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INVESTMENT STRATEGY

Investment Strategy

 

We invest within the scope of pre-defined funding windows related to specific themes, programs and geographies. Each of these funding windows has, in addition to the aspects described below, specific selection and investment criteria that will be published via open calls. We hope for your understanding that we cannot accept applications outside these calls.

 

There is no open call right now!

We understand and use the term “investment” in a wider sense that includes, besides debt and equity, instruments such as payments for results and grants made conditional on the attainment of specific outcomes.

What our investees need to fulfil

We provide financing to organizations and enterprises committed to achieving measurable impact with a scalable business model. Targeted organizations need to fulfil the following 6 criteria:

Impact focus:

Does the organization target areas of highest impact – e.g. serving very low-income groups, female-led households or rural areas? How does it understand, measure and articulate its impact? Only organizations strongly committed to impact management and measurement will be funded.

Sustainability:

Does the organization have a clear path towards financial and operational sustainability?

Effectiveness:

Is there sufficient data and evidence that the proposed intervention will generate the intended results? How do these compare to existing benchmarks?

Efficiency:

Within the same target group and/or geography, which results represent the best value for money?

Scale and depth:

How many beneficiaries/clients will be reached and what depth of impact will be created?

Critical services:

How critical are the needs being addressed? Does the organisation play a crucial role in providing services or is the sole service provider addressing these needs?

How we select the appropriate Impact-Linked Finance instrument

We provide innovative finance in multiple forms by using a variety of non-repayable and repayable financial instruments that link financial terms to realized outcomes.

If not pre-determined by a specific program, the criteria for assessing and selecting the appropriate financing instrument and its terms are:

 

(1) Additionality:

To which extent does the proposed financing instrument and its terms mobilize additional private resources and make a difference beyond ‘what would happen anyway’ (or better/faster)?

 

(2) Results Orientation & Targeting:

How precisely are the financing instrument and its terms targeted towards those activities that are most closely linked to the intended development outcomes?

 

(3) Impact Potential & Scalability (incl. cost-effectiveness analysis):

How do the financing instrument and its terms support exploring the full potential for development impact and scalability? What are the expected benefits as compared to cost?

 

(4) Alignment of Interest:

How much aligned are the interests of all parties that are involved in the financing model? Is there any risk of moral hazard or market distortion?

 

(5) Sustainability & Exit:

How do the financing instrument and its terms encourage the exit of concessional finance and the financial self-sustainability of the intervention?

There is another important criterion for deciding on the appropriate type of funding:

(1) either using the funding primarily to mobilize additional investment (e.g. SIINC-type instruments for blended finance) or

(2) providing the capital from a single source (e.g. using Impact-Linked Debt or Equity instruments as direct impact investment).