be a model for GFRI, funded by donors and contracts
Alt protein finance labs
Alt Protein Labs
Protein Lab
GFI Labs
Identifying solutions and testing them, RCT, very EA friendly
We conduct studies of promising technical, policy, commercial model, financing, marketing, and other innovations to identify promising scaleable solutions to large-scale problems facing the alternative protein industry
Good explanations
Fund design
(they are sharing their paperwork February 15 2021)
(They work to build this field, would make an excellent interview)
How we might participate in social impact bonds, development impact bonds
Eventually we could launch a fund manager, our own funds, funds of funds,
Maybe we launch the fund of funds for the catalytic part of the the capital
Bridges Fund MGMT has already invested in vegetarian company
Launching business/industrial parks that are targeted to alt proteins, like at former malls (Bridges Fund Management has done this)
This is the physical instantiation of the top ideas
Research institute system
Input characterization
BioFungible
Catalytic capital
Manufacturing
Cluster
How do non-profits generally participate and benefit? Informs GFI role
Potential fund managers: UBS (any group that has lots of funds), OPP, Coller, Unovis, Blue Horizon, Siddhi, Align Impact, Big Society Capital, Arabella, impact investment wholesalers
Go through their full list for ideas and research
Rabobank
ResponsAbility
AXA, Ardian
Can be public/private partnerships
Calvert Impact Capital
Ceniarth
GFI Dev team
Gates, MacArthur, Rockefeller, Ceniarth, etc.
Mention design funding grants from Rockefeller, Convergence
To arrange for a bespoke knowledge exchange for your organization, email Aakif Merchant at
.
share with GFI Brazil as an interesting case study
Share with Jen, also
This depends on type of instrument: loan, equity, grant, guarantee
This idea has some strong affinity with guaranteed offtakes, AMC's/guaranteed minimums, shared repurposable facilities/equipment,
Ask GIIN report author or research person
- slaughterhouse loans
Blue Orchard
Sustainable Jobs Fund/ SJF Ventures
Search for project finance facility
We could spin out a broker/consultant/advisory firm that helps connect alt protein firms with the investment and finance products they need
We could literally get design grants to create Solutions!
In 2015, Blue Forest received an early-stage design grant from the Rockefeller Foundation’s newly launched Zero Gap Portfolio. Here, the Rockefeller Foundation was specifically looking for projects that were i) scalable and replicable across a broader market, ii) commercially viable, and iii) creative in their structuring approach. Rockefeller’s funding offered crucial support to Blue Forest as they continued to build out the model and identify investors.
Start an impact investment wholesaler for the alternative protein sector
The India Impact Fund of Funds plans to lend US$1 billion to debt funds that invest in social enterprises. The Fund seeks to fill an apparent gap in medium- to long-term unsecured debt. It will target a 9% return over its ten-year life. The Fund aims to raise US$600 million from finance-first investors (those that emphasize return) and US$400 million from impact-first investors (those that emphasize social goals and do not necessarily seek a commercial return). The Fund will approach financial institutions and members of the Indian diaspora as finance-first investors. It will approach foundations and development finance institutions as impact-first investors. It will ask the impact-first investors to take a first-loss position.
Tasks
12.23: Map out this project and its workstreams, publications I need to write or get others to write, the topical cluster, action items
Promote this to the alt protein community
Promote alt proteins as an investment asset class to impact, catalytic, and blended finance community
Create own project in Asana
Parse subtask
Conduct research below
12.24: After CE-SciTech meeting: Evaluate splitting out this section into its own document
Pitch this idea to Blue Horizon
Could launch this with Cass, get her help with researching this area
New Energy Risk (NER) helps insure technical risk for breakthrough technologies to optimize cost of capital and accelerate time to market. We should talk to them
12.25: Subtask, write 2-pager/proposal on catalytic capital for January PhaseGate
Jan: This should be presented to GWS, OPP, FAIRR,
Jan: Work with MacArthur, Ford, Gates, Rockefeller, Omidyar, and others to show how alt proteins are an opportunity area for catalytic capital. Omidyar Network, Blue Haven Initiative and Candide Group, both family offices, have made substantial impact investments and done significant “catalytic” work. It can also be a corporation—Prudential
Join MacArthur's Catalytic Capital Consortium, Rockefeller Zero Gap initiative
As part of the initiative, MacArthur is dedicating up to $150 million in investments on a matching basis to approximately five funds or intermediaries that demonstrate a powerful use of catalytic capital across sectors and geographies
:text=Insurance%20companies%20are%20often%20public,which%20take%20time%20to%20change.
