A new episode of Money + Meaning, SOCAP’s podcast, is now available!
The CEO of Convergence on the Practice and Promise of Blended Finance
“Markets are not perfect, therefore you need to solve for market imperfections. People’s perception of risk may be too high, markets can be an inefficient size, there might not be a domestic capital market (etc). Blended finance is a deal by deal by deal method to put money where it needs to go and to overcome market failures.”
Institutional investors have trillions of dollars in financial assets under their control. Getting them to invest more of that capital in high impact projects in emerging markets could lead to massive progress towards achieving the UN’s Sustainable Development Goals. But there are significant challenges that often prevent those institutional investors from moving capital in that direction.
Blended finance is a solution that can ease those challenges and motivate institutional investors to get involved.
What is blended finance?
Convergence CEO Joan Larrea says her organization defines blended finance as, “the use of catalytic capital to increase private sector investment in sustainable development.”
How can public and philanthropic capital catalyze private sector investment in sustainable development solutions in emerging markets? In the latest Money and Meaning, Convergence CEO Joan Larrea answers that question in plain language and provides concrete examples of blended finance in action, including a deal that helped move money into life-saving clean drinking water and sanitation projects in South Asia.
Convergence is the global network for blended finance. With their focus on emerging economies, Convergence aims to drive private sector investment (from both impact investors and institutional investors) where it is needed most. In this episode, Larrea, whose expertise was honed over two decades of experience in private equity and international development investing, explains how blended finance can accelerate solutions to poverty, hunger, and the other SDGs. She also talks about the future of the blended finance industry and why we need to “really hustle” to get on a billions to trillions trajectory if we are to achieve the SDGs on time.
About Money + Meaning
Money + Meaning is the official podcast of SOCAP. This series aims to expand the conversation around impact investing and strategies to finance and support social change while stimulating innovative and valuable new partnerships across sectors.
- Watch the Convergence Blended Finance YouTube channel to find videos that answer common blended finance questions such as, what is the difference between blended finance and impact investing? and what are the key components of a blended finance deal?
- Visit Convergence’s Blended Finance Jargon Buster to get help demystifying blended finance terms
- Read The State of Blended Finance 2019 report – Convergence’s annual report that provides a snapshot of the blended finance market including top sectors, regions, players, and other info.
- How Foundations Are Using Catalytic Capital to Amplify Their Impact: A SOCAP Guest post by By Debra Schwartz, Managing Director, Impact Investments at the John D. and Catherine T. MacArthur Foundation and Matt Onek, President and CEO of Mission Investors Exchange