 Well, thank you very much for for I would say staying up late, but I guess staying out here and not Although thank you Matt at least for the for the beers and already I see folks are starting with happy hours So we'll try to make things quick today. My name is Rob Schneider I'm with USAID and I lead our partnering to accelerate entrepreneurship initiative and PACE as we call it works with about 40 different incubators accelerators and impact investors and seed state and seed stage impact investors to Test ways to bridge the pioneer gap So I think something very relevant to a lot of folks in the room and a lot of folks here at the conference We've leveraged over a hundred and fifty million dollars in the three years since we've been we've been active So we're really proud of that and I have with me a great panel So to directly to my left. We have Stephanie Kimber from Australia's Department of Foreign Affairs and Trade Stephanie's in the innovation unit within Australia's aid program and is currently based in Washington, DC Collaborating and sharing learnings with us at USAID and also the Global Innovation Fund and other players in the ecosystem She's one of the architects of Australia's innovative new Program supporting the entrepreneurial ecosystem in Southeast Asia and the Pacific Islands, which I'm sure you will share all sorts of information with us about And then we have Chris Juergens Chris is a director at the Omajar Network His team works to increase the reach and effectiveness of impact investing the impact investing industry through field building efforts Research and thought leadership and catalytic investments He's particularly focused on driving innovations to increase the flow of frontier capital to early-stage enterprises and Before joining Omajar, Chris was actually my boss at USAID's global development lab and also a partner at Accenture Development Partnerships And we have Owen Rachman from the who's the access to finance lead at InfoDev at the World Bank Group Owen leads a team at the World Bank working on early-stage investing in developing countries in frontier markets He leads initiatives on building local early-stage clean tech funds in Africa And also a multi-year program to develop angel investor networks in the Caribbean Prior to the bank, Owen spent almost 10 years at the Acumen Fund and launching and managing Acumen's office and portfolio in Pakistan And finally last but not least Victoria Fram who is with Vilkapp investments who we think has the record for the most panels it's so kept this year at How many? Six six This is the last one. So keep that energy up Victoria is the co-founder and managing director of Village Capital's affiliated investment fund Vilkapp investments Vilk, Village Capital for those that don't know is a system to fine train and invest in high-potential Entrepreneur solving real-world problems around the globe Over the last seven years Village Capital has worked with over 600 entrepreneurs made 80 investments and catalyzed $200 million in capital to portfolio companies prior to Vilkapp Victoria worked at the Bill and Melinda Gates Foundation on the PRI team the program related investments team and a metropolitan which is a global private equity fund of funds So that's your panel today The reason we're up here is you know a lot of what we've been talking about these past few days is about investment and private investment And frankly, we're getting a little lonely What's the role for or is there still a role for donors and donor capital? And so Chris, I'd like to start with you a little bit Omidyar Network provides both grants and investments. So to take a bit of the devil's advocate position Why don't you just restrict your involvement to investments? Won't your money go a lot further instead of providing grants? Sure, maybe we'll stop with the grants So Omidyar Network is the philanthropic investment firm of Pierre and Pam Omidyar been around a little over a decade We've invested about 1.1 billion In about half of that has been early stage equity investments in companies and half of that Grantmaking and that's what's unique about Omidyar as we take a sector-based approach into the issue areas We focus on financial inclusion Education property rights among others and then use all the tools in the investment toolkit in the place Where we think we can have most leveraged impact So we do have a bias for commercial investments at market rate returns That's for us. That's always the most scalable model That's where the business bottles are robust and that's where all the capital is waiting to line up the door So the quickest way to scale in deep backpack is where you can get those market rate returns But very much acknowledge and learn more and more of our decade investing particularly early-stage investing in emerging markets That that's not always possible But have invested a lot in our framework to think about when we consider concessionary returns and when we consider grant-making and for us, that's around a few key decision criteria so for concessionary returns we think about What incremental impact is that buying by taking a concessional return and firm us we think about the direct impact of a firm But also the market level impact of firm is having often in the case of the pioneering enterprise That's pioneering a new business model particularly it's serving low-income markets for the first time So we invested early on in delight one of the early off-grid energy solar lanterns and now household solar system players With below market reserve expectations recognizing They were an early pioneer in the industry take longer to figure out the business model asset heavy and a more difficult path to scale than a tech-based company But seeing that market-level impact that they're successful that can catalyze an entire industry and indeed years on thanks to several pioneers in the early stage See that see that growing We also invest in things we see as in a sector-based approach Industry infrastructure that can catalyze the growth of an entire sector so it may not be the highest return for us But we see it as addressing a major cross-cutting barrier. That's hindering the growth of an industry So an example for us in that case is MFX in the mic in the financial inclusion space Provides currency hedging solutions for micro finance institutions a major challenge Profitable investment But we're willing to accept Concessionary returns there because we see the market-level impact of what they're doing Enabling the growth of an entire sector Justifies that and then we use grants in a number of instances Both for sectors where non-profit innovators are most critical for policy and advocacy Around