Blended Finance Structures
Combining public, private, and philanthropic capital to unlock investment
Your Progress
Section 4 of 5The Catalytic Approach
Blended finance strategically layers different types of capital to improve risk-return profiles and mobilize private investment at scale.
Core Principle
Use limited public or philanthropic funds to absorb first losses or provide guarantees, thereby de-risking projects enough for commercial investors to participate. Each dollar of concessional capital can mobilize 3-10× commercial capital.
1. De-risk: First-loss capital absorbs initial risks
2. Bridge: Concessional fills return gap
3. Scale: Commercial provides majority funding
Blended Finance Structure Designer
Layer different types of capital to mobilize commercial investment
Project Parameters
7/10 - High Risk
$50M
Select Capital Layers
Real-World Success Stories
🌾Climate-Smart Agriculture Fund (East Africa)
Total Size:$120M
Catalytic Ratio:5:1
Beneficiaries:500,000 farmers
Structure:$15M grant (capacity), $25M concessional debt (2%), $80M commercial loans (8%)
Innovation:First-loss guarantee covers 20% of commercial capital, weather insurance bundled with loans
Impact:30% yield increase, 40% income growth, 85% loan repayment rate
💧Urban Water Resilience Bond (India)
Total Size:$200M
Catalytic Ratio:7:1
Coverage:5 million residents
Structure:$20M World Bank guarantee, $30M green bond (5%), $150M institutional investors (7%)
Innovation:Resilience outcome payment: If flood reduction > 50%, investors get 1% bonus return
Impact:70% flood risk reduction, water access for 1M people, ESG investor enthusiasm
Critical Success Factors
- Clear risk allocation: Each layer must understand their position in the waterfall
- Strong project preparation: Blending doesn't fix fundamentally unviable projects
- Aligned incentives: Public funders want impact, commercial want returns—structure must serve both
- Exit strategy: Plan for concessional capital to rotate out as projects de-risk over time