lac training social

__Member Training: A Spotlight on Blended Finance in Latin America and the Caribbean, June 5, 2024, 11:00am-12:00pm EDT__

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Details to follow.

Member Training: A Spotlight on Blended Finance in Latin America and the Caribbean

Join us for a Spotlight on Blended Finance in Latin America and the Caribbean

Blended Finance in Latin America and the Caribbean

sids webinar caribbean social v5

__Tuesday, May 14, 2024, 11:00am-12:00pm EDT__

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Small Island Developing States (SIDS) face unique social, economic, and environmental vulnerabilities, and must rapidly accelerate their transition to sustainable economies. Many SIDS are exploring innovative financing mechanisms, including blended finance, for this transition. Blended finance will be an essential tool in supporting the regional blue economy transition, scaling investment opportunities, and financing nature-based solutions. 

This virtual panel discussion will explore the trends, opportunities, and challenges for blended finance in the Caribbean, and discuss successful examples of blended finance structures and instruments deployed to-date. The session will conclude with an open Q&A. 

Featured panelists:
- Caribbean Climate-Smart Accelerator
- W.K. Kellogg Foundation
- Platform for Social Impact


Blended Finance for Small Island Developing States (SIDS): Caribbean

Join us for for an update on Blended Finance in the Caribbean.

Blended Finance for SIDS: Caribbean

Convergence Logo

__Member Training: Innovative Blended Capital Structures within African Financial Institutions, May 9, 2024, 4:00pm EAT__

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African commercial and development banks have adopted innovative blended structures at the corporate/balance sheet level that have mobilized non-traditional pools of capital to increase their ability to support various thematics including climate, small and medium-sized enterprises, and gender. Examples include Trade and Development Bank and African Guarantee Fund's tiered or varied capital structures. 

Join Convergence for a webinar exploring the nuances of how these organizations have implemented these innovative blended structures from a financial structuring perspective, and the opportunities and challenges they've encountered. The session will begin with a brief overview from each organization followed by panel discussion to delve into the details.

Featured speakers:
- __Nishdeep Sethi__, Group Director of Structured Finance at the African Guarantee Fund
- Additional speakers to be announced

*Registration is complimentary for members, please register using the code shared via email. Non-members can register for a fee of $75.*

Member Training: Innovative Blended Capital Structures within African Financial Institutions

Join us for a Spotlight on Innovative Blended Capital Structures within African Financial Institutions

Innovative Blended Capital Structures in Africa

dc training eb

__Thursday May 2, 2024, 10:00am - 5:00pm EDT, Washington D.C.__

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This training will bring together blended finance practitioners in the Washington D.C. area for an inspiring, interactive, and practice-driven day of learning and knowledge sharing. As an intermediate-level programme, the session will combine insights from Convergence experts, notable speakers from major organizations, and technical experts in the field. This training is an opportunity for Convergence members and non-members to gather in-person to share insights and experiences and tackle difficult questions around innovative approaches to mobilize more private capital for the United Nations Sustainable Development Goals. More speaker details to follow.

This training is complimentary for members (one seat for Standard Membership, two seats for Market Builder Membership), USD 500 for additional member seats, and USD 750 for non-members. Please contact your relationship manager for more details or questions on your membership type.

Register by April 19th to reserve your seat.

__Session Agenda__

10:00am: Welcome & Introduction
- Joan Larrea, CEO, Convergence

10:15am: State of Blended Finance 2024: Deeper Insights
- Ayesha Bery, Manager, Convergence; Andrew Apampa, Manager, Convergence
- Convergence to present thematic insights and recommendations from the newly-released report.

10:45am: Panel Discussion: Balancing Scalability and Innovation: A look at Large Scale Transactions
- Moderator: Joan Larrea, CEO, Convergence
- Esteban Brenes, Senior Director Conservation Finance, WWF; Dia Martin, Managing Director, DFC; Stephanie von Friedeburg, Managing Director, Citi

11:45am: Group Exercise: Key Themes in Blended Finance
- Facilitator: Joan Larrea, CEO, Convergence
- Participants will discuss their responses to pre-work activities provided by Convergence on topics relating to their experience in blended finance transactions. 

12:45pm: Networking Lunch

1:30pm: Anatomy of a Blended Finance Transaction: The Central Asia Fund
- Geoffrey Chalmers, Senior Vice President, ACDI/VOCA

2:10pm: Expert Presentation: The Financials of Carbon, Biodiversity and Other Credits and Their Use in Blended Finance

2:40pm: Networking Coffee/Tea Break

3:00pm: Group Exercise: Analyzing a Blended Finance Transaction
- Facilitator: Leah Pedersen, Senior Director, Convergence
- Participants will review a specific blended finance transaction in detail and work together in small teams to analyze the feasibility of the structure and determine key opportunities for innovation and/or challenges to its success.

4:00pm: Blended Finance Marketplace
- Girls First Finance: Ryan Burgess, Managing Principal, Whole Child Advisors
- Azure Source Capital: John Simon, Managing Director, Total Impact Capital

5:00pm: End

In-Person Convergence Training for Blended Finance Practitioners

Join us as we bring together blended finance practitioners in the Washington D.C. area for an inspiring, interactive, and practice-driven day of learning and knowledge sharing.

Blended Finance Training in Washington D.C.

dc networking social

__Thursday, May 2, 2024, 8:30am - 9:30am EDT, Washington D.C.__

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Convergence invites you to a networking breakfast with members and partners in Washington D.C. Come meet with impact investors, institutional investors, donors, development banks, and sponsors of blended finance deals amongst other stakeholders. This event will be an opportunity to connect with like minded individuals/institutions engaged in blended finance, make new contacts, exchange ideas, and more. 

Additionally, we will share key findings from the 2024 State of Blended Finance Report and be available to answer questions following the presentation.

Member Networking Breakfast in Washington D.C.

Join us for a member networking breakfast in Washington D.C.

Join us virtually for the launch of the 8th edition of our flagship State of Blended Finance report on __Tuesday, April 30 at 9:00am EDT__, where we will guide through the report’s data, trends, insights, and recommendations.

This year, for the first time, we will release two State of Blended Finance reports. This first report will cover the overall blended finance market and the second, to be released in Fall 2024, will focus on climate.

Explore last year's report [here](https://www.convergence.finance/resource/state-of-blended-finance-2023/view).

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__AGENDA__

9:00am - Welcome Remarks, __Joan M. Larrea__, CEO, Convergence

9:05am - Key Findings: The State of Blended Finance 2024
- __Nick Zelenczuk__, Manager, Convergence
- __Andrew Apampa__, Manager, Convergence
- __Ayesha Bery__, Manager, Convergence

9:25am - Q&A, Content Team, Convergence

9:35am - Panel Discussion, moderated by __Joan M. Larrea__, CEO, Convergence, featuring:
- __Babak Abbaszadeh__, President & CEO, Toronto Centre
- __Isabelle Tiems__, Sustainable Finance Expert, Network for Greening the Financial System (NGFS)
- __Michael Ryland__, Director, Centre for Social Finance Law
- __Ben Weisman__, Executive Director, Capital Mobilization at Glasgow Financial Alliance for Net Zero (GFANZ)

10:05am - Q&A with Panelists

10:25am - Closing Remarks, __Joan M. Larrea__, CEO, Convergence

2024 State of Blended Finance Virtual Launch

Convergence is launching the 8th edition of the State of Blended Finance Report on Tuesday, April 30 at 9:00 am EDT. The State of Blended Finance is Convergence’s annual report on blended finance trends, opportunities, and challenges. This year, for the first time, we will release two State of Blended Finance reports.

2024 State of Blended Finance Launch

sids webinar oceania social v2

__Tuesday, April 23, 2024, 10:00pm-11:00pm EDT__.

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Small Island Developing States (SIDS) face unique social, economic, and environmental vulnerabilities, and must rapidly accelerate their transition to sustainable economies. Many SIDS are exploring innovative financing mechanisms, including blended finance, for this transition. Blended finance will be an essential tool in supporting the regional blue economy transition, scaling investment opportunities, and financing nature-based solutions. 

This virtual panel discussion will explore the trends, opportunities, and challenges for blended finance in the Oceania region, and discuss successful examples of blended finance structures and instruments deployed to-date. The session will conclude with an open Q&A. 

Featured panelists:
- Marko van Waveren Hogervorst, PFAN Programme Manager, UNIDO
- Andy Isbister, A/g Director, Blended Finance and Investor Engagement Unit, Australian Department of Foreign Affairs and Trade
- Paul Makumbe, Regional Director, Pacific, Camco

Blended Finance for Small Island Developing States (SIDS): Oceania

Join us for for an update on Blended Finance in the Oceania region.

Blended Finance for SIDS: Oceania

ecosperity ACS social v2

__Wednesday, April 17, 2024, 4:00pm to 5:30pm SGT during Ecosperity Week in Singapore__

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Jointly organized by Convergence and the Monetary Authority of Singapore (MAS), this session will spotlight the opportunities and considerations for implementing blended finance transactions targeting nature-based solutions. It will provide a high-level overview of the state of blended finance in Asia, with a focus on mobilizing capital for climate action and nature-based solutions.

The session will also feature grantees from the inaugural cohort of the [Asia Climate Solutions Design Grant](https://www.convergence.finance/design-funding/open-window/Asia-climate-solutions-design-grant). An interactive fireside chat will showcase successful impact fund managers and investors who will provide granular insights on considerations, challenges and overall learnings for launching blended finance funds targeting nature-based solutions in Asia.

Asia Climate Solutions Design Grant Showcase: Scaling up Nature-Based Solutions Investments with Blended Finance

Join us to learn about opportunities and considerations for implementing blended finance transactions targeting nature-based solutions.  

Asia Climate Solutions Design Grant Showcase

ecosperity members social v2

__Tuesday, April 16, 2024, 6:30pm to 9:00pm SGT__

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Join Convergence and the Australian High Commission to Singapore for a networking event on the sidelines of Ecosperity Week. Connect with impact investors, institutional investors, donors, development banks, and sponsors of blended finance deals. Attendees will have ample time to exchange ideas and discuss blended finance initiatives.

Due to limited capacity, this is an invite only event. If you are interested in attending, please reach out to: asia@convergence.finance

Asia Pacific Member Networking

Join us for a networking event on the sidelines of Ecosperity week.  

ecosperity UNDP social v3

__Monday, April 15, 2024, 6:00pm to 8:00pm SGT on the sidelines of Ecosperity Week in Singapore__

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Recent estimates show adaptation costs are far higher than available international public finance, with private sector contributions remaining minimal. By 2030, adaptation costs could reach $300 billion annually, surpassing what public finance alone can cover.

In this context, UNDP and Convergence will jointly host an interactive workshop showcasing various stakeholders' perspectives on blended finance as an instrumental approach to address the complex challenges of scaling climate adaptation investments in the Asia Pacific region.

The workshop comprises of two parts: a keynote presentation and overview of blended finance and key insights on climate adaptation in Asia Pacific; followed by a hands-on case exercise on structuring a blended finance transaction targeting climate adaptation.

After the case exercise, participants will have the opportunity to connect with like-minded ecosystem partners in the region over snacks and drinks.

Mobilising Investments Towards Climate Adaptation with Blended Finance

Join us as we explore blended finance as an instrumental approach to address the complex challenges of scaling climate adaptation investments in the Asia Pacific region.  

Investment in Climate Adaptation with Blended Finance

CC Facility new logo

__Wednesday, April 3rd, 2024, from 11:00 am-12 pm EDT__

The [Catalytic Climate Finance Facility (CC Facility)](http://www.ccfacility.org) accelerates the implementation of high-impact, ready-to-scale financial structures, filling a market gap in mobilizing private capital for climate action in developing economies. The initiative is a partnership between [Climate Policy Initiative (CPI)](https://www.climatepolicyinitiative.org/) and [Convergence](http://www.convergence.finance), who are combining their expertise to turn innovative financial vehicles into scalable solutions, to increase the available investable pipeline and grow the climate finance market.

The CC Facility accelerates the implementation of climate finance solutions by offering grant funding of up to USD 500,000, customized acceleration support over 12-18 months, and knowledge-sharing resources through a learning hub. The initiative aims to be an ecosystem builder and address a market need in scaling blended finance structures and catalyzing capital for climate change.

__Register for the webinar to:__
- Learn about the CC Facility and its new call for applications
- Gain insights into how to apply for funding and acceleration support
- Understand the experiences of past CC Facility grantees
- Get your questions about the CC Facility answered

Applications will be accepted from March 20 until April 24, 2024. Visit the [CC Facility page](http://www.ccfacility.org) to learn more.

The CC Facility is funded by the Bill & Melinda Gates Foundation, Global Affairs Canada, Australia's Department of Foreign Affairs and Trade, and the International Development Research Centre. The CC facility has raised USD 13 million to date and is fundraising for a second round of USD 10 million by the end of 2024. The goal of the initiative is to reach USD 100 million in size over the next few years.