market-based solutions to influence government policies where grants make more sense for research for data for helping Companies understand their customers so often the grants are linked to Industry enabling investments around enterprises as opposed to us doing grants to enterprises nonetheless see the role that very early stage funders and donors play in providing those grants, but that's not where we tend to play We also think it's really important in cases where you're doing either subsidy or grants to be very Intentional about what kind of subsidy you're using and why So talked about the case of upfront subsidy for a pioneering business model or an early stage company To help them get investment ready and get to the point where they can attract commercial capital We've also done a study and we think that's one very valid use of subsidy another is Enabling deeper reach than is otherwise possible So in the ag sector through capital has done great work in showing very transparently how where how deep they can reach and be profitable and agricultural lending and Where they need subsidy in order to reach deeper and so that being transparent around how deep business models can reach and achieve Sustainability we think is another really important use Where I could say about I'll pass that Thanks, Chris, and and I want to move on to on you working for the World Bank You also have a variety of tools at your disposal, and so I want to get an understanding Sort of how you think about using those different tools Do you agree with Chris's assessment about how you use grants versus investments versus debt? What's your what's your thought on that? what Thanks, Rob The World Bank doesn't invest That's our sister agency of the IFC which which which invests but We the kind of work we do in the markets in which we operate And the sectors which we're trying to develop we often are ceiling seeing market failures. So We can in a lot of cases Have a sense of where purely market-based models powered by private capital Can work but in most cases where the World Bank gets involved You're dealing with some level of market failure and so The market failures capital is not going into that so that can be in in new sectors It can be in in frontier markets, and we work You know we work in we work globally we're in all 200 countries So we don't have that we don't have the mandate to pick and choose the best markets to work in And I I mean the program I'm involved with is working in small alienation in the Caribbean where the smallest Montserrat has 5,000 people or and the average is 50,000 people the largest Jamaica is 2.7 million people So we've got to figure out how do you get private sector solutions to work there? So that's one aspect the second aspect is looking at new sectors Whether you're looking at you know climate-smart agriculture water and sanitation And so on and the third dimension is what amplifies all of that is when you're investing really early when you're investing in businesses that are Somewhere between ideation and and growth. There's a lot of risk over there so Private investors VC funds a lot of impact investing funds have have sort of found their sweet spot And what we've seen in the market we took at a market like Kenya for example We don't you see too much deal activity in the sub $500,000 range So how do you address that problem? And so what we focus on is really testing and building models that are addressing the very early part of the the capital curve And What we find is that private capital is not going over there. So we essentially try to blend Grand capital going into unproven investment models with a goal to leverage private capital So that over time the thesis is that over time as as investors get more comfortable and we get a more of a line of sight around What kind of capital works over there? Perhaps the trajectory is that this can become get to a point where front capital may not be needed or you can bring Into lower the subsidy right so to give some practical examples in Ghana We have a mandate to set up early-stage funds focusing on climate subsector So that's off-grid energy What in sanitation climate smart ag? The impact investing space in Ghana is still fairly young most most investors are looking at And and and in the climate space is even younger. So most investors that are operating are in the You know growth stage Finance and so what we've done is we've we've we've put together a grand structure where we're taking a subordinated role in in a fund which will be 20% coming from us in the form of grant funding and 80% is going to come from private investors mostly in Ghana who are taking a first-time risk in this right? So it's giving them a little bit of a cushion And then we are coupling that with capacity building for the fund manager Who is essentially getting into a new sector? And so we're trying to again to Chris's point trying to build the infrastructure in the ecosystem, right? So we were successful look like in a you know in a few years is that these funds could be capitalized without grant funding And you've built the capacity of the fund manager, right? So that's just one example in the Caribbean small island nations We're trying to build angel investor networks We have gone in and said the market failure problem is called the graveyard of private equity So we don't see any VC over there we don't see any private equity over there and We've taken a hypothesis that is a quite a bit of wealth and their business angels who can both write capital in small amounts $50,000 to $250,000 coupled with more importantly the technical assistance The question is how do you how do you get them? How how do you unlock that capital? And so we are testing out a model where on a deal-by-deal basis If the angels put in 80% of the capital you put in essentially a de-risking element into the firm of 20% that's Essentially sort of a matching grant, but it's with 80% of the capital is coming actually from From the angels right so it becomes a nice sweeten of a both the entrepreneur and the investor To try and do a deal where there's also a lot of issues of trust between entrepreneurs and investors And then the fact is you've got to start building that infrastructure again of angel networks And the the business models for angel networks are not sustainable at this stage And so you've got to put in subsidy over there as well. So we come in and do that too. So they're just two examples There are a few other models where we've tested our different approaches in terms of trying to leverage grants Or cat using grants as as catalyzing sort of private capital Right, so it sounds like you know So both Chris you at Omidyar and on it