Catalytic Capital – Executive Primer
We’re launching a Catalytic Capital Community of Practice (CoP) on 28 April – get the facts on catalytic capital beforehand!
What is catalytic capital?
Catalytic capital intentionally fills gaps left by mainstream finance, in pursuit of social and environmental impact that otherwise could not be achieved.
Key characteristics:
>Takes a patient and flexible approach to seed, scale or sustain an impact-driven solution
>Targets a market gap, tolerating disproportionate risk and/or concessional returns, often in order to catalyse additional investment
Why does it matter?
“As the demand for innovative, impact-driven solutions intensifies, catalytic capital responds, by design, to those solutions’ needs, ensuring impact and often offering a path to future scale and financial sustainability.” -- From Catalysing Impact, our 2023 report
Three cases in brief
- MacArthur Foundation, FMO (Dutch Entrepreneurial Development Bank) and Allianz: a $25M guarantee from MacArthur, through the Catalytic Capital Consortium, allowed Allianz to use public market capital to back the fund with $1 billion.
Catalytic effects: changing the risk profile of FMO’s pool of lenders; mobilising capital that could go out in loans to further SDGs in emerging countries. Read the case - Kampani is an impact-first fund. Their investment and support to early-stage ventures in low-income contexts attracted an investment by the Belgian government, including a first-loss guarantee. This enabled Kampani to double in size and help thousands of additional smallholder farmers.
Catalytic effects: public-private collaboration addressing market gaps, changing the risk profile and attracting additional capital. Read the case - Acumen provided early-stage funding to d.light, a high-risk, high-impact venture in India and Kenya, supporting it through experimentation, failure long-term growth and preservation of impact.
Catalytic effects: patience, allowing ventures to avoid compromising on impact to attract funding from more mainstream providers. Read the case (p.21)
Next Steps
>Get to know the Catalytic Capital Consortium: Impact Europe’s journey on catalytic capital began in 2022, when our organisation entered a partnership with the Consortium to help increase the knowledge, awareness, and use of catalytic capital to address critical social and environmental gaps across Europe. In addition to the catalytic capital resources on Impact Europe’s website, the Consortium offers a wealth of knowledge and news to get you up to speed.
>Is my capital catalytic? Take our quick, 7-question quiz to find out!
>Let’s get together (members only): Join the Catalytic Capital CoP: Housewarming on 28 April and help build the home for catalytic capital in Europe. Then, join us online for the Catalytic Capital Crash Course – the first learning moment of CoP, 7 May.
Not yet a member? Explore how membership gives you access to this community and more ways to catalyse impact – learn more!