__About Climate Policy Initiative (CPI)__ 
CPI is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has six offices around the world in Brazil, India, Indonesia, the United Kingdom, and the United States. CPI serves as the Secretariat for the [Global Innovation Lab for Climate Finance (the Lab)](https://www.climatefinancelab.org/), an incubator program that develops innovative financial mechanisms to drive private investments into climate change mitigation and adaptation in developing economies.

__About Convergence__ 
Convergence is the global network for blended finance. Together with our membership of over 160 public, private, and philanthropic investors, as well as sponsors of transactions and funds, we increase private investment in emerging markets and developing economies to advance the UN Sustainable Development Goals (SDGs) and Paris Agreement.

Convergence’s [Design Funding and Market Acceleration Program](http://convergence.finance/design-funding) provides early-stage capital to support the design, launch, and acceleration of blended finance solutions targeting the SDGs.

Convergence is headquartered in Toronto and operates globally with a presence in Singapore, La Paz, Kigali, Nairobi and Washington DC.

Info Session for Catalytic Climate Finance Facility: New Call for Applications

Learn about the CC Facility & its new call for applications

W2AF V3

__Inside the Deal: Water Access Acceleration Fund (W2AF), March 26, 2024, 9:00am - 10:00am EST__

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Explore the inner workings of real blended finance transactions through Convergence's "Inside the Deal" webinar series. Each quarter, we delve into a successful deal, inviting the deal sponsor and key stakeholders to share candid insights on structuring these intricate transactions.

In our next webinar we will feature the Water Access Acceleration Fund (W2AF), the first ‘water-focused’ blended finance impact fund. This innovative private equity fund is focused on financing sustainable and scalable solutions that improve access to clean and affordable drinking water for underserved populations in Sub-Saharan Africa and South and Southeast Asia.

During the hour-long session, the Incofin and Danone team will provide an overview of the fund's structure and fundraising journey. We will also conduct in-depth interviews with key stakeholders involved in the transaction, uncovering invaluable lessons learned along the way. The webinar will conclude with an open Q&A session.

*This webinar is open to Convergence members only.*

Inside the Deal: Water Access Acceleration Fund (W2AF)

This webinar featured the Water Access Acceleration Fund (W2AF), the first ‘water-focused’ blended finance impact fund. This innovative private equity fund is focused on financing sustainable and scalable solutions that improve access to clean and affordable drinking water for underserved populations in Sub-Saharan Africa and South and Southeast Asia.

During the hour-long session, the Incofin and Danone team provided an overview of the fund's structure and fundraising journey. We also conducted in-depth interviews with key stakeholders involved in the transaction, uncovering invaluable lessons learned along the way. The webinar concluded with an open Q&A session.


Join us to learn about the Water Access Acceleration Fund (W2AF)

Latin America faces formidable challenges in maintaining access to capital against the backdrop of climate change and ecosystem degradation. Nearly $107 billion in additional investment is required per year in the region to support nature-based solutions (NbS) and align with the Rio Convention Targets1. Nature-based solutions play a vital role in maximizing the impact of capital invested in Latin America’s infrastructure and have high potential to contribute to the Sustainable Development Goals (SDGs).

AMPLO Impact Investing (Amplo)’s Blooming Roots Fund is designed to invest in gender inclusive NbS-aligned sectors in Latin America. Amplo is working with Grassroots Business Fund (GBF) and Andes Impact Partners (AIP), a spin-off of GBF, to design and operate the fund. 

## Feasibility study grant for the Blooming Roots Fund 

Convergence [awarded](https://www.convergence.finance/design-funding/grant-portfolio/3wYP2QawPGpubU3phuxxup/view) a feasibility study grant to Amplo under the [Gender-Responsive Climate Finance Window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window) funded by Global Affairs Canada, for the design of the Blooming Roots Fund—a $50 million, blended fund that aims to invest in a diverse portfolio of for-profit NbS enterprises (NbSEs) focused on sustainable agriculture, sustainable tourism, health and personal care bio-products as well as nature-tech businesses that allow the scaling of portfolio companies in Latin America. The fund will invest in NbS-aligned sectors across Colombia, Peru, and Central America supporting gender-inclusive businesses that foster sustainable use of natural resources. 

The Blooming Roots Fund employs a blended finance strategy that combines innovative and flexible financing and technical assistance (TA). The fund aims to utilize investment capital to make direct investment into NbSEs and offer first-loss capital along with a guarantee to reduce investment risk. TA will support investees to gain new skills and improve their financial performance and capacity to generate impact. 

## Targeting climate and gender 

The Blooming Roots Fund aims to contribute to the development of NbSEs as a viable and long-term solution for addressing climate adaptation and mitigation and to bridge rural and gender gaps. The fund focuses on rehabilitating and strengthening the entrepreneurial ecosystem, targeting rural populations living in areas where economic activity relies on land use or exploitation.

TA will include opportunities to strengthen businesses’ environmental management, including the provision of necessary tools for implementing sustainable practices and enabling appropriately delivered NbS, such as support for carbon certification and payment for ecosystem services structuring. Additionally, investees will receive gender-focused TA allowing them to develop gender-inclusive company policies that will foster female leadership and skills development to close information, financial, and digital literacy gaps.

Through the fund, over 400 community members will gain access to increased income and improved knowledge tools with 50% expected to be women. The NbSEs supported through the fund aim to restore natural habitats, protect the ecosystems of 1,000 ha of land, and capture 27,855 tons of CO2 through carbon sequestration.

## Challenges during the design process

In its original design, the fund aimed to primarily support smaller businesses, however managing many small investments proved costly and inefficient. To address this challenge the fund has developed a diversified investment strategy to pool resources from larger investments to support smaller ones. The fund uses a variety of long-term performance-based instruments, including revenue-based finance and mezzanine debt, and convertible debt or pure equity instruments for ecosystem enablers (innovation and tech-based businesses supporting NbSEs). Each investment is evaluated on a case-by-case basis to meet the investee’s needs.

Investors often perceive NbSEs and SMEs as high-risk investments. To mitigate this perceived risk, the Blooming Roots Fund has implemented risk reduction measures, including utilizing self-liquidating instruments, offering guarantees, and providing first-loss capital funded by grants. These mechanisms help reassure investors and make investment opportunities more attractive. 

Data availability for benchmarking purposes can be limited, especially in the context of supporting NbSEs and SMEs. To meet this challenge, the fund developed their own benchmarking system leveraging data drawn from previous advisory work and a comprehensive baseline study conducted on the ground. Using this data they have gained valuable insights into how to effectively support target businesses, particularly with a gender-smart approach.

![bloomingroots fundstructure](//images.ctfassets.net/4cgqlwde6qy0/6Dqj46DBey4m3NrC7G7WK6/1a3f694fcada85dadf2216a432c691b8/bloomingroots_fundstructure.png)

## How Design Funding has helped to advance the solution

Convergence's Design Funding support to the Blooming Roots Fund has significantly advanced the fund’s efforts on multiple fronts. Design Funding has empowered Amplo to allocate more resources towards refining their structure and strengthened their fundraising endeavors by financially supporting their team's commitment. Feedback from Convergence has helped them enhance their investment thesis and refine their materials. Convergence’s support has also served as a compelling marketing asset for the fund, enhancing its credibility and appeal in the market.

## The importance of blended finance

Creating a robust pipeline of NbSEs is key to the fund achieving its mission of driving long-term, positive social, environmental, and economic change. To this end, the Blooming Roots Fund’s blended structure is essential. Utilizing grant capital for investment readiness ensures that NbSEs are adequately prepared to meet the fund's investment criteria, leading to pipeline development, derisking, and proper implementation of sustainable business models within the realm of NbSEs. This proactive approach to pipeline development increases the likelihood of identifying viable investment opportunities and contributes to the fund's overall impact objectives.

The fund's blended structure derisks the typical challenges sustainable business models often face including market volatility, regulatory uncertainties, and limited access to capital. Guarantees and first-loss grants encourage private investors to participate while instilling confidence in NbSEs, enabling them to pursue innovative solutions without fear of failure.

Proper implementation of sustainable business models is equally as important as investment. The fund's TA equips NBSEs with the knowledge, skills, and resources needed to empower them to execute their business strategies while maximizing social, environmental, and financial impact. This approach fosters resilience and adaptability within NBSEs allowing them to navigate challenges and capitalize on opportunities in a rapidly evolving market landscape.

## The way forward

Building on learnings from its initial pilot, conducted in the Providencia and Santa Catalina islands in Colombia, Amplo designed the Blooming Roots fund with the aim to expand its reach by implementing scalable and replicable strategies and further refine its investment approach to optimize the use of resources in the target areas for higher potential impact. The fund is currently completing its design and structuring activities and conducting stakeholder consultations.

The fund is also actively seeking alliances with organizations that share a commitment to sustainable development and have a proven track record of success in complementary sectors. They are currently exploring partnerships with organizations like [Cacao for Development](https://www.partners.net/program/cacao-for-development/#:~:text=C4D%20is%20a%20US%2425,complementary%20supply%20chains%20in%20Colombia), whose technical assistance program in the cacao and complementary crops value chain has garnered positive results in the region. Through collaboration with similar organizations the fund aims to leverage their expertise, networks, and resources to amplify impact, expand reach, and drive meaningful change in target communities and sectors.

*1. [State of Finance for Nature 2023, United Nations Environment Program](https://www.unep.org/resources/state-finance-nature-2023).*

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*Have a blended finance solution at the intersection of climate change and gender equality? Apply for funding from our [Gender-Responsive Climate Finance Design Funding Window](https://www.convergence.finance/design-funding/open-window/gender-responsive-climate-finance-window), which awards early-stage grant funding for the design and launch of innovative blended finance vehicles focused on climate change and gender equality in emerging markets globally.*

*To see what Convergence has supported to date, review our Design Funding grantee portfolio [here](https://www.convergence.finance/design-funding/grant-portfolio).*

Learn how funding from Convergence has supported the Blooming Roots Fund, challenges they've faced, and what's next.

Grantee Profile: AMPLO Impact Investment

Grantee Profile: AMPLO Impact Investment - Advancing gender focused nature-based solutions

FOUNT is a leading impact investment firm, providing strategic advisory and investment management services focused on driving social and environmental impact alongside financial returns in emerging markets. 

Building upon earlier experiences in their previous roles, Bernadette Blom and Bob Assenberg established FOUNT in 2013 as a strategic advisory firm, specializing in impact investing within emerging markets. As FOUNT advised and supported its numerous clients to achieve substantial impact, the firm expanded their involvement to encompass fund and investment management activities, leveraging their existing networks and expertise in setting up and managing impact investment funds. This evolution started with the management, restructuring, and eventual divestment of an affordable housing portfolio in emerging markets.

We spoke with co-founder Bernadette Blom about FOUNT’s portfolio, blended finance insights and learnings, integrating a gender lens, and more.

__Can you tell us about FOUNT’s portfolio of impact funds?__

FOUNT currently oversees a diversified portfolio of four impact funds that span various sectors, geographies, and instruments, all characterized by innovative and sustainable business models.

Since 2017, we manage __BIX Capital__, focusing on pre-financing impact receivables (mainly carbon credits) in Sub-Saharan Africa. Additionally, since 2019 we are Fund Manager for the __Good Fashion Fund__, contributing to systemic change within the textile and apparel industry and as of 2020, we serve as the Investment Advisor for the __AGRI3 Fund__, collaborating with Cardano Development, to provide guarantees for sustainable agriculture, forest protection, and improved rural livelihoods.  FOUNT recently added the __Organic Development Finance__ to its portfolio, dedicated to providing affordable finance for organic agricultural producers in developing countries.

Our commitment revolves around innovative, unique, and impact-focused initiatives, with blended finance constituting a central role in all our endeavours.

__What is FOUNT’s approach to blended finance? What have you observed in your practice of blended finance?__

The impact funds under our current management exhibit a blended capital structure comprising distinct risk/return tranches. This structural composition is imperative for innovative impact funds without a proven investment thesis. In instances where risks are indeterminate, investors frequently perceive them as high, underscoring the indispensability of a blended capital structure to stimulate private investor participation. The strategic allocation of varying risk/return profiles across diverse investors within a unified capital structure facilitates the attainment of substantial impact.

As a prudent practice, ascertained from experience, we observe that upon establishing a robust track record, the concessional tranche can be strategically diminished. Simultaneously, leverage can be augmented for subsequent funds, capitalizing on the diminished risk perception among investors. This nuanced approach aligns with industry best practices and enhances the overall viability and attractiveness of subsequent investment vehicles.

__FOUNT has an array of blended transactions, ranging from fashion, to clean cooking to agriculture. What lessons have you learned working with different instruments and across sectors?__

When establishing an innovative fund, particularly one entering a new sector or featuring a novel investment instrument, as exemplified by our experience with all our mandates being first-of-its kind impact funds, the primary objective is to showcase the financial, environmental, and social viability of the investments. In the context of such a ‘demonstration fund’, the inclusion of junior equity/first-loss is imperative to attract private investors. 