that at info dev you you're using your grand capital in a way to really Subsidize the creation of the ecosystem, which is something that folks like us generally put our money towards and so and so Stephanie with DFAT You guys are all are used to be doing for providing lots of grants and now suddenly you're coming up with this new model Tell us about this new model now. You're going to to act as an investor. Tell us How and why and are you still planning on using grants? Are we or are you going to announce today as Matt was going to ask us to that? You're no longer doing grants. You're just doing investing, right? That's right. We're out. No, obviously not actually we Still will have to do grants. We can't actually do anything else But we have over the last two years taken a lot of time to design a fund of funds so that we can experiment in this Space of being actually being or being more directive with our funds in the impact investing space So we will give a grant to our fund manager And then they will then strategically place that into different impact funds That tell us that they can provide the sort of impact that we're looking for So this is just one small ish Foray into the actually being an impact investor By far and away the business of DFAT the Australian aid program will still be in giving grants But I think we all recognize that international development challenges are accelerating while donor bilateral aid programs Shrinking so when we think about grants We're thinking about how we can be smarter with our grants like Chris said if you're using a subsidy Which effectively a grant is into this ecosystem. We need to be smarter about how and where we place that grant In the past I think as bilateral donors We haven't always been really smart We've just wanted to help or we've wanted to support incubators just because they exist not because they're actually Sustainable or doing a good job just well done. You exist. Let's give you millions of dollars. So My colleague Matt who's sitting in the front row. He and I have been working on a program called the frontier innovators and I also want to say on if the Caribbean is the graveyard. I Don't know what you call the South Pacific Something even worse. I don't know But in order like the ecosystem within the South Pacific and Southeast Asia is very nascent in this area So we are very focused on trying to build the ecosystem Build the capacity of the players and make it easier for all of you wonderful investors here in the room and that's so cap To want to come to our region because there are definitely opportunities there. So frontier innovators We'll have a couple of different components. It will provide some core funding to high potential post-revenue entrepreneurs that we Source in the region They'll also get some training on storytelling and impact evaluation and measurement so that they can come Better at telling their stories and attracting investment. And then we will also be doing frontier incubator Which is not just for incubators for all enterprise support organizations to build the capacity of the existing ESOs that are in the region. We see a lot of varying quality of the sort of organizations who work with the entrepreneurs And then we're creating a brokerage to which will be humans To try and do what all of the tech platforms have kind of failed to do especially in emerging markets that matching of capital to Enterprises so the brokers will be highly networked They're going to be the people that you want to call when you want to come to Southeast Asia and the Pacific and you're looking for opportunities and they'll be connected into all the angels and the banks and Accelerators and they'll have a stable of great investments for everyone. And then we have some Some capital that we're actually putting through From our innovation exchange team that Matt and I are on we're directing some of our funds through this new investment vehicle the emerging markets investment facility And it will have a particular development innovation focus so they'll be looking for to support Entrepreneurs in the region or funds that are investing in entrepreneurs that are doing something innovative and different and delivering particular development outcomes So yeah in a nutshell, we'll still be doing grants great And so I want to say you've heard from a number of the funders up here I want to change tack a little bit and Victoria bring you in as someone who's invested in dozens of companies both in the United States and in emerging markets What's the perspective from the company companies that get blended capital they get grants they get investment whether equity or debt How do they use that capital in different ways? And do you see that that has any Is there any different perspective that they have when they receive those different types of capital and do they use them in different ways? Yeah, so for There's a variety of ways. We've seen this play out in our portfolio both here in the US and and abroad. I think Clearly it's it's great to get non-dilutive grant funding Though it's certainly not it's not free money. It often comes with a lot of strings attached to it So but that's been helpful in a bunch of ways to company So the primary way we've seen it used is in our more capital intensive industries So we invest across education healthcare financial services all that are very tech based but also energy and agriculture where we see far more use of hardware innovations or rather capital intensive Businesses that need to be built that have a fair amount of early R&D Associated with them and getting early non-dilutive funding that lets you get you know out of a lab and out of prototyping phase to Actual market validation and testing which is where we start to work with companies They wouldn't be alive by the point that we are ready to work with them If they didn't have some of that grant funding up front and in the US That's been from you know government entities like our buddy and DOE and NSF and SBIR Internationally it's been USA. So some of our companies have worked with div or other initiatives to get grant funding that has let them sort of Experiment when they're getting out of pilot phases, but still have some room to work on their innovations And I think the way they use it differently in addition to That which is sort of specific to business model So they you know need to invest in hardware that investors aren't going to take all of the technical risk that it might That they might require to actually get to a market place The other way that we've seen them use it is to to really do deep impact assessments or M&E Initiatives that investors want to get the results from but won't necessarily