Securitization
AO doing impact investment, look up their annual report, ESG
Research to be done
GIIN's research
Rockefeller Zero Gap initiative
There was a "first global summit of all development banks" in early November, 2020. Following from that, I'm hoping to spend some time early in C1 2021 trying to figure out how to get GFI a seat at the table when their "Agriculture Cluster" next meets. Here's the Ag Cluster's statement on "
"
Blake did u analyze ICOs
Meatcoin
Prime roots is a great model for e-commerce (add crowdfunding)
GIIN launched a Blended Finance Working Group
Join Convergence!
Might require its own white paper/2-pager
Research & analysis
Impact scale
Tractability
Neglectedness
Startup Venture involvement
Commercial incumbent involvement
GFI involvement
Who do we talk to?
Solution/resource development
Targeted engagement
Events
Split into separate ideas
Solutions we do
Solutions we share via targeted engagement
Solutions we publish publicly
Solutions we do more research on
Capital providers > Developer > Pool/YieldCo (REIT) > Management company > Tenants
We could play in each part of this chain
If a developer bankrolled a project, the company could lease it, build to suit to lease
Note which funds we want to start are catalytic vs. non-catalytic
Create a topical cluster around these concepts
Ari Nessel, interview him or someone who he knows
Merchant developer takes developer risk, then flips to low risk pool, REIT, REIT are lower risk pool, these developers, some REIT’s do some developing, but not a
MII, catalytic capital, research institute
Malls have parking, public transport access
Repurposing study
Multi-tenant industrial, common, dividing walls is easy, designed as giant boxes that can be divided or subdivided easily, single tenant or multi-tenant
Incubators, scaling network, companies start by sharing equipment early, then move to their own space over time . these are often PPP, economic development corporations. WeWork for manufacturing, industrial, this has to exist
Could we just lease existing buildings and then sub-lease out, like WeWork?
who has a lot of excess industrial capacity? Churches. Malls. Malls are key.
Research on capital, funds, investors, investment structures and mechanisms
Capital
Create a YieldCo, publicly traded company holding production infrastructure assets that are low-risk, predictable gains
, she is great, the kind of person we need for this.
,
Credit Suisse SDG 12 listed fund
Pension funds, SWF's focus on infrastructure
Like Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs), YieldCos are pass-through stock entities designed to allow for generous dividend yields and, at least in theory, strong long-term dividend growth.
YieldCo's are a renewable energy utility KEY IDEA
WHAT THINGS DO WE WANT TO BE A UTILITY? EVERY PART OF THE CHAIN!
The renewable power plants operated by YieldCos typically obtain long-term, fixed-fee power purchase agreements (PPAs) from utility companies to buy the clean energy they generate.
, general partners hold 2% stake (w/ option to increase), issues units (like shares) to limited partners that are traded on national stock exchanges, for stable, slow-growing industries
A real estate operating company might fund new construction and then sell the property for a return. The company could also buy a property, refurbish the building, and then resell the real estate for a profit. A REOC could likewise serve as a management company that oversees the properties.