The distinctive innovation introduced by BIX Capital (investors include Shell foundation, International Finance Corporation (IFC), FMO: Dutch Entrepreneurial Development Bank (FMO), and U.S. International Development Finance Corporation (DFC)) lies in its unique investment instrument, impact receivable finance. Under this mechanism, carbon credits generated through the utilization of cookstoves or other impact products are pre-sold to reputable offtakers, based on a pre-agreed volume and price . The underlying agreement serves as collateral, mitigating the need for recourse to the balance sheet of the financed SME. Since its inception BIX Capital has successfully demonstrated the efficacy and scalability of this business model, and is now fully invested prompting the initiation of a follow-on fund, BIX2, characterized by increased leverage, a larger fund size, and a broader investment mandate.

AGRI3 (investors include the Dutch Government, Rabobank, and Global Environment Facility (GEF)) , on the other hand, specializes in providing risk mitigation, employing various types of guarantees to empower financial partners in developing countries to collaborate with their clients towards greater sustainability, encompassing areas such as sustainable agriculture, deforestation avoidance, and support for rural livelihoods. AGRI3 facilitates transactions that might be beyond the capacity of individual partners, ensuring scalability through collaborative efforts. 

__Tell us about a past transaction that benefitted from using a blended finance approach.__

The strategic utilization of blended finance empowers FOUNT to foster innovation and engender positive environmental and social impact, aligning seamlessly with our commitment to maintaining an impact-focused and innovative approach in managing our funds.

A notable illustration of the successful implementation of blended finance is the establishment of the Good Fashion Fund in 2019.The fund strategically targets apparel manufacturers. Investments are directed towards impactful equipment that results in a substantial (>50%) reduction in the utilization of energy, water, or chemicals in the production process, concurrently improving workers' conditions and rights.

The textile sector is known for its environmental impact, challenging labor conditions, and reputational challenges. Laudes Foundation initiated the fund, acknowledging the pressing need for investments and the considerable potential for positive impact within the sector. The junior equity investments from Laudes Foundation and the Mills Fabrica catalyzed senior debt funding from Rabobank. This collaborative approach not only validated the viability of the business model but also exemplified the indispensability of the blended finance strategy in overcoming inherent challenges and propelling the success of such initiatives.

__How does FOUNT integrate a gender lens into its investment decisions?__

Gender inequality remains a formidable global challenge, and FOUNT is unwaveringly committed to the rights of women and contributing significantly to the realization of gender equality. Within our funds, women, whether as customers, company proprietors or employees, play pivotal roles. A comprehensive gender lens is meticulously integrated into the investment decisions of AGRI3, Good Fashion Fund, and BIX. Each fund adheres to an individualized gender policy, incorporates leading industry standards and best practices, and tailors to address specific gender challenges within the targeted sectors.

In the case of BIX2, the fund has undertaken multifaceted adaptations to the 2X Challenge criteria, aiming to yield tangible gender outcomes from its investments. The primary focus is on the percentage of investments targeting products specifically designed to enhance the livelihoods of underserved female populations. Our steadfast commitment involves dedicating 80% of investment capital, via SME finance, to such products and services. We are committed to quantifying the number of women reached and calculating time saved by women, utilizing a proprietary model. Where feasible, we intend to pre-finance companies based on monetized time savings, denoted as "Gender Credits." 

Beyond our core focus, we actively engage with portfolio companies to promote gender-positive workforce and supply chain policies and. Additionally, we consciously exhibit a positive bias towards investing in female-led or owned businesses.

__What are some key challenges FOUNT has faced in your blended finance journey?__

Securing risk capital, particularly for the first-loss/concessional tranche, poses a considerable challenge, yet is pivotal for mobilizing private funding, especially for innovative impact funds. 

Our track record has become instrumental in facilitating the expansion of our funds. Given our focus on establishing high-impact, pioneering funds with innovative approaches, operational in developing countries, the associated perceived risks are often elevated. Over the years, we have systematically instituted standards and policies that can be applied across various initiatives, encompassing investment, environmental, and social impact considerations.

__We are seeing lots of interest in the potential for blended finance to enable scaled opportunities and impact. Could you share some insights and advice based on your experience managing funds of a significant size?__

We see many opportunities for blended finance and foresee substantial prospects in its future application. It is often imperative to initiate a first fund to establish the proof of concept. Drawing from the insights gained in this initial endeavor, a considerably larger second fund can be formulated. The second fund typically necessitates a reduced reliance on junior or concessional capital, given that the viability of the business case has been substantiated, resulting in a commensurate reduction in perceived risk.

__How do you see FOUNT’s blended finance activities evolving in the future?__

As we focus on the continued management and investment of existing funds in our portfolio, a logical progression for FOUNT is to leverage the insights garnered, sector networks, knowledge, methodologies, and processes from our current funds. These valuable assets will be strategically channeled into the creation of larger follow-up funds, including a first close of BIX2 in 2024 and our imminent plans for GFF 2.0.

Moreover, we are dedicated to exploring new, innovative initiatives capable of generating substantial impact and that have not yet achieved widespread implementation.

__Thinking about your time at FOUNT to date, what has stood out to you?__

FOUNT was founded in 2013 by two visionary entrepreneurs committed to enhancing livelihoods and ecosystems in emerging markets. Presently, FOUNT is strengthened by a dedicated team of international professionals. Over the years, FOUNT has successfully established multiple impact investment funds, disseminated knowledge, and facilitated financial flows to impact investment initiatives. Through the creation of innovative and scalable projects in emerging markets, FOUNT actively contributes to advancing the Sustainable Development Goals.

Our commitment is to persist in this journey alongside our stakeholders, with a focus on expanding FOUNT's influence as an innovator in the sector. Simultaneously, we aspire to maintain our status as an inspiring workplace dedicated to making a meaningful impact.

Hear from Bernadette Blom of FOUNT on their portfolio of impact funds, their approach to blended finance, how they are integrating a gender lens in their work and more.

FOUNT Member Spotlight

FOUNT Member Spotlight with Bernadette Blom

*San Francisco and Toronto, March 20, 2024* —Today, the Catalytic Climate Finance Facility (CC Facility) launched its second call for applications targeting early-stage market-ready blended climate finance structures in developing economies. 

Selected applicants will receive a suite of support—up to USD 500,000 in grant funding, customized technical assistance to address key barriers and mobilize private capital, and access to knowledge-sharing through a learning hub.

Applicants may submit concept notes on the [CC Facility website](https://www.ccfacility.org/apply) until April 24, 2024, with reviews conducted on a rolling basis. 

Launched in 2023 with funding from Bill & Melinda Gates Foundation, Global Affairs Canada, Australia’s Department of Foreign Affairs and Trade, and the International Development Research Centre, the CC Facility is a partnership between Climate Policy Initiative and Convergence, who are combining their expertise to turn innovative financial vehicles into scalable solutions and grow the blended climate finance market. 

Dr. Barbara Buchner, the Global Managing Director of Climate Policy Initiative (CPI), emphasized the crucial role of blended finance solutions in unlocking the trillions of dollars required for climate action this decade. "As the CC Facility embarks on its second cycle, we are confident that our unique blend of grants and acceleration support services can catalyze the development of the next generation of climate finance vehicles," Dr. Buchner said.

Joan Larrea, CEO of Convergence, underscored the CC Facility's role in helping market-ready blended climate finance vehicles scale up quickly. “We know where the roadblocks lie and are putting tools and resources together to support climate solutions while creating a pipeline of investible deals.” Larrea said. “Investors from public, private, and philanthropic sectors will want to invest.

To date, the CC Facility has raised USD 13.5 million and aims to raise USD 100 million in catalytic donor capital to support the launch of blended finance structures closing the climate financing gap and accelerating climate solutions in developing markets.

On April 3, 2024, the CC Facility will host a [virtual information session](https://climatepolicyinitiative.zoom.us/webinar/register/9217110244138/WN_edIRAgf0QA-3ntitiJT1aQ) to cover the features of this application window, provide insights on how to apply, and offer details on the selection process. Interested parties are encouraged to participate to gain valuable insights and guidance for submitting successful proposals.

The call for applications marks the first of two application windows scheduled for 2024, with a second round slated to open on September 19. 

The first CC Facility cohort, featuring six mitigation and adaptation solutions in Sub-Saharan Africa and Latin America, [was announced](https://www.climatepolicyinitiative.org/press-release/catalytic-climate-finance-facility-awards-usd-2-4-million-to-inaugural-class-of-blended-finance-vehicles/) during COP28 last December.

### ABOUT CLIMATE POLICY INITIATIVE
CPI is an analysis and advisory organization with deep expertise in finance and policy. Our mission is to help governments, businesses, and financial institutions drive economic growth while addressing climate change. CPI has six offices around the world in Brazil, India, Indonesia, the United Kingdom, and the United States.

CPI serves as the Secretariat for the [Global Innovation Lab for Climate Finance (the Lab)](http://www.climatefinlab.org/), an incubator program that develops innovative financial mechanisms to drive private investments into climate change mitigation and adaptation in developing economies. 

### ABOUT CONVERGENCE
Convergence is the global network for blended finance. Together with our membership of over 160 public, private, and philanthropic investors, as well as sponsors of transactions and funds, we increase private investment in emerging markets and developing economies to advance the UN Sustainable Development Goals (SDGs) and Paris Agreement.

Convergence’s [Design Funding and Market Acceleration Program](http://convergence.finance/design-funding) provides early-stage capital to support the design, launch, and acceleration of blended finance solutions targeting the SDGs.

Convergence is headquartered in Toronto and operates globally with a presence in Singapore, La Paz, Kigali, Nairobi and Washington DC.

### MEDIA CONTACTS

__Karolyn Xie__ 
Head of Communications 
Convergence Blended Finance 
karolyn.xie@convergence.finance

__Júlio Lubianco__ 
Communications Manager 
Climate Policy Initiative 
julio.lubianco@cpiglobal.org

__Sam Goodman__ 
Climate Policy Initiative 
sam.goodman@cpiglobal.org

Catalytic Climate Finance Facility opens call for applications of market-ready blended climate finance solutions

Catalytic Climate Finance Facility call for applications

*Figure 1: Market size and growth of blended finance in South Asia*

The latest data brief from Convergence analyzes how blended finance approaches have been deployed in South Asia to date and presents insights from interviews conducted with industry stakeholders. This article provides a snapshot of the data brief, including opportunities and challenges for blended finance in South Asia. 

Click [here](https://www.convergence.finance/resource/blended-finance-in-south-asia/view) for the Blended Finance in South Asia data brief.

In the past two decades, South Asia has experienced significant economic growth. For instance, the region experienced a [growth rate of 5.8%](https://www.worldbank.org/en/news/press-release/2023/10/03/world-bank-expects-solid-growth-but-risky-outlook-for-south-asia#:~:text=WASHINGTON%2C%20October%203%2C%202023%E2%80%94,%2Da%2Dyear%20regional%20outlook.) in 2023, with India accounting for [approximately](https://world101.cfr.org/rotw/south-asia/economics#india-s-rise-drives-growth-in-the-region) 70% of the region’s total economy and almost 75% of the population. Despite this success, South Asian countries continue to face major challenges, such as government debt, which [averaged](https://www.worldbank.org/en/news/press-release/2023/10/03/world-bank-expects-solid-growth-but-risky-outlook-for-south-asia#:~:text=WASHINGTON%2C%20October%203%2C%202023%E2%80%94,%2Da%2Dyear%20regional%20outlook.) 86% of GDP in 2022 across the region. Moreover, some countries, such as Bhutan, Pakistan, and Sri Lanka, face weak private investment, with growth that [has been](https://blogs.worldbank.org/endpovertyinsouthasia/south-asias-economic-outlook-five-charts) negative or near zero. The region is also [vulnerable to natural disasters](https://thedocs.worldbank.org/en/doc/9c70bcc4b291f92a9dba8e4690d04419-0310012023/related/SADU-Oct2023-Highlights-Chapter-1.pdf), made more frequent and intense by climate change. Blended finance can play a role in addressing many such challenges by using concessional catalytic capital to de-risk private sector investment. 

The Convergence Historical Deals Database (HDD) has recorded 167 blended transactions targeting South Asia in part or in full, representing aggregate committed financing of $23.5 billion. A large portion of both the deal count and aggregate financing has targeted India. To provide a more accurate picture of India’s influence on the data, the Blended Finance in South Asia data brief distinguishes deals between India (“India-focused deals”)  and the remaining South Asian countries (“South Asia excl. India”) where appropriate.