invest in which may just be a flaw in the space but That has been a way to sort of please both parties is say, you know My investors will care about these results if I can demonstrate them, but they won't pay for them yet So again, if you think about how grants can be catalytic, that's one of the ways that we've seen them The only other point that I would make from the investor perspective is I think there's some apprehension that Entrepreneurs have occasionally which is you know, if I take this grant funding am I going to forever be seen as kind of concessionary oriented or Not be able to attract investment down the line and by and large You know grants if if misapplied or used excessively of course can distort a market or you know Put put an enterprise on a track that might not make it as competitive long term But for us how we see them applied at such an early stage It's like a great outcome that you know somebody is then coming to us a bit more de-risked and we can really Put our capital to use where we think it can have the highest invest use when they're ready to get to that next phase of scale So in general it has been a good thing across the applications. We've seen Yeah, I think that's a great insight and I think this is some echo some comments I've heard from some of the other panels this week about Investors kind of wanting the impact but not necessarily willing to pay the full cost of the impact and how do you how do you monetize that and Sort of broadly I think it's something that we're all sort of thinking about and and how you're able to internalize those externalities and And one thing I wanted to follow up with you is I know that VIL cap investments itself is a Has a blended component to it So maybe you could talk a little bit about how you think about your own blended finance Yeah, absolutely, and on touch on this a bit in the kind of fund manager model that you're trying to Initiate so pace the group that that Rob works with and we worked with Chris on this in the past as well Was absolutely critical to us getting our fund off the ground So one of the big challenges in early-stage funding in general is you want to write these small checks To give people a little bit more runway to prove their business model Doing that is still very expensive and time-consuming so the cost of writing a fifty or a hundred thousand dollar investment can be as extensive as if you're writing a million dollar check and To write those small checks you generally need a small fund size and that small fund size carries with it pretty poor Economics for actually operating the whole entity So this can leave a big capital gap in the market because nobody wants to actually go in and do that work and one of the things that allowed us to get off the ground is that by working with us a its pace initiative we got a Set amount of philanthropic capital to bridge the gap between the market rate management fee that Investors were willing to pay for a fund. So they they looked at our you know, 15 million dollar fund the same way they're looking at 100 million dollar fund opportunities that have standard 2% management fees attached to them And our cost of operating a 15 million dollar fund or more like 4% a year so By getting philanthropic capital from USAID's pace initiative We were able to bridge the gap between that 2% that investors are willing to pay and the 4% that it actually costs us to operate And that would catalyzed, you know the first close of our fund Which then we were able to continue raising until the the final target that we had Of 15 and eventually what ended up being 18 million dollars So and it wouldn't have happened without a creative solution like that Yeah, and thanks for bringing that up Victoria But one thing it does highlight actually a way in which we can utilize our grand capital in a variety of ways And so through the pace program We've had about 17 different grants that we've provided and I think Village Capital is a great example of one of those Some other ones where we've used our funding to provide a second-loss guarantee for for an impact investing fund in Africa We've also provided a grant to root capital where root capital has done some great work on sort of the frontier capital space that has Given them an understanding of how expensive it is for them to actually service their own loans and recognizing that Below a certain amount, it's really not financially feasible. And so we were able to give root capital a grant to for them to be able to Successfully and financially sustainably Service loans much smaller than they normally would Recognizing that those loans are necessary in order for the companies to grow to a certain size where they could then take out loans from Root capital that were financially sustainable and were covered by the cost of fees And so one of the things we've been trying to do in pace is look for those creative solutions And so yes, they're still grants, but we're trying to plug them in in different ways in order to enable these intermediaries to grow and service their their clients and provide debt and Equity and technical assistance So on I know I want to return to your sort of history at acumen, which is where you were before info dev You helped set up their Pakistan portfolio, and I know that you also work with companies That had some sort of blended financing To them and do you are you did you find something similar to Victorious finding in the companies that they're working with and how did you use that blended financing both in acumen the fund as well As with the companies that you worked with Yeah, so I mean the same principle I mean acumen Formally stopped doing grants in 2004 but practically Took a fairly flexible approach in thinking about the provision of capital and Funding to firms to get them on on you know If you look at the blueprint to scale framework from the validation stage on what to prepare and scale and so the premise is that When you're the acumen doesn't really make investments a blueprint say but in the validate state You're dealing with a lot of risk a lot of unknowns, right? And if you're talking about base of the pyramid markets last mile distribution just amplify all of that So so the idea was to and in Pakistan where where social entrepreneurship impact investing is very new When we were investing we were often the first investor in the first pioneer in that industry So we're talking about the validation of an industry business model, right? It's very different from India very different from from Africa and We while we didn't do grants they were we would we would structure the The the investment in a way that it was it was below market And I'll give a couple