Project snapshot 1

«Blended Finance: When to use which instrument»

This research project addresses one major question: How to select – or create – an appropriate and effective blended finance instrument to address a given problem. There are numerous factors to be considered when deciding on the best approach. An intimate and granular understanding of both, the contextual factors which play a role and the mechanics of varying blended finance instruments, will be vital to come to the right decision.

So far, the majority of research conducted on blended finance has focused on the effectiveness of instruments with respect to mobilizing private investment in a broadly defined development context. What is new, however, is to thoroughly investigate how specific instruments contribute to solving a concrete problem or achieving specific outcomes. Therefore, this research project will perform a bottom up assessment of how to effectively address a predefined problem with appropriate financial structures.

Project team:

-> To the research paper (phase 1), released in February 2022, and the summary version

-> To the research paper (phase 2), released in October 2022

Our research projects

Finalized, ongoing & planned

Third-party research

Selected papers from peers & practitioners

Blended finance is an investment approach that heavily builds on collaboration. In this sense, we share some inspiring, curated resources from our peers in this space:

-> «Beyond Leverage Ratios: A Strategic Approach to Blended Finance» by Matthieu Pegon, Head of Blended Finance, IDB Invest, released April 2023

Project snapshot 2:

«Blending Impact and Finance with Catalytic Capital: What’s in it for the entrepreneur?»

Research in the fields of impact investing and blended finance using catalytic capital has been focusing much on the stewards of capital – the impact investor, the public funder, the foundation executive – in order to understand their motivations, metrics, and performance. Left largely to the side has been the recipient of capital: the entrepreneur. But what advantages do they see in the practice of blended finance that is enabled by catalytic capital? How fitting are blended finance structures? How does the blending of capital influence the entrepreneur’s trajectory of delivering blended value?

This project idea aims to focus on the entrepreneur’s experience of blended finance, learning from the “capital consumer.” Findings identify in which way blended finance structures foster or dampen entrepreneurship and suggest how catalytic capital can ensure the scaling of entrepreneurial solutions. This research project has received an award from the Catalytic Capital Consortium (see press release).

Project team:

-> To the research paper, released in December 2022

Project snapshot 3

«Unleashing the Potential of Faith-Based Investors for Positive Impact and Sustainable Development»

More than 7% of the world’s land surface is owned by religious institutions. This is just one example of the vast amounts of wealth steered and owned by faith-based institutions and actors. Due to the wealth, influence, values, and history of this group, faith-based investors have had a central role in driving the sustainable and responsible investment (SRI) movement. With their ingrained inclination for value-based investing and wealth management, it is no surprise that secular investors with an interest toward sustainability have a lot to learn from faith-based actors.

This research project is based on field research of institutional investors with Judeo-Christian belief in Europe and the United States. Based on in-depth interviews and the shadowing of selected organizations, we identify key points characteristic for faith-based investors and the learnings secular investors can derive from them to further investments towards positive impact and sustainable development.

Project team:

-> To the research paper, released in April 2021

Project snapshot 4

«Unlocking Investments for Water Entrepreneurship»

Globally, water-related issues present one of the biggest challenges that need the attention of governments, civil society and private sector. More than 2 million people do not have access to safe drinking water and 4.5 billion people live without access to sanitation. With climate change becoming increasingly apparent, water scarcity is set to rise as well over the next years.

With their fresh and disruptive thinking, local entrepreneurs provide financially viable solutions and new impulses for the broader water nexus. Yet, access to the required early stage risk capital, particularly smaller ticket sizes ranging from 10k – 1 million USD, remains restricted.

The project explores how innovative financing mechanisms can attract more private capital, particularly in the context of water. It aims to map out which mechanisms are interesting for what kind of water enterprise to help investors and entrepreneurs alike to find the right financing mechanism and unlock investments for the water sector.

Project team:

-> To the research paper, released in December 2021

Project planned:

«Public support: How much is enough»

While both public and philanthropic funders are using concessionary capital to crowd in private investors – sometimes even forgoing financial returns altogether -,  private investors often have mixed expectations vis-a-vis this specific type of funding.

The research project will focus on assessing how much “blending” is exactly needed to successfully crowd in private investors. A related question is whether or not excessive concessionary capital is actually crowding out private investors and thus creates competition rather than collaboration.

Answering these questions with the help of excellent research will enable funders to identify the appropriate level of concessionary capital and ensure that private investment is effectively crowded in while negative side-effects are avoided.