# Key takeaways from the brief
### India is South Asia’s largest blended finance player by deal count and financing

Given the size of its consumer market and the prominence of its economy within the region, India is the most active blended finance market in South Asia with 115 transactions, of which 110 transactions are India-focused, while the remainder are also active in multiple other South Asian countries. India is followed in deal count by Pakistan (19), Bangladesh (18) and Sri Lanka (15). 
While India accounts for 69% of blended finance transactions in South Asia, these transactions tend to be small and make up only 59% of aggregate financing in the region. Pakistan, on the other hand, accounts for only 11% of total South Asia transactions but 30% of aggregate financing. 

![How is blended finance deployed in South Asia?](//images.ctfassets.net/4cgqlwde6qy0/mBFPTeCKTYt7ym6Hl8izL/76fd8afba2d7a9c1d97e705018739fd9/SA_DB.png)

*Figure 2: Deal count and aggregate financing by South Asian country*

### Energy and financial services most prominent sectors in South Asia

The top sector targeted by blended finance transactions in South Asia is energy. While demand for energy across South Asia has [increased](https://blogs.worldbank.org/endpovertyinsouthasia/integrated-electricity-market-south-asia-key-energy-security) by over 50% since 2000, renewable energy use varies widely by country. For example, Afghanistan, Bhutan and Nepal have [used](https://www.wri.org/insights/afghanistan-bhutan-and-nepal-grid-renewables-bring-power-remote-villages) small-scale solar and hydropower to bridge the gap between rural and urban energy access, whereas India remains dependent on fossil fuels, with coal [supplying](https://www.eia.gov/international/analysis/country/IND) 44% of total energy consumption in 2020. Blended finance [can help address](https://www.convergence.finance/resource/state-of-blended-finance-2023/view) the financing challenges associated with access to commercial capital for renewable energy by de-risking investment opportunities and crowding in private funding.

Secondly, compared to all HDD transactions, South Asia overall has a higher representation of blended transactions targeting financial services. According to the International Monetary Fund Financial Development Index, South Asia’s financial inclusion is [behind](https://www.elibrary.imf.org/display/book/9781513587219/CH013.xml?rskey=hlLR8u&result=1) its G20 and ASEAN-8 peers; in 2021, only 11% of adults in South Asia were borrowing from and saving with a financial institution. Many adults who do borrow turn to friends and family as a source of funds. Blended finance can help increase financial development by de-risking investments in inclusive financial institutions. 

 ![South Asia transactions by sector](//images.ctfassets.net/4cgqlwde6qy0/3DhZORKp8iDanCcXhL9v8g/5b0206735c6a07bdba21adbf9c7f2f33/SouthAsiaFigure3.png)

*Figure 3: South Asia transactions by sector*

### Projects predominant in South Asia excl. India; funds predominant in India

In South Asia excl. India transactions, projects make up 33% of the blended finance landscape, whereas in India-focused transactions, projects play a smaller role (9%). Meanwhile, funds play a larger role (43%) in blended transactions in India, and a smaller role (32%) in the rest of South Asia. The prevalence of funds among India-focused structures is likely related to the size of the Indian economy and its familiarity to portfolio investors who place money in funds. Other countries in the region may have more difficulty attracting fund investors, even with blending, in which case project finance offers another avenue. Single-asset financings of a sufficient size, credit enhanced through blending, can attract direct investors, especially in established asset classes such as energy. 

![South Asia transactions by blended vehicle type](//images.ctfassets.net/4cgqlwde6qy0/35T54xDLcRWly4UYK4Gg1k/bcd13d7f757b542d812a4f3ae08aebb4/SouthAsiaFigure4.png)

*Figure 4: South Asia transactions by blended vehicle type*

### Opportunities and challenges for blended finance in South Asia

Throughout our interviews with blended finance practitioners across South Asia, several themes arose regarding challenges and opportunities for blended finance in the region. The largest challenge noted is the cost of foreign exchange hedging, which can prohibit poorer countries from accessing capital markets. Inconsistent or archaic legal and regulatory environments is a second challenge that many interviewees spoke about. South Asia is [hampered](https://www.dni.gov/files/images/globalTrends/GT2040/GT2040-5-YR-Regional-2021317-South_Asia.pdf) by outdated legal frameworks and highly bureaucratic systems that can lead to a lack of innovation in the financial sector. A third challenge is a lack of understanding of blended finance structures, leading to hesitancy by investors to provide funding towards these transactions. 

With these challenges come opportunities to increase the use of blended finance in the region. Innovations from South Asian governments and regulators can help to incentivize private investors to participate in blended finance transactions and create an enabling environment. Some interviewees shared examples where governments could have positive impacts, such as through the creation of an overarching regulatory framework for infrastructure development in Pakistan, or the push for a sovereign credit rating in Nepal. A sovereign rating provides information on the background level of country risk that could affect that transaction. The presence of this benchmark allows better calibration of the amount of concessional support needed in a blended transaction to secure private sector interest and could reduce the need for concessional support.

There are also opportunities to increase the use of philanthropic capital to catalyze private investment in South Asia. Currently, regulations in India prohibit the use of corporate social responsibility (CSR) in blended finance structures, however CSR could be a potentially large pool of concessional capital. Meanwhile, there could be an increasing role in blended finance for family offices and high net-worth individuals. 

Finally, blended finance can be used to close the Sustainable Development Goal (SDG) financing gap in climate-focused and social sectors. While the largest opportunities for blended finance in South Asia focus on areas of climate investments like energy storage, micro grids, cooling, and biofuels, there is untapped opportunity to mobilize private capital for health and education. Currently only a small portion of blended finance transactions in South Asia target social sectors such as health and education. Convergence [found](https://www.convergence.finance/news-and-events/news/3sJLhFFmJi5M60tQ7zut69/view) that scaling private financing into these sectors will require the development community to deploy catalytic financing to launch funds of funds to develop a broader investment ecosystem in the space. 

Blended finance can be an effective tool in South Asia’s agenda for sustainable development. The region’s transition to net zero, the opportunities to update legal and regulatory frameworks to create an enabling environment for investors, and the largely untapped pool of philanthropic capital are some of many avenues where the region can benefit from blended finance.

For further information on Convergence’s methodologies, click [here](https://www.convergence.finance/about/data-methodology?). 

__Become a [member](https://www.convergence.finance/membership) and read the [full brief](https://www.convergence.finance/resource/blended-finance-in-south-asia/view).__

How is blended finance deployed in South Asia?

Gender diversity and inclusion in the evolving world of finance is an important strategic imperative to enhance profitability, resiliency, innovation, and business performance overall. Yet, the underrepresentation of women in investment decision-making roles, and in fund management positions, persists. On this International Women's Day, we explore the pressing need for increased gender diversity at the capital allocation level and delve into initiatives by various players across blended finance fund structures that are tackling key barriers to entry that women face including lack of experience and network-building, proper implementation of Gender Lens Investing (GLI) frameworks and inconsistent investor/donor requirements.

### Mentorship and Training

Convergence has tracked over 1,100 blended finance transactions benefiting developing economies, with a majority structured as funds. One of the most significant challenges to increasing women-led funds in emerging markets is the lack of experience and mentorship opportunities for women aspiring to leadership positions. The reality is that social and organizational structures tend to favor male candidates and employees over their female counterparts in the financial sector. Worse yet, first-time female fund managers [face](https://hbr.org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get) an uphill battle with additional scrutiny by investors who tend to ask them prevention-oriented questions about potential for losses, rather than promotion-oriented questions about potential for gains.

Organizations can meet this challenge head on by developing dedicated mentorship programs alongside intentional sponsorship initiatives, and capacity-building activities. For example, [2X Ignite](https://www.2xignite.org/) runs 2XI GP Sprint, a 6-month long capacity-building program aimed at upskilling 100 female-led gender-lens fund managers across Africa to strengthen their fundraising proposition for their investment vehicles. 2X Ignite’s ultimate goal is to grow and support the market for female-led gender-smart fund managers, unlocking more limited partner capital for gender-smart businesses. Another example, [RENEW Capital](https://www.renewcapital.com/) provides customized training for women executives that addresses specific systemic barriers for their career development and leverages their extensive pan-African network to bolster participants’ mentorship opportunities. These efforts focus on building the next generation of female leaders; other efforts address systemic biases toward women. For instance, [Value for Women](https://www.v4w.org/work/gender-in-business-insights/value-for-women-insights-women-decision-makers-issue-4) has  explored why women-fund managers and women investors in emerging markets receive limited funding and determines that enduring systemic cultural barriers are what's holding women back. Value for Women [recommends](https://www.v4w.org/resources/insight-issue-4-women-decision-makers) encouraging limited partners to innovate their decision-making processes through power-sharing with women and other minority groups, piloting co-creation concepts with fund management and investees, as well as fostering an openness to experimenting while listening to investee needs. 

### Perception and Integration of Gender-Lens Investing

The implementation of GLI in investment vehicles presents another challenge. While numerous frameworks and guidelines exist, each investment fund must define its own strategy and investment criteria. We regularly see investment theses for blended transactions with a gender-lens incorporate female entrepreneurs as end beneficiaries but lacking an integrated and intentional female-led approach to internal leadership and investment decision-making within the fund itself.

To address this gap, [FinDev](https://www.findevcanada.ca/en), Canada’s development finance institution, launched a [Technical Assistance Facility](https://www.findevcanada.ca/en/what-we-do/technical-assistance) that guides a select portfolio of fund managers to incorporate a gender lens into their investment processes. This includes supporting women as executives, leaders and investors, based on the 2X criteria. In response to the growing need for support in this area by their portfolio companies, FinDev also produced a training toolkit for fund managers designed to help implement a GLI strategy that also develops gender inclusivity. 

At the fund level, [Chancen International](https://chancen.international/)’s Future of Work Fund (FWF), led by Batya Blankers, illustrates how a blended fund can incorporate GLI into its investment strategy as well as its management approach. FWF provides access to education for marginalized youth across Sub-Saharan Africa. This fund is a women-led initiative that focuses on creating opportunities for traditionally excluded populations, especially women. For Blankers, the attitudes and perceptions held by leadership become reflected in driving FWF’s success: "Our position as a women-led fund enriches our approach, allowing us to bring diverse perspectives to the forefront of financial innovation. The biggest challenge with scaling blended finance solutions in emerging markets is risk perception, but as has been proven multiple times, women are some of the best customers, and we see having a strong gender lens as an opportunity." 

### Investors’ Expectations 

Finally, despite a dual focus on impact and financial return, women fund managers raising gender-lens funds regularly encounter investor reticence. [Terra Global Capital](https://www.terraglobalcapital.com/), a US-based investment manager focused on nature-based solutions, has observed these challenges first-hand in the market. As Leslie Durschinger, CEO and Founder puts it: “These challenges are rooted in implicit biases, limited networks, and gender-related perceptions during the capital-raising process.” Leslie also states that, in her experience, some women-led funds present return potential more conservatively than their male counterparts, at times underplaying the upside potential and inadvertently negatively impacting the assessment of their funds. Leslie attributes the success in gaining investor interest in their new fund, Terra Bella Nature Based Solutions Carbon Fund, to a track record of investment management over 17 years and leveraging a team composed of 50% women.

Investors in blended funds can help shape the investment landscape by setting and encouraging investment criteria that include a higher proportion of women on investment committees or in fund leadership and being open to smaller ticket sizes for small female-led funds. Examples of such initiatives include the [Visa Foundation](https://usa.visa.com/about-visa/visa-foundation.html)’s investment strategy that evaluates investments into intermediaries and funds focused on emerging markets with a gender lens applied all the way from the VC partners and co-investors through to end-borrowers. Their aim is to not only increase access to capital for entrepreneurs in emerging markets, but also raise the amount of women who control the capital from the top. To further illustrate how a gender lens has been applied at the investor level, [C4D Capital Partners](https://c4dpartners.com/)’ Bharat Shubharambh Fund II developed an integrated gender strategy with carried interest linked with a goal of reaching 30% of their investments dedicated to women-owned or led enterprises. Tangible, measurable and intentional goals set at the investor level can drive meaningful outcomes and set market standards. 

### Supporting women-led transactions at Convergence

At Convergence, supporting women-led transactions lies at the heart of our granting activity, where close to 40% of the blended finance vehicles supported are transactions led by women. As investors increasingly seek to embrace roles as catalysts for change, supporting women-led funds is critical to achieve diversity in investment decision-making and achieving an equitable financial landscape.


The Gender Advantage: How to Bolster Women-Led Funds in Blended Finance 

How to Bolster Women-Led Funds in Blended Finance 

*This op-ed was originally published on [Devex](https://www.devex.com/news/opinion-a-whale-watching-moment-in-the-blended-finance-ecosystem-107080).*

When a pod of whales swims by, it’s worth putting down the binoculars to witness the moment in full color. That just happened in our world of blended finance. 