of examples and with at least a hypothesis that this if it starts sitting Milestones we can start thinking of commercial capital coming in so as an example in 2005 we gave a small roll of three hundred thousand dollars to an affordable housing developer Well below market and With with no security essentially to test out whether you could provide affordable housing developments to to communities below a certain income bracket To address Pakistan's housing shortage, right? So there's really no solution in that market You're very testing out the model, right? They were able to Pay that loan back and so then they came for a follow-on investment in 2008 Where they said all right we want to build the holding company affordable housing company do a slightly larger project the next project Because we had insight into the first project. We were able to begin to structure that more commercially With a pre-money valuation and so on and so forth, but the developer itself Again, we had no insight so we put equity in Which effectively when the investment committee asked me how you gonna exit I said, I don't know so effectively it was a grant Fast forward five years the company then also flirted with three rounds of bankruptcy in that process So we have to be pretty hands-on But fast forward five or six years I've moved on from Acumen Acumen was able to exit that investment Make a profit of a return on investment and they were able to bring in twenty million dollars of commercial capital, right? So that's one journey of one firm over a ten-year period another example is We wanted to see if you could provide Super micro health insurance Again to test out that model So we partnered with a with a micro health insurance distribution company To test out models and you'd have to go at the back end to get a large insurance provider to Essentially write the policy. You've got no data on on on micro health insurance, so essentially Acumen put a bit of equity into the distribution company and then created a stop-loss facility With equivalent like basically along the same principles as a guarantee structure where you provided second loss So losses below a certain amount Would then be absorbed by the stop-loss facility and that did get hit a little bit But in the process it gave comfort to the insurance company on how to begin to underwrite policies So, you know the the facility took a 40% hit and that was understood And there was a lot of controversy around whether we should do that or not do that But in the end it began to stimulate a little bit of market activity in that right So those are just two examples and you know, we were doing last mile repirations So when you start looking at those kind of markets, you can't really start thinking about commercial IRR But you can start using some of the principles of equity or returnable investments, but with with an appreciation that this is The the likelihood you're gonna lose your principle is high So you've got to have a little bit of the, you know, you've got to have the stomach to lose it all But you build it with an eye towards getting that company on on the path towards raising commercial capital With the recognition that some of them won't get that I mean, I personally think if you start serving Really frontier frontier last mile markets with something like repirugation you talk about 20 30 years before you start thinking about commercial model So I think when we talk about patient capital It's really patient in some cases if we really want to build access through through market-based models Great. Chris, do you have something? Yeah, I'm building on that. We wanted to take a look at Amityar given pioneers like Acumen and others have been at this Market-based solutions for the BOP for over a decade now much of that's Upfront patient capital and grants, but where has it gotten us to in terms of financial sustainability and Simultaneously reaching deep down the BOP. So we funded some research just came out from from Deloitte called reaching deep and low-income markets Asking do we have evidence that a number of these business models are Simultaneously reaching deep down the base of the pyramid and financially sustainable Finding number one is it's really hard to come by data So for many of these companies don't have hard data on exactly who they're reaching But there are a number of companies they ended up finding about 20 that had pretty solid data on both Customer reach and their financial sustainability and 17 out of 20 of these companies from more tech-based models to Asset heavy and cook stoves and off-grade energy and even a couple water and sanitation place We're achieving a reasonable degree of financial sustainability at different thresholds that were number were profitable And others were profitable on a unit economic spaces, but reinvesting for growth And we were surprised actually we hypothesized that it'd be possible in tech sectors But not really in the asset heavy sectors, but that there were multiple examples across different BOP industries of reaching that Simultaneously and for me that's really encouraging that much of this grant funding is not necessarily perpetual and with patients in many cases It's taken a number of the years for the companies to get there. They are now both attracting Commercial capital or impact investing capital and serving low-income customers in some cases with these microfinance models And others and M. Copa sub two dollars a day even on a sustainable basis So to me that speaks to the power of how catalytic Smartly targeted grant capital can be if you have that patience Great and I want to thank the audience for your patience today Hopefully you won't have to wait 10 or 20 years, but we're gonna open it up to questions shortly And so while you're thinking about your questions, I want to ask a question. I think mostly of Stephanie and Chris Really practically right in the audience. We have entrepreneurs. We have intermediaries that are providing services to entrepreneurs What is it that you look for as you are thinking about either providing grants or providing? investment capital How how should people in the audience think about Preparing ideas and things that you're thinking of funding and what really is the type of thing that you would want to fund I'll jump in So I guess Being an aid program our priority is always on The beneficiary like what is what is that impact that you're? That you are able to achieve So you really need to be able to tell your story Which is why we're investing in training for storytelling and the impact metrics behind that so if you can Show that you are hitting those communities of under, you know, five dollars a day In emerging