OpCo, PropCo
Casino companies are often OpCo's
Could apply to so many things, conttract or self-operated capacity
Distributions reinvestment in REIT, lookup simply safe explanation
Private capital
Private equity
Venture capital
Private credit
Real assets
Wealth & investment management
Trade finance
FinTech
Risk Management
Insurance
Alternative investment
Project & Infrastructure Finance
Quant Finance
Corporate Finance
Look for visual charts/diagrams flowcharts of capital, investment, finance, the type of secret money Mark was talking about,
Japan’s Designated Utilization Foundation
EIF has their social impact accelerator, look more into this
The EIF aims to build a market in which social enterprises of many types and at many stages can raise capital tailored to their needs. It manages three social enterprise instruments under the European Fund for Strategic Investments 23. 1) The first instrument invests in or alongside funds linked to an incubator or accelerator. It intends to expand investment in very early-stage social enterprises. 2) The second instrument invests alongside business angels or in business angel funds. It intends to expand investment in early- and growth-stage social enterprises. 3) The third instrument invests in or alongside intermediaries investing in social programs delivered under payment-by-results arrangements. It intends to expand investment in social impact bonds and similar payment-by-results arrangements. The EIF also manages two social enterprise instruments funded by the EU’s Employment and Social Innovation program. 1) Capacity Building Investments Window. The Window invests in intermediaries that finance social enterprises or offer microfinance products. It aims to seed new intermediaries and strengthen intermediaries already in the market24. 2) Guarantee Instrument. The Instrument guarantees up to 80% of an intermediary’s loans to social enterprises (loans up to €500,000) and microfinance applicants (loans up to €25,000)25.
Quadratic funding
If we could make society better at providing public goods in general, we might be able to make progress on many challenges at once. One idea we’ve discussed that both has promise and faces many challenges is
, but the space for possible interventions here seems enormous.
Tasks
Integrate these notes into Manasvi/Manuela report
Create 2-pager and blog for sharing with everyone
Pull insights/phrasing from longform playbook
GIIN Catalytic capital report notesExample: Bank letters of credit facilitating trade financing
Example: US Small Business Administration guarantees up to 85% of commercial loans made to small businesses (SBA 7a loan program)
People from these case studies would be great advisors if we launched funds
Example: Fannie Mae and Freddie Mac credit enhancement for home mortgages
Credit enhancement, catalytic credit enhancement tools
Credit enhancement tools
Government loan guarantees
Letters of credit
First-loss capital
Over-collateralization
Insurance
Reserve accounts
Look up GIIN’s publications on the other credit enhancement tools
Debt, equity, or guarantees
GIIN may have other catalytic capital and blended finance reports, share blended finance with Dev team as an idea
Page 4: Figure 1, investor providers of first-loss vs. recipient investors
Page 5, definition
More patient, more flexible
Page 6: Table 1, instruments used
One characteristic of Providers is that they are strongly aligned with the Investee’s social or environmental goals and theory of change. Another is that they are willing to take on greater financial risk in return for driving towards target non-financial objectives. A third is that they may have a deeper knowledge of the target sector or geography and, hence, a better understanding of the risks, than mainstream investors. Given these characteristics, Providers are typically foundations, high-net-worth individuals, governments, and Development Finance Institutions (DFIs); however, any investor with the appropriate motivation and risk appetite can, of course, play this role.
“Philanthropy must do what it does best: peel back the first layer of risk, and experiment where other sectors cannot, making development and commercial investment dollars more productive and less risky” DR. JUDITH RODIN, PRESIDENT, THE ROCKEFELLER FOUNDATION
Page 7: Value prop for providers
Page 8: Value prop for recipient investors
Page 12, leverage for impact, small amount of CFLC results in massive amounts catalyzed
Page 14: Peak 2, losses go to C first, while returns go to A first, multiple levels
Page 16: Case study, using debt
Designed to prove a market, with reduced or eliminated loss protection for future investments
Page 28: Multi-layer investing, JP Morgan Foundation provide CFLC, and JP Morgan Chase invests in senior debt as a recipient
This debt waterfall seems common, so applying philanthropic dollars as the most junior position is the innovation
This type of multi-level investing on the part of a single institution may be particularly attractive
to foundations, which can provide credit enhancement using their grant or program-related investment (PRI)22 funds and invest in more senior positions using their PRI or endowment
allocations.
Appendix: Questions for participants
Omidyar Network, an investment firm started by eBay founder Pierre Omidyar and his wife Pam, and Blue Haven Initiative and Candide Group, both family offices, have made substantial impact investments and done significant “catalytic” work
Additional thoughts
Add attached image
An estimated
will be passed down from baby boomers over the next 30 years to younger generations who, research reveals, are eager for a range of investing opportunities, particularly those that maximize breadth and depth of impact.
Other sources
Completed
Integrate ideas from investment funds section of the GFRI Asana project
Completed Sources
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