Blended finance activity has remained relatively flat, gauging from the data [Convergence](https://www.devex.com/organizations/convergence-64325) has been able to verify and record stretching back over a decade. Its ups and downs have reflected the broader patterns in portfolio investment in developing markets, but we haven’t seen the swift upward trajectory that would signify that blended finance has become a routine solution for stretching development dollars or making transactions bankable for global investment houses. Our own [State of Blended Finance 2023](https://www.convergence.finance/resource/state-of-blended-finance-2023/view) tells this story.

Then came 2023 and, significantly, the 28th United Nations Climate Change Conference, or COP 28.

After having watched the horizon for a single tailfin that would signal change, we suddenly saw an entire pod of whales breach the surface: 

First, the [SDG Loan Fund](https://www.fmo.nl/news-detail/6fb79fab-ec10-4e7e-9fe8-d908dda30b06/sdg-loan-fund-mobilizes-usd-1-1-billion-of-investor-capital) closed at $1.11 billion. This transaction alone represents more than 15% of the volume of blended flows captured for 2023 so far. Conceived by [Allianz Global Investors](https://www.devex.com/organizations/allianz-global-investors-138751) and the Dutch development bank [FMO](https://www.devex.com/organizations/netherlands-development-finance-company-fmo-52091), the fund [benefits from multiple forms of catalytic capital](https://www.convergence.finance/resource/SDG-Loan-Fund/view), including a $111 million first-loss investment from FMO, which is credit-enhanced with a $25 million unfunded philanthropic guarantee provided by the MacArthur Foundation. Together, these instruments are unlocking $1 billion in private capital toward affordable energy, financial inclusion, and sustainable agriculture in emerging and frontier markets.

Also financially committed is [ALTÉRRA](https://www.alterra.ae/), a $30 billion global investment fund targeting climate solutions, of which [$5 billion in catalytic capital](https://www.cop28.com/en/news/2023/12/commits-US$30-billion-in-catalytic--capital-to-launch-landmark) will go to the global south. Launched at COP 28 with funding from the United Arab Emirates alongside inaugural partners [BlackRock](https://www.cop28.com/en/news/2023/12/commits-US$30-billion-in-catalytic--capital-to-launch-landmark), [Brookfield](https://www.devex.com/organizations/brookfield-136455), and [TPG](https://www.devex.com/organizations/the-prospective-group-inc-tpg-133062), the fund aims to mobilize $250 billion by 2030. We can’t tell yet how closely ALTÉRRA’s definition of global south overlaps with Convergence’s world of blended finance — we track activity mostly in countries eligible for official development assistance. Let’s hope some of that $5 billion goes to geographies otherwise off the maps for the parties involved.

Then the [Monetary Authority of Singapore](https://www.devex.com/organizations/monetary-authority-of-singapore-mas-120102) announced the [Financing Asia’s Transition Partnership (FAST-P)](https://www.mas.gov.sg/news/media-releases/2023/acp-ifc-mas-and-temasek-establish-a-green-investments-partnership-in-asia), which aims to raise $5 billion for green and transition projects in Asia. Two partnerships have resulted from this blended finance initiative: the [Green Investments Partnership](https://www.mas.gov.sg/news/media-releases/2023/acp-ifc-mas-and-temasek-establish-a-green-investments-partnership-in-asia) and the [Energy Transition Acceleration Finance Partnership](https://www.mas.gov.sg/news/media-releases/2023/adb-geapp-and-mas-to-establish-energy-transition-acceleration-finance-partnership-in-asia). These partnerships don’t qualify as financial transactions that Convergence would record in our blended finance database but they demonstrate changes we have been calling on donor governments to implement.

Via these partnerships and other moves, Singapore has set out specific targets for the use of blended finance to accelerate development and climate action and backed up those targets with regulatory action to ease the path for private sector capital to flow.

Two blended finance platforms still in process bear mentioning: [Project GAIA](https://www.greenclimate.fund/project/fp223), with a target size of $1.5 billion (including an already landed commitment of [$152.5 million](https://www.greenclimate.fund/project/fp223) from the Green Climate Fund), and [Allied Climate Partners](https://www.alliedclimate.org/), aiming for [$825 million](https://www.prnewswire.com/news-releases/allied-climate-partners-launches-to-catalyze-bankable-climate-related-projects-in-emerging-economies-302003275.html). 

Led by FinDev Canada and Mitsubishi UFJ Financial Group, Project GAIA is proposed to be a climate blended finance platform that will blend commercial and concessional capital for mitigation and adaptation investments in emerging markets. Importantly, 70% of GAIA funds would be dedicated to climate adaptation projects, providing much-needed financing to the sector, while at least 25% of financing will go toward the groups of least developed countries, or LDCs, and small island developing states, or SIDS.

Meanwhile, a consortium of philanthropies and investors launched the [Allied Climate Partners platform](https://www.reuters.com/sustainability/sustainable-finance-reporting/cop28-donors-join-ifc-lure-11-bln-climate-cash-2023-12-01/). Using philanthropic capital from donors, including Three Cairns Group and [Bezos Earth Fund](https://www.prnewswire.com/news-releases/allied-climate-partners-launches-to-catalyze-bankable-climate-related-projects-in-emerging-economies-302003275.html), as well as financing from the International Finance Corporation, the platform aims to raise $11 billion in debt and equity to create a pipeline of climate investments in Southeast Asia, Africa, the Caribbean and Central America, and India.

Not to count our whale calves too early, but each of these transactions, if raised, would turn the tide for climate finance in the developing economies — let alone blended finance.

It’s worth noting that big transactions are important not because they are showy or because smaller transactions have less impact — they don’t — but because of the example they set for naysayers resigned to the status quo. Big transactions are a jarring demonstration of why complacency is misplaced; that change is possible in big increments.

Further, as a group of transactions, here’s what sets them apart from the usual. They draw in institutional investors’ capital at a tremendous and desperately needed scale for climate adaptation and mitigation and for achieving the Sustainable Development Goals in lower income countries around the world. They set an example, and hopefully a trend. They each represent efforts to pool the best talents and existing assets of multiple parties into one big go, and not to duplicate each other’s efforts in multiple, smaller structures.

Several of them feature fairly recent entrants to the field, such as the UAE, the Monetary Authority of Singapore, and Allied Climate Partners. Several showcase leadership by philanthropies, which generally have not participated in blended finance in developing economies at anywhere near the scale of development banks and donor agencies.

All of these transactions are climate-related, signaling the awareness of private investors that climate change is central to their business models.

Was this a one-time burst of action or will we keep seeing large-scale collaboration and capital mobilization? I’m personally hoping for more whales, which have, up to now, been rare among the many forms of life in the blended finance ecosystem.

When a pod of whales swims by, it’s worth putting down the binoculars to witness the moment in full color. That just happened in our world of blended finance.

A whale-watching moment in the blended finance ecosystem

Opinion: A whale-watching moment in the blended finance ecosystem

I&P is a pioneering impact investment group with a proven track record of over two decades investing and supporting small and medium-sized enterprises (SMEs) in Africa.  

With a team of approximately 180 dedicated professionals operating from ten locations across Africa, (including Burkina Faso, Cameroon, Côte d'Ivoire, Ghana, Kenya, Madagascar, Mali, Niger, Senegal, and Uganda), and in France and the United States, I&P and its partners have invested in over 250 SMEs across roughly twenty Sub-Saharan African countries, with a primary focus on frontier markets and fragile states within Francophone Africa, where access to finance is most limited. 

We spoke with Sébastien Boyé, Co-CEO of I&P about their comprehensive approach to blended finance to support African SMEs, how they measure their impact, the gaps and opportunities they see in the blended finance market, and more.

__Can you tell us about I&P’s mandate and how it engages in blended finance?__

Our mission is rooted in the belief that small and medium-sized enterprises (SMEs) are catalysts for sustainable and inclusive growth across the African continent. These enterprises create local added value, provide formal and high-quality employment opportunities, deliver essential products and services, and foster significant social, environmental, and governance impacts. 

I&P takes an innovative investment approach, providing directly or indirectly through local African Impact funds, seed financing to emerging small businesses and taking minority equity stakes in startups and growing SMEs, with financing ticket sizes ranging from $30,000 to $5 million. This approach involves nurturing long-term partnerships with entrepreneurs, offering management expertise, networks, and knowledge to enhance business strategies, formalization, and overall performance. We also contribute to strengthening the broader ecosystem supporting African entrepreneurship, including local African investment team, investors, accelerators, incubators, and other critical stakeholders.

I&P covers a wide range of investment stages within the SME spectrum and takes a comprehensive approach to blended finance. From providing repayable grant funding to early-stage small companies, to anchoring local African impact funds, to making relatively large investments (up to $5 million per transaction) in commercially viable growth companies or to invest as a LP in emerging Impact Funds, I&P uses catalytic capital in different forms and for different project stages to tailor to the needs of African entrepreneurs. 

In its programs and funds, I&P strategically combines diverse financial products to tailor optimized funding and technical support for portfolio companies. We offer various financing instruments, including seed and equity financing, along with an extensive range of ecosystem support services, including consulting, training, fundraising, and more. Our diverse expertise enables us to cater to the specific needs of the "missing middle" within the SME sector, thus amplifying our impact.  

As an illustration, [I&P Afrique Entrepreneurs](https://www.ietp.com/en/content/ipae-closes-investment-phase) (IPAE3), the third I&P Impact Fund, is structured as a conventional growth equity model with an added layer of risk mitigation through a first loss tranche. This first loss tranche will be secured through contributions from Development Finance Institution (DFI) investors. 

In addition, IPDEV, I&P’s second investment vehicle which aims at anchoring local African impact funds will be structured as an evergreen fund with a first loss tranche sourced mainly from a large institutional Donor. It is expected that this first loss tranche will allow private investors to support this high impact initiative. This support in blended finance will also provide Technical Assistance for the anchored funds and their investees, as well as high impact seed finance.

__Tell us about one or two blended finance transactions I&P has engaged in.__ 

Agroserv, led by Burkinabe entrepreneur Siaka Sanon, stands out as a prominent grains manufacturer in the land-locked country of Burkina Faso. Siaka started his company by aggregating the supply of grains in the country and adding value through a small processing plant. Sinergi Burkina, one of the single-country funds sponsored by I&P, initially invested in Agroserv, providing an equity ticket of less than half a million dollars. 

Over the following six years, Agroserv experienced remarkable revenue growth, driven by increased demand from a rapidly urbanizing population and beverage manufacturers. Agroserv was able to graduate to a private equity fundraise of $12 million. I&P led this fundraise, which included additional investors as well as a matching grant from USAID (part of the US Government’s DFI). The combined impact of the concessionary grant and the substantial capital raise proved highly beneficial for Agroserv, facilitating operational enhancements and the establishment of a new milling factory.  

__How does I&P measure the impact and evaluate the success of its blended finance transactions?__ 

By the end of 2023, I&P's portfolio companies had directly and indirectly impacted 3.7 million people in over 20 African countries, including employees, their families, suppliers, and clients.

To evaluate impact and chart success, we measure investee company performance with a comprehensive in-house impact management tool based on global impact performance metrics. Close to one hundred impact indicators are collected on a declarative basis and analyzed every year to assess partner companies’ impacts on their local stakeholders (entrepreneurs, sub-contractors, employees, clients). I&P tracks its portfolio on a consistent and clearly quantifiable basis.

This tracking and reporting system enables I&P to gauge the progress of blended investments and support programs. Comprehensive reports inform future decisions regarding the optimal mix of financial and concessionary capital. A summary of our impacts can be found in our [Annual Impact Report](https://www.ietp.com/en/content/annual-impact-report-2023).

The impact of technical assistance is also carefully weighed and assessed in seeking the right balance to support the growth and development of portfolio companies. 

In response to the increasing global focus on climate finance mandates, I&P conducted an in-depth examination of climate adaptation and mitigation strategies implemented across portfolio companies. This evaluation served as the foundation for a defined climate policy, emphasizing more tailored and cost-effective climate adaptation measures.

__How does I&P apply a gender lens to its blended finance transactions?__  

Our gender-lens strategy encompasses a comprehensive approach, addressing various aspects for all stakeholders. This includes fostering women's leadership and access to corporate governance, promoting access to quality jobs and training opportunities, meeting specific needs for basic goods and services, and enhancing activity for women suppliers and distributors. This approach has been consistently implemented and monitored since the release of our gender policy in 2018, [Opportunities to Address the African Gender Gap](https://www.ietp.com/sites/default/files/Gender-strategy-IP-March-2018.pdf).

Furthermore, I&P is strongly committed to the 2X Challenge and the second I&P impact fund, which is fully invested, is 92% 2X Challenge compliant.  

I&P’s track record includes nearly 30% of women-led or owned portfolio companies. One example is DELTA S.A., a Senegalese sanitation company, established by a female entrepreneur who transitioned from her role in local banking to establish a water and sanitation contracting firm specializing in outsourced municipal contracts. 