markets, that's a great start. We're also looking for the capacity of the Enterprise that can they actually manage our grant like Victoria said sometimes, you know The reporting is kind of heavy when you get this free Money from a government donor. We have taxpayers to you know, we have this emphasis on transparency we have to be accountable and Usually it's through a competitive process, right? Like we're not really able to come to a venue like so cap meet an amazing Entrepreneurancy we're giving you money. So it's more likely going to be you're amazing We've just opened this funding window. You should come and compete against everyone else against these selection criteria and We'll see if You're successful. So I did want to say that like yeah, that's one of the main mechanisms that we've used in the innovation exchange for actually finding the enterprises is that sort of global call open challenge Model, which is not always great tend to have the darlings that are good at applying to those sort of applications and have the right Answers to everything But it has been great for us as an experiment of like to seeing where the innovations are taking place Who are the players in our in our region? We do focus, you know Predominantly on Southeast Asia and the Pacific and it's just there's just less activity there Less capital less people working in this sort of space So if you do want to get funding from the Australian government keep an eye out on our websites follow us on Twitter And yeah, that's the best way Great Doing you wanted to add Yeah, so for us I think we look at the things that typical impact oriented VC investor would look for particularly if it's seeking market rate capital So prospects for financial returns innovative business model strong product market feet strength of the management team proof of some solid unit economics and To the where I started in the comments on the panel for concession Returns we're really looking for where is this demonstrating impact From a broader sectoral perspective is this truly pioneering a new business model that hasn't been tested before is it reaching a Sub-segment of customers that hasn't been reached before is there that a pathway from getting subsidized capital to? Profitability and an eventual exit for us as a typical Exit investor so that's kind of the criteria that would differentiate between we're really seeking market rate returns Or we consider more flexible capital Yeah, great. I don't know whether we have microphones or not We do have a microphone there. I don't know if there's So maybe we'll take one or two questions if folks have Questions, otherwise we have to keep talking so Please ask questions They pay us by the word Hi, thank you very much for the discussion. It's very enlightening. I Would like to get your take on the role of intermediaries specifically how you view Sustainability for incubators accelerator programs. There was the village capital orville communities report that recently came out that had Something like 60 70% of incubators are generally not sustainable Is that considered Is that Ongoing grant funding something that you see Being the future for that are you looking for sustainability? How do you have any examples of sustainable incubators? Especially those in asset heavy sectors that aren't just working in tech hubs that have very low program costs Yeah So we have done a fair amount of research in this space. I liked Or would like to counter one of Stephanie's comments about like incubators or accelerators just getting paid for existing because that has not been our experience I But it's true. They're extremely difficult business models to make work. You're dealing with Especially if you're gonna stay at an early stage with companies You're dealing with founders that have no money to even run their business let alone pay to participate in something We particularly care about leveling the playing field for who gets access to even starting an enterprise or getting early-stage capital So you're putting up additional barriers if you're trying to just Only work with the companies that are well-funded or that are personally in a financial situation where they can fund themselves And then the investors which I think has been the hypothesis for a long time of incubators or accelerators Like if you are good enough, they will pay for the deal flow just will not pay for the deal flow there, you know, they see it as sort of this part of the ecosystem that needs to exist and You should be so lucky that I want to come and back your company It's which leaves you in this precarious position of like, okay I have a sensibly two customer bases and neither of them can pay for what I'm trying to provide So if we saw a business that came to us and wanted funding for that, you know We would be fairly skeptical of it Which is why the vast majority still are philanthropically funded Speaking specifically for Village Capital. We are doing a lot of work to try to figure out what other Components of the work we do are monetizable that aren't necessarily the core programmatic service But leverage the data and research that we've been doing or some of the tools that we are building to make it easier and less biased our own investment process Easier more scalable and less biased that we think would be useful to a bunch of other investors out there And those are the types of things that we expect and hope will reduce some of the cost of operating purely based on philanthropic sponsorships or corporate Sponsorships which you know are paying for our programs, but even if they're not coming out of the philanthropic part of a corporation they see as You know paying for a one-time experience that we're putting on for a batch of ten entrepreneurs and not necessarily a recurring source of revenue So we we also have a perspective on that. Thanks for bringing that up It's a huge a huge issue in our space and when we launched pace about three or four years ago as Chris will remember I think we went into it with a perspective that with three to five years of grant funding We would get a whole bunch of intermediaries to be financially sustainable And so we just actually did a kind of a midterm strategic review of all of our pace grants now granted The sample size is pretty small So my my data person will require me to caveat this which is we got Of the 17 grants only about 10 or longer than a year and of those 10 we got data on like six So small, but they're all different models You know one's a micro franchise operation one's village capital one's a consulting firm one a couple are more traditional incubators Right and so all across those and what we found was on average. They were about 