Earlier this year, Convergence hosted a peer-to-peer learning session for Blended Finance Accelerator grantees focused on fundraising for blended finance solutions at the nexus of climate and gender. This session offered Convergence grantees the opportunity to discuss challenges they faced and lessons learned while designing and investing in catalytic blended finance vehicles in the space. With funding support from Global Affairs Canada, this closed-door learning session brought together grantees, investors, and donors to explore the various aspects of fundraising for blended finance.
Key takeaways from the session:
What funders look for in blended finance opportunities differs by mandate
Grant funders and catalytic investors were represented in the session. For grant funders, development impact remains central to their decision making. They value clear communication of impact indicators, particularly those that are evidence-based, measurable, and comparable. Grant funders also have a preference for projects that use minimum concessionality to achieve high levels of development impact while aligning with policy priorities and providing transparency in how public funds are used.
Catalytic investors typically have flexible capital and can take different positions in blended finance structures, depending on their internal risk return impact analysis. For them, alignment with social outcomes is vital and usually the first point of decision making. They look for credible financial models, experienced fund managers, robust impact measurement systems, and blended structures that effectively catalyze other investors while remaining efficient and focused. Team track record and the ability to adapt and learn are also key factors in investment decisions.
Design for complexity and communicate with simplicity
Participants were in consensus that blended finance structures often require sophisticated layering of capital: grants, equity, subordinated capital, senior debt, and guarantees. Investors emphasized the importance of speaking directly to each capital provider to understand their expectations, whether they are concessional, commercial, or philanthropic, rather than utilizing a one-size-fits-all approach.
Aggregation as a strategy to unlock capital for the missing middle
One fund manager shared how aggregation is being used as a strategic tool to mobilize capital for community-driven, nature-based enterprises that typically fall in the “missing middle”; too small for traditional institutional capital, yet too large for microfinance. By pooling investments into a single facility investors can participate pari passu across a diversified portfolio of enterprises, operating in new and often higher-risk sectors such as ecotourism, sustainable fisheries, and regenerative aquaculture. This approach allows for diversification across geographies and business models, making it more attractive to commercial and impact investors alike.
Catalytic capital must be patient and purpose-driven
Multiple participants emphasized the importance of concessional capital that is long-term, impact-first, and flexible. In markets where cash flows are uncertain and outcomes can take years to materialize, like forest restoration or climate-smart agriculture for example, long tenors are often needed. One grantee shared that while some commercial investors cap their exposures, that is where patient concessional capital can come in and help extend fund maturities. This is often necessary for long-term climate investments in emerging markets in sectors such as agriculture. This capital also provides the flexibility to respond to external shocks, evolving risks, and the adaptive nature of blended finance structures in frontier markets. As one participant noted, “patient capital is not just a nice-to-have, it is a requirement when you're working with communities, nature, and governments.”
Fundraising is nonlinear, expect setbacks and build redundancy
Several participants shared that they faced a variety of setbacks, including unforeseen regulatory issues, shifting interest rate environments, and fiscal policy changes that disrupted fundraising plans, even after soft commitments and board approvals. Participants also noted that various exogenous factors, such as budget deadlines, can be used as alignment tools to accelerate closing timelines. A broad and diverse investor pipeline was recognized as essential for risk mitigation. One participant shared that “what [they] thought would be the hardest part, long tenors, actually was not. The real challenge was synchronizing investor timelines and managing shifting macro conditions.”
Convert impact into investment language
A common hurdle, especially for grantees coming from the conservation or development space, was translating impact narratives into investor-oriented language. Creating a compelling investment pitch, with financial projections, risk management strategies, and clear pipeline visibility is critical to build credibility with commercial capital providers.
The climate-gender nexus is gaining traction
Participants acknowledged that climate metrics are no longer enough on their own. Increasingly, gender outcomes are being demanded not just as side benefits but as integral to a fund’s theory of change. Many funds now incorporate gender metrics at both the fund and investee level. Most actors apply basic gender standards, such as the 2X Challenge, across all investments. There is growing interest in embedding gender equity into pipeline sourcing, governance, and performance metrics. One participant noted that “standardized impact metrics, particularly for gender, are becoming essential,” driving transparency and supporting comparisons between deals.
Direct vs. fund-level investing
For many impact investors, especially those without a local presence, fund-level investments offer better access to emerging market pipelines in sectors like regenerative agriculture or the blue economy, where due diligence, local knowledge, and deal flow aggregation are critical. Direct investing on the other hand, is often reserved for shorter-tenor working capital structures where the investor has a trusted relationship with the enterprise. For donor investors, funds offer a scalable route to reach qualified investees.
Partnerships must be purposeful
While strategic partnerships can enhance a fund’s credibility or technical capacity, fundraising partnerships rarely move the needle unless they come with concrete introductions and influence. Impact measurement, pipeline development, and technical assistance delivery are meaningful areas where partnerships can add operational value.
Closing reflections
As the blended finance space evolves, fund managers are increasingly being asked to demonstrate strategic clarity, impact rigor, and financial discipline while operating in increasingly complex markets. Despite growing investor interest, participants reiterated the importance of staying grounded in the end goal: building viable, high-impact solutions that mobilize capital for climate resilience and gender equity at scale.
The session served as a valuable reminder that while structures matter, the real measure of success is the ability to deploy capital into meaningful outcomes, supporting communities, protecting ecosystems, and building climate resilience with gender equity at the core. Convergence’s Blended Finance Accelerator has awarded $24 million in grant funding to over 79 solutions to date across seven initiatives. The program supports solutions across various levels of maturity including early design, proof-of-concept, and expansion. In addition to catalytic grant funding Convergence also provides acceleration support market intelligence, networking opportunities, and produces thought leadership that collectively benefits the entire ecosystem of blended finance practitioners.
Learn more about the Blended Finance Accelerator.