__What are some interesting or unexpected challenges I&P has had to navigate in the blended finance space thus far?__  

I&P’s experience as an impact investor providing blended finance to SMEs has revealed some key learnings and challenges, namely: 

__The challenge of sustainability, liquidity, and profitability__ — The positive economic performance of portfolio companies does not necessarily translate into maximized financial value. Financing African SMEs often involves higher costs and longer investment periods than in other geographies because of high levels of human capital and financial investment, associated with significant risk. 

__The challenge of optimal structuring__ — Structuring innovative blended finance vehicles poses several challenges. For instance, defining first-loss tranches among DFI investors can be complex, as fund managers need to reconcile varying investor goals and loss thresholds. 

__What gaps or opportunities do you see in the larger blended finance market in Africa?__  

Blended finance often does not reach frontier markets (mostly fragile countries) SME funds, and is still not sufficiently widespread on the African continent. This is due to the lack of flexibility of financing options, including investment horizon, management fees, return expectations, and fund size. Fund durations are often too short and the main performance indicator, the IRR, pushes investment teams to exit in a premature manner from portfolio companies, even though a longer investment period would maximize impact creation and financial returns, as I&P demonstrates in its last report, [Unlocking Catalytic Capital for African SMEs](https://www.ietp.com/en/content/IP-C3-report-catalytic-capital). 

With the growing emphasis on climate finance and gender-lens investment, there is a need for specialized funding providers to support these initiatives. For example, the funding can be in either concessionary–early-stage support that matches the early build up—or in project capital execution or based on commercial capital rates and tenors. 

__How do you see I&P’s blended finance activities evolving in the future?__ 

I&P will carefully assess trends in blended finance and incorporate the concepts that align with the small and medium-sized company segment.  

The blended finance trends I&P aims to emulate are those facilitating the acceleration of early-stage companies, propelling them into significant contributors to job creation and catalysts for economic growth.  

In the meantime, I&P continuously explores opportunities to collaborate with investors and funders across its diverse business lines:  

__(1) Impact Investment through growth equity models__ — I&P is currently raising about $80 million to finance its third impact fund, “I&P Afrique Entrepreneurs 3”.  This Pan-African impact fund will build on the track record of two previous I&P impact funds and will invest equity and quasi-equity in local African -founded and African-managed champions aiming at scaling-up or having projects to expand regionally and continent-wide.

__(2) Anchor positioning for African impact funds__ — I&P has developed an innovative LP anchor fund initiative (IPDEV). Under this program, I&P sponsors small, single country funds with a target capital of approximately $5 million, acting as a catalyst for local investors. 7 country funds are operational under this program so far—in Burkina Faso, Cote d’Ivoire, Madagascar, Mali, Niger, Senegal, and Uganda. Two additional funds are currently in the fundraising phase—in Guinea and Cameroon.  These local investment vehicles are targeting early-stage SMEs which have almost no access to funding. IPDEV will also commence fundraising in the latter part of 2024 to launch a second generation of country funds.

__(3) Driving acceleration programs__ — I&P oversees incubation, acceleration and seed-funding programs through grants obtained mostly from Donors and Foundations and is exploring additional opportunities and funding sources.

__(4) Supporting local Ecosystem__ — I&P provides Training and Advisory services targeting local Ecosystem players (Accelerators, Incubators or Governments) and is developing a unique expertise of Impact Fund of Funds management and advisory services.


Hear from Sébastien Boyé from Investisseurs et Partenaires (I&P) on their comprehensive approach to blended finance to support African SMEs, how they measure their impact, the gaps, and opportunities they see in the blended finance market, and more.

Investisseurs et Partenaires (I&P) Member Spotlight

Investisseurs et Partenaires (I&P) Member Spotlight with Sébastien Boyé

*Nairobi, Kenya*—Today, Convergence and [Intellecap](https://www.intellecap.com/) announced their partnership at the [Sankalp Africa Summit](https://www.sankalpforum.com/sankalp-africa-summit/). 

The partners signed a memorandum of understanding (MoU) to support scaling of blended finance in Asia and Africa as a tool to advance financing for the Sustainable Development Goals (SDGs).

Under the framework of the MoU, the partners will collaborate on programs and activities that:
- Facilitate the mobilization of concessional capital and ecosystem building,
- Build capacity and knowledge of key stakeholders including governments, philanthropic funders, corporates and other partners,
- Foster an enabling environment for blended finance.

Intellecap is an impact advisory and a pioneer in developing multi-year multi-stakeholder programs to mobilize collective action and solve global challenges by bringing together knowledge, networks, capital and technology. Part of the Aavishkaar Group, Intellecap’s work aims to promote the adoption of blended finance solutions to drive economic growth and development, with a focus on marginalized and underserved communities in the Global South.

“Intellecap’s mission and vision closely align with our own,” says Convergence CEO, Joan Larrea. “This partnership is a unique opportunity to cultivate deeper blended finance knowledge and strengthen the growing blended finance ecosystem in Asia and Africa.”

“Without private capital, achieving our climate and development goals is impossible, said Intellecap Managing Director, Santosh Singh. “We can unlock private capital by convening public, philanthropic and development finance through catalytic structures such as blended finance instruments. With this partnership with Convergence we are bringing our combined strength of designing capital structures, comprehensive understanding of key sectors and our ability to convene key stakeholders.”

Convergence and Intellecap have announced a new MoU at the Sankalp Africa Summit

Convergence and Intellecap affirm partnership

Convergence and Intellecap affirm partnership at Sankalp Africa Summit with MoU

In the race to achieve the Sustainable Development Goals (SDGs) by 2030, the exploration of diverse and innovative financing sources is paramount. With nearly [$3 trillion in global assets](https://www.adb.org/publications/unlocking-islamic-climate-finance) concentrated in well-established Islamic finance markets, notably Malaysia, Saudi Arabia, Indonesia, the United Arab Emirates, and Qatar, Islamic finance emerges as a promising resource with considerable potential to bolster an inclusive green agenda.

__What is Islamic Finance?__

Built upon ethical and responsible principles, such as financial inclusion and social welfare, [Islamic Finance refers to a set of faith-based, asset-backed, financial intermediation products and institutions](https://www.worldbank.org/en/programs/global-islamic-finance-development-center#:~:text=Islamic%20finance%20is%20equity%2Dbased,financial%20inclusion%20and%20social%20welfare.). Key priorities encompass sharing of profits and losses, and fostering integration between the finance sector and the real economy. Conversely, activities deemed harmful or unethical (*Haram*), such as those involving interest payments charged on loans (*Riba*), gambling (*Maisir*), speculation, and uncertainty (*Gharar*), are strictly prohibited. Islamic Finance mandates that investments exclusively involve assets compliant with Islamic law or *Shariah*, with each transaction tied to a real underlying economic activity. These guiding principles of Islamic Finance closely align [with principles of green and sustainable finance](https://documents1.worldbank.org/curated/en/591721554824346344/pdf/Islamic-Green-Finance-Development-Ecosystem-and-Prospects.pdf).

__Islamic Finance and Climate__

Of the $3 trillion [Islamic finance assets](https://www.adb.org/sites/default/files/publication/838201/unlocking-islamic-climate-finance.pdf), only about [$20 billion](https://www.adb.org/sites/default/files/publication/838201/unlocking-islamic-climate-finance.pdf) has been directed toward climate finance. Historically, Islamic finance has focused on social welfare causes such as poverty, education, and health. However, Islamic finance can contribute to climate finance, through the development of specific financial instruments. Two such instruments that have gained prominence are Green *Sukuk* and *Waqf*.

__Green *Sukuk* (bonds)__

Green *Sukuk*, often referred to as Islamic green bonds, are *Shariah*-compliant bonds where all proceeds exclusively finance or refinance green projects contributing to climate mitigation, adaptation, or biodiversity preservation. This instrument has played a vital role in supporting environmental initiatives, with Malaysia and Indonesia leading the way.

[In 2017, Malaysian Solar energy firm Tadau](https://tadau.com.my/solar-energy-firm-tadau-raises-rm250m-via-malaysias-first-green-sukuk/) successfully issued $59 million worth of *Sukuk* to finance a 50MW solar photovoltaic power plant in Sabah, Malaysia. The *Sukuk* was issued under Malaysia’s Sustainable Responsible Investment (SRI) *Sukuk* [framework](https://www.sc.com.my/development/sri). [In 2018, Indonesia issued its first sovereign Green *Sukuk*](https://climatepromise.undp.org/research-and-reports/indonesias-green-bond-sukuk-initiative#:~:text=In%20March%202018%2C%20the%20Government,an%20amount%20of%20%241.25%20billion.) which aimed to support Indonesia’s goal of reducing its Greenhouse Gas (GHG) emissions. The proceeds from this Green *Sukuk* were [instrumental in rejuvenating the Piyungan landfill in Yogyakarta Province](https://www.undp.org/indonesia/blog/less-smelly-organized-and-no-more-fire-impact-undp-supported-indonesias-green-sukuk-piyungan-landfill), Indonesia, improving both environmental conditions and the public health and wellbeing of communities in the vicinity. These success stories underscore the potential of Islamic finance, particularly Green *Sukuk*, in achieving climate and social impacts.

__*Waqf* (designated assets)__

*Waqf* is another Islamic finance instrument, rooted in traditional Islamic philanthropy, with potential to be applied  by countries seeking to achieve their climate goals. *Waqf* involves designating assets for the benefit of the community or specific causes. Indonesia, for example, is tapping into the potential of *Waqf* for environmental conservation, sustainable agriculture, and climate resilience. The [Bogor *Waqf* Forest Foundation](https://climatepromise.undp.org/sites/default/files/research_report_document/INS-20SEP-GREEN%20WAQF%20FRAMEWORK.pdf) in Indonesia conducted land rehabilitation by planting various types of trees on designated *Waqf* land, showcasing the versatility of this traditional mechanism.

__Challenges facing Islamic Finance for Climate__

Despite its potential, Islamic finance is not without challenges. The industry faces obstacles in terms of awareness and understanding of Islamic finance principles among key stakeholders, hindering its integration into climate finance initiatives. The nuance of designing *Shariah*-compliant financial instruments tailored for climate finance adds another layer of complexity. Additionally, the absence of standardized frameworks makes it challenging to compare and assess initiatives in Islamic finance. Risk management is also a concern, as developing effective mechanisms for climate-related projects while adhering to *Shariah* principles is intricate. Furthermore, [policy and regulatory hurdles](https://www.adb.org/publications/unlocking-islamic-climate-finance) pose additional barriers to the successful implementation and scaling of Islamic climate finance.

__Outlook for the Islamic Finance market__

Growing global interest in sustainable finance has created a favorable environment for Islamic finance to align with ethical and environmentally responsible investment trends. Investors and institutions seeking innovative *Shariah*-compliant options may see a potential market for Islamic  finance products that utilize blended finance for  the design and structuring of financial instruments that align with Islamic principles while effectively addressing climate-related issues. Collaborative efforts, partnerships, and inclusive approaches that involve governments, international organizations, financial institutions, the philanthropic sector, and commercial investors can enhance the capacity and reach of Islamic climate finance, allowing it to contribute meaningfully to the global climate agenda. One such example is the soon-to-be-[launched Global Islamic Finance Program (GIFP) for Climate, Nature, and Development](https://wwf.panda.org/wwf_news/?10271391/Progress-on-Global-Islamic-Finance-Program-to-mobilize-capital-for-climate-nature-and-development). The design of GIFP has benefited from consultation with multiple Islamic finance stakeholders globally. GIFP looks to draw upon insights gained from [WWF](https://wwf.panda.org/) and its partners who have expertise in creating a pipeline of bankable Nature-based Solutions (NbS) projects through blended finance.

Islamic finance has the potential to be a transformative force in climate finance and sustainable development. The industry's ethical principles and alignment with responsible finance, make it a natural ally in addressing global challenges. While challenges exist, collaborative efforts, innovation, and strategic partnerships can overcome these obstacles and unlock the full potential of Islamic finance. Green *Sukuk* and *Waqf* demonstrate tangible contributions to climate initiatives, highlighting the industry's ability to create a positive impact. As the world seeks new and effective ways to fund climate goals, a blended approach to Islamic finance is a promising untapped resource that could play a pivotal role in shaping a sustainable and resilient future.

In the race to achieve the SDGs by 2030, Islamic finance emerges as a promising resource with considerable potential to bolster an inclusive green agenda. 

Islamic Finance: An Untapped Resource for Climate Funding

During COP28, Convergence [announced](https://www.convergence.finance/news-and-events/news/3uRpJsgsS4MpWN1427ezyP/view) Powertrust as among the grantees awarded an Asia Climate Solutions Design Grant for designing a blended finance facility to address climate energy transition across South & South-east Asia. 

Convergence’s Design Funding and Market Acceleration (DFMA) Manager, Krishna Malhotra, spoke with Powertrust’s Head of Product, Joseph Armah, about what they aim to accomplish in designing their blended finance vehicle and their experience as a Convergence grantee.