70% sustainable And kind of the more disappointing part, but it's public So I have to say it is that they were 70% sustainable in year one and they're about 70% sustainable a year later So we haven't yet seen that That jump in sustainability I think part of it is just they're too young many of most of the Organizations that we've provided grants to where are fewer than five years old And so they're still pretty early in their either investment process if that's how they're monetizing and Subsidizing their technical assistance So I think what we're really hoping is two and a half three years from now We'll probably do a more final report after a number of these grants are over It'll be really interesting to see what's happening and is are there differences between those models But that's clearly something that is part and parcel of what we're trying to evaluate. I Think one other comment on that is You know one question is can accelerators and other intermediaries become fully financially sustainable And another question is how cost-effective of an investment even if it's a grant is that in delivering outcomes in terms of more Companies growing attracting more capital and building vibrant entrepreneurial ecosystems And that's why we in USA and others have funded this global accelerator learning initiative to gather more data on Excelter performance and initial positive data collection including from Village Capital Which was one of the first exoders to really provide a ton of data to the effort Which involves a whole host of exoders that you are seeing higher revenue growth more capital attracted And so that starts to build a business case for a sector for high performance Exoders that Grand Capital may indeed be warranted if it's a cost-effective way to get those sorts of outcomes Right and while the microphone. Where's the microphone walking around? You have it right there. So before before we do that I would say one caveat to Victoria's comment which we did amongst our 17 grants have one grant to open capital advisers And which is based in East Africa where they actually got five impact investors to pre-commit funding to escrow account to pay for pre-investment technical assistance so we've seen sort of one example of that and we just finished that grant and We sort of realized more than five times our our grant in actually Engaging private sector investment into the companies that open capital work with so there's some success there But I haven't really seen any other examples of impact investors doing that. Sorry, please go ahead. It's okay. I Have a question about blended finance and grants So I have been working on an initiative for some time in India So I have a nonprofit organization in the US. I have a nonprofit organization set up in India But through the research that we've been doing We are launching a venture that would be a for-profit or a profitable initiative So the identity crisis that we're kind of going through right now is how do we set ourselves up for maximum success? Considering that we are looking for what is you know a microscopic amount of funding in the scheme of the world So for you guys as people with experience in sort of both realms what earmarks are you looking for? What kinds of you know what kinds of things are you looking for as far as whether you're more interested in developing the philanthropic side of an Organization or whether you really want to dig in and invest in something that's going to turn a profit So I'll just offer that we've invested in 80 companies And I think maybe three or four of them have tried this path that you're trying of having two different entities to try to capture as much of the you know Receptive audience of both grant makers and investors as they can and it wears them down as founders Which you probably have already experienced, but I think what can start out as seeming like this will be the best of both worlds I won't have to turn foundations or investors away I can just figure out like how do you which entity do you want to speak with and I'll put you in touch with the right team It eventually gets gets hard and complicated So my piece of advice not knowing anything about your business would would be to say like Do you think you can make a real go out of it go at it with one path or the other? based on the the total Pool of capital that might be interested in the solution that you're trying to provide and If not try to minimize the number of complications So try to keep you know one pool a lot smaller than the other and sort of use it as an exceptional case that you'll Sometimes take capital on rather than trying to full-time run two different entities that may eventually have legal difficulties or One of the other things we've seen with a number of these kinds of organizations is when they do have these two pools of capital Each pool is dedicated to different Expenses that the organization is going to have and so you sort of keep the lines straight before profits gonna pay for this and then Non-profits gonna pay for this and so that I think has potentially reduced some of the wearing down of the founders And has allowed them to continue to get capital in and kind of both pockets So I don't again don't we don't know your business, and I don't know whether it's applicable But that's something that I've seen that has worked sometimes so I Wanted to ask a question about a program related investments and Specifically what I'm curious about has any of your for-profit ventures been able to utilize a PRI Yeah, so at the fund level where we're a for-profit company and took a fair amount of Programmulated investment money and then in our portfolio, which is exclusively for profits a number of them have also taken PRI capital at various forms or stages a mix of equity and debt So I think you know we're still seeing slowly The tide of foundation awareness and comfort with PR eyes increase And the more examples that get out there about the ways they're being used. I hope we'll see that continue in a big way Same or mid-air is a number of investing companies that have received PR eyes And but from an industry perspective, we think it's still a relatively underutilized tool particularly as it can be more Patient than a lot of the impact investing capital that's out there All right while you're thinking of last questions I'm gonna turn the panel and have you guys each wrap up in In a couple of sentences if we're looking out, you know for five years. We're here in 2023 or 2022 What does the future of blended finance look like in your mind, right? We've talked about a couple of different models that we have We're using grants. We're using investments Just at the conference in general