When catalytic capital is critical: how impact entrepreneurs use grants to build ‘bottom-up’ blended finance

In a commentary for Pioneers Post, Bjoern Struewer (Roots of Impact) and Jed Emerson (Alvarium Tiedemann) discuss their recent research report, What’s in it for the entrepreneur? An entrepreneurial perspective of catalytic capital and blended finance, an effort funded by C3 through our Strengthening the Evidence Base grant program.

“Catalytic capital is the type of impact finance that entrepreneurs value most: it offers flexible terms and may be used to attract additional capital from third parties,” Struewer and Emerson explain. “It enables disproportionate risk or concessionary returns, longer time horizons for investment, and more innovative financing structures. Accordingly, entrepreneurs view catalytic capital as the most crucial part of any blended finance transaction. And it can also be valuable as a standalone type of finance.

“Yet the providers of catalytic capital are still undecided about the role of grants,” they continued. “As catalytic capital is often seen as a form of investment capital, grants have been historically excluded from this toolbox. But can they be viable tools, too, if we ask the recipients themselves, the entrepreneurs?”



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