*Conversation has been edited and condensed. Find the recording of the full interview [here](https://youtu.be/oob6-znKhjQ).*

__Tell us about Powertrust. What is the blended finance vehicle you are designing and the development challenge you are looking to address?__

Powertrust is a managed marketplace and what we do is enable multinationals who have stated net zero emission targets to procure energy attribute certificates from renewable energy developers across the global South. 

The way we do it initially is through bilateral agreements. You might wonder why we have this objective. If you think about it, these multinationals have stated renewable energy targets in terms of emissions and they want to be able to deploy capital to do that. At the same time, we also have developers, normally distributed across the global South, who would also like to have some capital, which would be a nice slice of the capital structure. But they are unable to do that and we have very small capacity. We're talking solar lanterns with three or four megawatt capacity. 

One way to do this is to aggregate all these projects and present them in a way they can be financed. That is what Powertrust does at its core: bring multinational organizations together in order to acquire these projects with respect to their specific energy attributes and be able to get these transactions done. We act in this space of creating a marketplace.
This cannot easily be achieved with the current model. There are a couple of reasons, the first is that developers want capital upfront and because they want capital upfront, it's not possible to wait until projects are developed in order for them to get the capital. The multinationals, on the other hand, want to pay after the renewable energy certificates (RECs) or energy attributes are delivered. So you have a conundrum where you have one entity wanting the capital deployed after the RECs are received and the other entity wanting to have capital in order to develop the projects. 
What we have put together is a blended finance prepayment model that allows this action to happen. Developers get their capital upfront to develop their projects. The multinationals are able to get renewable energy credits that can show there is additionality that has already been achieved. In addition, the developers will have a revenue stream that is denominated in USD, they will have cash flow that is certain and they will have the capital upfront. 
This allows them to de-risk their projects and bring other investors on board. When we think about what this blended finance prepayment model can do, we can walk through some of the attributes. The multinationals can pay upfront for multiple years of RECs. The mechanism allows upfront payment to these developers so they can have capital upfront. That also creates a new tranche in the capital structure, so they can talk about their debt and equity and this new tranche that is coming in.

So, the question is, why blended finance? The idea of blended finance, as most of you are reading about and thinking through it, really allows us to reduce the cost of capital, because you're thinking about capital coming from different tranches.

Also, some of these projects will be riskier than usual. You want to be able to attack these riskier projects. But you want to do it in such a way that your weighted cost of capital is done, and this project can easily be financed, and you can think about first loss positions and guarantee positions.

This also enables corporate participation. One of the biggest developments that we’ve seen is that all these corporations are now really focused on their emission targets, and deploying capital. And this has happened in the US, in Europe and other places where corporates have been very active. Allowing these corporates to take part in this type of project in the global South is very important.

The last thing is the development finance institutions (DFIs). They see the ability to mobilize capital. They are more incentivized to invest in these projects. In terms of the stakeholder, what are the stakeholder impacts? So the developer gets more capital upfront. The investor? They have a return on their investment, and the corporate will get a return on investment as well via renewable energy credits. So the idea for us was, how do you come up with a way to mobilize funds to solve two key questions: provide capital upfront, aggregate this project to scale and be able to finance them?

__Can you talk about how design funding fits in with the blended finance vehicle that Powertrust is designing? What are some of the goals you’re looking to achieve as part of the feasibility study?__ 

When you really think about it, it is a lot of work to put together a facility or a financial vehicle. Often those who are coming from the development side, or maybe from the position of having worked on these projects before, they actually have deep domain expertise in that area. In our case, we had deep domain expertise in putting together bilateral contracts with multinationals on one side with us on the other side, and also had contracts with developers as well. 

What becomes clear pretty quickly is when you're trying to put together a financial vehicle, there is a different set of work that needs to be done to prove that the concept is viable, sustainable, can be financed and is bankable—and that investors will get their return. The whole process of getting that done requires detailed explanation and analysis, and testing, and putting together the structures. 

__How do you expect this grant will support you in designing the proposed vehicle?__ 

One of the key things and the benefits of having a facility like this and support from Convergence is that we can pay for the work that we have to do in terms of designing the vehicle before asking investors to put money into it. Some of the things that we're doing with respect to having this ability is pay for our legal fees, to design the structure, to travel, to go to conferences—really, everything that has to do with putting the structure in place, testing it and making sure that it's bankable and can be leveraged to achieve the goals that have to be achieved.

__Based on your experience, what should prospective applicants focus on when applying to the Asia Climate Solutions Design Grant?__

I think there are quite a few things to look at. The first is to understand that the application process is quite rigorous and detailed. The concept note must be succinct and carry across the message you want to convey such that you know the team can understand what you are trying to put together. 

Second, you have to devote resources to getting the application in hand and if you are called upon to answer questions at any step of the process, even during due diligence, make sure you have the resources to do that. 
The third part is your team's breadth and depth. I think one of the things that made us successful was that we had a very deep bench. We had breadth, depth, and experience on the ground. This really helped us articulate what we were trying to achieve. 

I also think that the questions that you are asked, there’s a reason why they’re asked, and you cannot blow them off. You have to take time to answer 
the questions in a very thorough manner. 

The last part I'll add to this is the element of passion. If you're truly passionate about doing something new, you're always going to hear that this is not gonna happen, or this is not possible, and that comes through in your application. So when there's doubt or confusion, you know the person who is evaluating will understand. I think one of the things that we were able to bring to the table is to have folks who actually believe in what we're trying to do, and have the passion to achieve their goals, despite naysayers. 

We had deep breadth, deep domain expertise, and we actually got the grant in the end. So all these factors are critical when applying for the grant.

__What advice would you give prospective applicants applying to the Asia Climate Solutions Design Grant?__

The first is understanding what exactly you are trying to address. So for us, we wanted to get into mitigation, we wanted to know that this was a new vehicle that had not been done before and we wanted to understand the structure. We wanted to understand whether, if we wait, if we were to put one and two together and ask people to invest in, would they actually invest? I think one of the challenges that most people face is they can put together a facility or a vehicle, but they think it is just an extension of the work they are doing without having thought about the fact that even though you might have deep domain expertise in one area, this is a whole new thing and you have to really understand the process. 

We've worked really hard on our project. At the time, we thought we were at the proof-of-concept stage. This is funny because I just wanted to add, as one of the things that I learned from this process, and as we were going through the back and forth of the [Design Funding] questioning, we realized that we are more at the feasibility stage, but not yet at proof-of-concept. 

The back-and-forth with Convergence was really key for us. So you really have to understand where you are in your process, because sometimes you might think you are done until you start answering questions and realize, “oh, no, you are not there yet.” 

So I'd say, be mindful of where you are in your trajectory of moving from feasibility all the way to full funding.

Learn from Asia Climate Solutions Design Grantee Powertrust's application experience

Grantee Insights: Powertrust

During COP28, Convergence [announced](https://www.convergence.finance/news-and-events/news/3uRpJsgsS4MpWN1427ezyP/view) Lestari Capital as among the grantees awarded an Asia Climate Solutions Design Grant for designing a blended finance facility to invest in conservation and restoration projects in South-east Asia. 

Convergence’s Design Funding and Market Acceleration (DFMA) Manager, Krishna Malhotra, spoke with Lestari Capital’s CEO, Michal Zrust, about how Lestari Capital aims to design their blended finance vehicle and their advice to prospective grantees.

*Conversation has been edited and condensed. Find the recording of the full interview [here](https://youtu.be/3_SsOiBg_b8).*

__Tell us about Lestari Capital’s story. What you do, where you work, and what drives your mission?__

Lestari Capital started about six years ago in 2017, but actually the idea for Lestari Capital started much earlier than that.

We work in nature markets, innovating around structuring the market, working very closely with clients to build the mechanisms and the business cases for them to invest in nature- and climate-based solutions. One of our flagship programs, the Rimba Collective, really started as an idea.

Just to give you an example of how this works, we started with the idea that “the palm oil industry has really difficult challenges around sustainability.” A lot of those challenges are becoming more clear and they focus around the fact that the industry is heavily dependent on land use.

So you have challenges around deforestation, you have challenges around Scope 3 emissions, you have challenges around protecting sites, protecting the supply chains, not cutting out suppliers, working with suppliers to transform the supply chain towards sustainability. A lot of these challenges can be responded to through financing, supporting nature-based solutions on the ground, and that can take many different forms.

We worked with our four founding partners within the Rimba Collective to better understand what the business case is in terms of what they need, what the outcomes are, and what the impacts are that they need. Then we structured the mechanism around that to raise financing from the demand side, manage the financing and then deploy the financing to portfolios of projects.

We also work on those portfolios of projects—they are third-party projects that we finance, but we build the portfolios, we work on the due diligence, we originate the projects, we onboard those projects into the project portfolio. We provide measurement, reporting and verification (MRV) services, we're financing these projects in a portfolio in an aggregated way to effectively source the impacts that they generate. The impacts are numerous—whether it's biodiversity or conservation or restoration or livelihood impacts or climate focused impacts—and those impacts are then verified, put into a registry, and go towards the fulfillment of the corporate sustainability commitments that they have. Those could be quite varied in terms of how the impacts are utilized.

You could say that what we do is build nature credit mechanisms that are able to actually source and deliver nature credits to support the fulfillment of corporate sustainability commitments on the ground. 

We do this in a number of ways. We as a company are actually innovating now around sourcing Scope 3 emission outcomes. We work on carbon credits as well.

We support certain companies and compliance with simple, specific standards. There is a wide variety that we do, but one of the most exciting things is innovating new mechanisms and trying to build the market, and that will then support conservation and restoration into the future.

__Can you tell us about the blended finance vehicle you are designing and the development challenge you are looking to address?__

What we're looking to do is really build on the experience that we have from the Rimba Collective working with the palm oil sector and bring this solution to the fashion industry, specifically the garment sector.

There are many similarities between any sector that is dependent on land intensive commodities. They are all facing multiple demands—some of them are still emerging, but some already exist and those could be both from voluntary commitments such as science based targets for nature or science based targets around climate, there could be no deforestation commitments and so on. More importantly there are emerging regulatory demands on these companies and those could be things like the EU developments under the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive, under these [directives] companies will have to identify what their footprint is and report it publicly. Of course, companies will then be saying, “what can we actually do about this? How can we go through that journey where we identify what the impact is, but we avoid future impact? We minimize the existing impact. We rehabilitate.” There will always be a residual in there, so how do we address that remaining footprint?

There are effectively two buckets of inserting and offsetting and I firmly believe that nature credits can play a really important part in supporting companies in being able to credibly demonstrate that they are achieving or that they can achieve, the targets that they have committed to or that they will be forced to commit to at a later stage. What a lot of these commitments have in common is there is a focus around the need for intervention on the ground.

You’re required to finance interventions, whether they are removing or mitigating carbon emissions or they are actually supporting projects that avoid further deforestation in high deforestation risk areas in your sourcing regions. You proactively protect your supply chain—rather than be reactive, which is really no longer acceptable. But then, how do you positively contribute to the world? And that is, I think, where we see no net loss and no net positive kind of gains.

Nature positive: there's a lot of terminology around it, but what this means is how does the corporate world actually contribute towards conservation, restoration and livelihoods in a positive way?

This mechanism that we hope to conceptualize, that we're doing the feasibility study for under this grant, is really focused on that. The fashion industry is fascinating, they are at a much earlier stage than many other industries. They have similar issues that they need to address, but in many ways there are also different challenges, for example, around traceability to the field, certain commitments and the level of commitments that they have, biodiversity, pollution impacts and so on. What we're going to be doing here is not only identifying what the industry actually needs, but how it can achieve those needs and targets.

__Can you shed more light just on the importance of having a blended finance mechanism here? Why is it important? How can blended finance help to mobilize these corporate commitments and support projects on the ground to create major credits and achieve the intended impact outcomes?__

To make an impact, develop a new market and also work within a new sector, it is important that you know many traditional investors, different financiers probably would not support such early stage market development—and that is where blended finance plays a key role.

[Blended finance] catalyzes movement towards structuring the market better, being able to demonstrate that there is viability within the sector, that the mechanisms can function and that they can deliver the impacts that you need.

It also signals to corporates that not only is there interest from potential investors, but that there is a general consensus on the direction that the sector should be taking.

I think that's really important because there is a lot of fragmentation. There are a lot of different initiatives which work around this sort of biodiversity credit, nature credit and even carbon credits space. The corporates start to see that this can be a pathway to achieve their goals and sustainability credibly. We can demonstrate that and our actions are going to be taken in a way which is positive rather than being accused of greenwashing, which unfortunately is an issue.

Blended finance provides that catalyst towards the market maturing and structuring. It also provides the finance that then allows other investors to come into this space and say “this can actually work. This is an investable model.”