a number of the sessions have been okay. How do we mix these things? Who does the mixing? How does it work? What do you think the future of blended finance looks like in five years? I'll start with Victoria because she's nodding Because what because you're nodding So I'm actually I'm gonna walk back a little bit the comment that I just gave about this question of two entities because I think if If we are going to really solve some of these problems We need as many creative solutions as we can get and you know The point of our panel is sort of talking about a mix of different types of capital to one organization So in my mind, you know to our investing companies or to us as a fund But that may not be what's best for the actual service or product delivery that you're trying to enable so I guess, you know, we're trying to be as creative as possible to think about what types of capital Best suit for profits and we're experimenting with some of the structures We use in that vein and I hope five years from now We're seeing the sort of normalization of a lot more of that creativity without the tax of a lot of complication or you know exhaustion on the part of Founders and then I just think the other thing that is really clear to us when we think about grant funding is You know, we play one really small role in the overall spectrum of the solutions that need to be out there We fund early-stage entrepreneurs and Oftentimes people come to us and they say okay You claim you want to solve these really big problems and you're in these five sectors Are you sure the the early-stage? Enterprises actually have the solutions. I was on a panel yesterday about climate change innovation and We got a totally reasonable question about like nobody up here is talking about girls education and SGGs and other research research has proven that like if we really want to move the needle on climate change Like girls education is one of the ways that we do that But that may not be an early-stage Entrepreneurial investment that is going to do that it may be a lot of really smart and well-applied philanthropic capital so I think You know, we we are very strict with our Entrepreneurs about like don't start with the solution you you want to bring to the market start with the problem That you're actually trying to solve and then work backwards And I think we as investors need to do that same thing and think about you know The tools we have are one type of capital or one type of structure and like rather than just trying to Apply that over and over again like let's all step back and think about what what the problem is that we're actually trying to solve And then what the best way to do it is and I think that will be a blend of different types of capital Can I go next because I'm the least expert in actually The mechanisms of blended finance just to quickly say that I think from the government perspective in You know when we're back here in 2022 we want to see just a lot more Different types of vehicles being used and I know there's very smart people Like Chris and on and the you know in the donor groups thinking about these different ways to subsidize or move money or you know Make our grants go further bring in private capital So yeah, I just want to say I hope that we also see a lot more activity in Southeast Asia and the Pacific Everybody's getting a little bit more access to the amounts of wealth and investment capital that's out there So, I mean, I think one thing is that given where we are right now The world is still fairly binary, which is why this this panel is relevant There's grants and there's commercial investments, right? So I think first is just get a few thousand flowers to bloom and Try with stuff. I think there's a certain degree of rigor around where would grant a subordinate capital a company or catalyze private capital to address a certain problem Again to Victoria's point start with the problem and try to unpack why it is so we need to see a range of intervention solutions that are testing out ways To address a problem where more capital can flow That's 20 22 and and I think we'll see validation of some of those approaches and then then hopefully these become, you know Again, they become like equity and debt. It's just like your problem acts Let it for my finance solution why I can work for that, right? We're just not at that point right now So there needs to be much more experimentation Not just in terms of people You know donors Development institutions foundation being willing to put it but putting the thought into it and saying how what is our theory of change here, right? And and also accepting the fact that five years out ten years out in some cases you might still need grant capital When you're dealing with the really the far flung the frontier of frontiers, you know using frontier plus plus plus in the way Of media defines it so You know, I think this is still a 30-year play I know we have a sense of urgency around issues like climate change and all where we need to find solutions much faster on scale But certainly I like to see more experimentation Yeah, I agree with all that's been said I'd hope as we go five ten years out will need less grant and aggregate as we're figuring out more and more business models That work in this technology keeps driving costs down Amazingly from connectivity to solar panels to everything else and so just more and more business models are working not that it'll go away We'll also get smarter about understanding how far different models can reach so we can more smartly target the grants and the sherd ship That the third shift I'd hope to see is not just grants on the front end but more outcomes-based payments on the back end and the Achievement of results and so you have a more marketplace for buying impact That's achieved and not just grants on the front end Not only through social impact bonds and development impact bonds, but a whole other way as you can start to pay for outcomes Yeah, I think from from the USAID perspective I returned to the first question that was asked over there is like how sustainable are some of these models and I think one of the things we're certainly hoping is In addition to be having them become more sustainable having a better understanding of to Chris's point exactly how Sustainable they ought to be and and how do we better utilize the tax dollars and grant dollars that we have I think Australia and deep fat and us have sort of the same perspective on we want our current dollars that we have which are not increasing to go further And have greater impact and so so with that I'd like everybody to thank the panelists and thank you audience for sticking with us for the whole hour