This learning report consolidates USAID INVEST's insights on performance-based incentives for subcontracted transaction advisors involved in capital raising activities. A key finding is that there is a weak link between the compensation for transaction closures and the amount of capital raised; higher payments do not always lead to greater capital influx.
Key takeaways include:
- When designing compensation agreements, it’s important to consider the intended additionality and the high perceived risks faced by private investors. It is also important to evaluate the level of support that target firms need to become ready for investment.
- Collaborating with transaction advisors is an effective approach to building investment ecosystems, establishing conditions that can support these services on a commercial basis over time. Donor backing can create favorable market conditions that encourage future investments.