__How will this grant funding support you in designing the proposed vehicle? What are some of the key elements that you’re looking to achieve with this structure?__

This is really my favorite part because you're effectively starting with an idea or concept, with slight apprehension: “Are we too early? Are we not too early? What are the opportunities? What are the challenges? What are the risks that we're going to be facing?” Blended finance is the catalyst towards being able to explore some of these things.

We're starting with a general concept of what we would like to achieve, which is a sort of replication of the model of collective action and collective aggregated sourcing at scale of nature outcomes that then go on to fulfill the corporate sustainability commitments.

Under [the ACS Design Grant Window], we're going to be number one looking at what is the level of demand and what type of demand? What are the outcomes that the corporates within this sector require in order to achieve their sector-specific goals? 

Of course given the difference and the complexity of the supply chains within the fashion sector, those types of issues are going to be different and the challenges are going to be different.

Once we identify that, we will be looking at what projects apply, what types of projects are actually out there that can then address that need, the sustainability commitments, and the demand, and can they do so credibly? Is there enough scale and how are these projects going to be sourced? Also what stage of development are these projects in?

Is there going to be further financing needed to springboard or catalyze that part of the industry? So we're going to be scoping our pipeline of projects moving forward depending on what the type of demand is.

We believe that the pipeline does exist and early assessments have shown us that. We have good experience already in Southeast Asia to show that the scale is there, but different projects obviously have different challenges.

Then we will be looking at the shape of the mechanism, how can you link those two aspects—the demand and the supply. What does the mechanism actually look like that can then deliver the financing to the ground and then source the outcomes that result from those projects and that will require looking at legal structuring, financial structuring, governance and operational structuring, MRV systems and so on. It is really exciting, effectively starting a new market for the fashion industry.

__What advice would you give prospective applicants applying to the Asia Climate Solutions Design Grant?__ 

I'm a very firm believer in having open and honest discussions. In the journey that [Convergence and Lestari Capital] took together, which lasted a fair few months, we had a good chance to actually get to know each other. Be very open and honest about exactly what you feel the challenges are and working through those with Convergence.

In this kind of early stage work in an evolving market, there are challenges, there are unknowns, there are risks, but there are also fantastic opportunities. And I think that level of excitement is what really helped us in the design of the grant proposal.

My advice to any prospective grantees would be to talk about the risks and the challenges that you foresee as well as the opportunities. We all see the opportunities, but the sector doesn't tend to learn from its mistakes as well. I think that's almost as important as being able to see the opportunities. Coming to the table and very openly discussing the challenges allows us to design the study and the work and the year ahead much better, because we understand each other's expectations, we understand where the challenges might arise and we understand what is and isn't feasible in the window. I think that is what makes for a really good application.

__What do you think contributed to making Lestari Capital stand out as a strong applicant?__

I believe one of the important things that made us stand out was the fact that we've done this before, we have gone from the conceptualization to the design to the building to the operationalizing of these vehicles in the past.

I understand that might not always be the same for all applicants. Some might not be presenting something to be replicated, but I think it is important to be able to actually demonstrate that these models can work and to know if they have tried and if they failed to understand why.

I think being able to talk about that and being able to say, “this is how we would address these risks,” would be really helpful.

I think also, we're very lucky to have almost 40 people now within Lestari Capital and we have a very multidisciplinary team: we have a legal team, we have a finance team, we have a very experienced project team, and that, I think, makes us stand out. 

There are a lot of companies outside of the field level that have good ideas. But unfortunately, unless you actually have the field-level experience of what it takes to be able to deliver these projects on the ground, deliver the conservation and the restoration on the ground, it's a much higher risk proposition, so having that expertise in the team really counts for something. That is also why our corporate clients trust us, because we go into the field, we understand the challenges to deliver conservation and restoration and so on.

I think it comes down to being able to identify what the challenges are and talk about the risks, and be thoughtful about how you plan to address those. Not every risk can be mitigated. That's just a fact of early stage developments. But you can show that you're at least thinking about it smartly.

Learn from Asia Climate Solutions Design Grantee Lestari Capital's application experience

Grantee Insights: Lestari Capital

At COP28, Convergence announced the [award](https://www.convergence.finance/news-and-events/news/3uRpJsgsS4MpWN1427ezyP/view) of a proof-of-concept grant to NBSV Worldwide (sister entity of Fairventures Social Forestry) from the Asia Climate Solutions Design Grant to design a blended finance structure to support regenerative agroforestry and social forestry projects at scale in Indonesia.

Convergence’s Design Funding and Market Acceleration (DFMA) Manager, Krishna Malhotra, spoke with Paul Schüller, CEO of Fairventures Social Forestry and NBSV Worldwide, about what the organization aims to accomplish in designing their blended finance vehicle and their experience as a two-time Convergence grantee.

*Conversation has been edited and condensed. Find the recording of the full interview [here](https://youtu.be/AKcRitr3fXo).*

__Tell us about Fairventures Social Forestry’s story. Can you talk about the blended finance vehicle you are designing and the development challenge you are looking to address?__

Very happy to tell a bit about our business and how we have experienced the whole process of this very exciting window. 

I want to kick it off by sharing a bit about Fairventures. We are a developer of agroforestry projects active in Indonesia. The total team is around 40 people, of which 35 are based in Indonesia, with a relatively small team working from Europe. And that also shows our philosophy—that we really believe that in order to succeed as a project developer in Indonesia you really need to build and develop a local team which has the expertise and the skills to be successful as a developer in the mid to long run. 

We started our business at the end of 2018, with a pilot project in Central Kalimantan. We are now in an exciting phase, because we are about to commence work on two new projects, one located in Eastern Java and another in Jambi.

As an agroforestry developer in Indonesia, we actually focus on the social forestry program. The social forestry program is a very ambitious program from the government of Indonesia. In order to issue long-term 35 year land leases to local communities who live on or nearby forest lands. Around 90% of the forest land is held by the state in Indonesia.

Up until now, 6.4 million hectares have been issued under this social forestry program, and it's a target to double towards 30 million by 2030. So it's quite a big area of potential—social forestry. 12 to 30 million [hectares] is about one-third the size of Germany, so you can imagine that it's significant.

Social forestry—how it works is that local communities or smallholders can set up an entity, and become a member of that entity. It could be a farmer group or it could be a cooperative, that entity applies for the social forestry permit, allowing its members to utilize the land that is owned by the state.

We have been active in social forestry permits since the end of 2018. We have also carefully followed the sector over the years, and explored empirical research related to social forestry, identifying some areas for improvement. For example, some entities holding these social forestry permits are quite weak in terms of governance. There's not a clear management structure within these entities. As a result, quite often the [local community] members are not selling [agroforestry products] to the entity, but they are just selling it themselves to middlemen. Also, there's often no clear allocation of tasks and responsibilities within those entities. 

Some other observations relate to the fact that public sales are quite unstable. In Indonesia, there is a multilayer middleman structure. If you analyze the supply chain, the first one to two layers of middlemen quite often act extremely opportunistically, which means that the small holders get certain indications regarding species and quantities that the middlemen are looking to buy, but then, a year or two later, the picture suddenly looks quite different. That is very harmful to the smallholders because they are really eager to have a long-term stable offtaker for their products. 

Another observation relates to the reforestation obligations. According to Indonesian law, at least 50% of a permit area needs to consist of forests. However, in practice, that's only 10% up to 20% maximum, because, as you can imagine, if you plant timber seedlings, it takes a long time before income is generated. So instead of planting timber, the members often plant crops, or non-timber forest products, which generate faster revenues, but in the end they don't comply with the legislation around social forestry.

We believe with our model that we have found a way to tackle some of these challenges. The key to our approach is that we support the co-ops or the entities holding the social forestry permits to strengthen their governance. We cooperate with local NGOs in order to achieve that strengthening and we operate as a long-term offtaker of the products. That also quite often includes a pre-financing element because we have good connections to process or end offtakers of certain products. In that way, we can better predict what the mid to long-term demands will look like out of the private markets.

By pre-financing seedlings and all the inputs, we can achieve a better match between the production by the smallholders and the demands out of the markets. So in the end, we are simplifying and professionalizing the supply chain. A very important note is that you cannot try to completely leave out the middleman in this structure, because the first two-layers of middlemen often have an important function in their communities as well. You need to make them part of the solution. That can be done by actively involving them at the co-op or at the farmer group level. I hope that gives a bit of an idea regarding our business.

A bit about our pilot project, we have 3,000 hectares in Central Kalimantan under a social forestry permit. There we closed a 30 year corporation contract with the co-op holding that social forestry permit, and we are active on around 1,600 hectares, with a combination of timber species, but also crops on around 450 hectares. We are also now actively rolling out contract farming on the rubber jungle part of that area. Regarding the rubber parts, we also help the farmers to professionalize their ways of working. For example the way they tap the trees and the equipment they use for tapping.

We have closed a carbon off-taking contract with Stihl in the past, a German multinational known from the gardening equipment they produce. That contract is based on a corporate social responsibility (CSR) program of Stihl’s, so there are no credits involved there. We have also closed an impact loan with the UBS Optimus Foundation where the interest rates are linked to certain target impact key performance indicators (KPIs), such as local employment, gender equality and carbon sequestration. We are also in the process of closing a contract with a German offtaker for the rubber parts.

I hope that gives a bit of an idea of what our business model is. This is our showcase project in Central Kalimantan. We are now about to start our new projects one and East Java, a social forestry permit, around 850 hectares and another similar permit in Jambi.

__Can you tell us about your experience and learnings as a recipient of both a feasibility study grant and a proof-of-concept grant through Convergence’s Design Funding program.__

I think what is extremely important not to do is make it too complicated in the beginning. I remember when I started designing the blended finance structure for our business, there was always a tendency to over design or over engineer at the beginning, with sophisticated fund ideas in mind. In the end, I think what's extremely important to keep in mind, and to acknowledge, is that investors have a certain preferred way of potentially investing into your business. 

What kind of structure can you develop where you still have the most flexibility to serve those investors in an efficient way? At the same time you want to set next steps with your business, and with the funds that are available, make progress, because progress is also extremely important to show to the outside world. I think it's finding that balance, not making it overly complicated, keeping it efficient, low cost, and lean. At the same time you have it set up in such a way that hopefully, when you are able to secure big ticket [investments], you have the flexibility in the structure to accommodate that. I think that's extremely important. 

What we did as well is read through the very interesting materials on the Convergence website regarding studies that were done by Convergence in the past. To give you an example, what you quite often see with blended finance vehicles is that the domestic investment market is not very involved in terms of investing into the structure. How we took that into account is including what you see as PT WLI in our structure, that's a 100% Indonesian holding entity. That entity opens the door for Indonesian investors to invest into our business, because Indonesian investors are not so eager to invest through Singapore, they would rather invest through an Indonesian holding entity with regulation and legislation they are familiar with. I would also advise that applicants look into the studies [on the Convergence website], and see how they could use them in their own situations.

__Reflecting on your past success, what are some critical aspects that prospective grantees should be mindful of when applying to Convergence’s Design Funding program?__

An obvious one is very good and sharp planning. You don't want to have to hurry and work day and night in the last few days before the deadline comes. I think the basis is very good planning. 

What I also appreciated was involving different colleagues with different skills, so they can either contribute to the drafting process, do a bit of research or be involved in proofreading the notes. Really make it a team effort internally, I think that's also extremely important. Some other points that I noted from the process relate to due diligence interviews with externals. If you get to that stage it’s important to be extremely proactive and not wait too long, just start updating people about the interview process, and also make sure you have backups if someone cannot facilitate that interview for any reason, make sure you always have backups. I think that's also important. 

Another one I would like to emphasize relates to Q&A with the Convergence team. I would say try to keep a good speed in that process, because the Convergence team, Krishna, and others are presenting your case internally, so the better, more convincing information you can share in the fastest way possible, the more it helps the team get to a very good understanding of the of the idea, and then be able to present it to the different decision making bodies.

So teamwork, a team approach, and then regarding the due diligence interviews with externals, be very strict and sharp on that. And then at the Q&A, keep a good speed in that process. That would be my three main points.

__In the earlier stage of the process when developing your application, were there any elements that you focused on? Any insights from that stage you can share with prospective applicants?__

I would like to highlight two points. For us we have been active since the end of 2018, five years of implementation experience. What have been our learnings during those five years? How does that influence our business model going forward? Any questions about the business model that need to be bought into by external investors. Key learnings, how does it impact your business model? That's one. A second one would be to show that you have had interaction with investors, so you can show that you’re continuing to talk to investors and discussing ideas. It's extremely important that you get input from the potential investors. To give you an example, maybe an investor is saying, first, we want to see you ticking off milestones, ABC, for example, because for them, that’s a sign that you have de-risked the business model sufficiently. That kind of information, showing that you are talking to investors, and that you take that information with you, and that you try to get closer to the needs from the market. That's also extremely important, because in the end it needs to become investable and bankable. Those would be my two key points for applicants in the early stage.

Learn from Asia Climate Solutions Design Grantee NBSV Worldwide's application experience