Blended Finance Bulletin

The Critical Role of Patient Capital: Leveraging Philanthropy for Impact at Scale.

As the narrative around blended finance sharpens, the necessity to contextualize blended finance solutions to meet local challenges and support emerging innovations becomes an imperative.  While blended finance structures bring with them the value derived from catalytic and commercial capital, they also shed light on the necessity for capital to be ‘patient’.

Patient capital creates pathways for deploying proof of concepts on ground, fostering new business models, and remaining flexible to the evolving needs of a developing business model geared towards impact as well as financial viability.
Philanthropy backed Capital which is ‘patient’ in nature, has the potential to not just create on-ground impact but also mobilize commercial capital for mainstreaming blended finance at scale.

Since 2004, Acumen has invested more than $35 million of Patient Capital, backed by philanthropy, into 33 Indian companies that are addressing critical needs such as healthcare, housing, education, clean energy, and rural poverty.

The Report – “From Risk to Reward  – Lessons from Exiting Patient Capital Investments” authored by Acumen, sheds light on Acumen’s model of Patient Capital investing – an aspect relevant for building effective blended finance structures.

To understand more about Acumen’s approach towards leveraging patient capital to support innovative and impactful solutions, click on the link below.

https://acumen.org/wp-content/uploads/From-Risk-to-Reward.pdf

Extract from the Report:

“Patient Capital is critical for catalyzing social change over time. Observing these entrepreneurs at work has been an incredible privilege. As investors, we have learned a lot about the role our capital plays in supporting social enterprises, our expectations around realistic returns, and the most effective modes of exiting investments. Beyond the impact created, a critical outcome for Acumen is a validation of our Patient Capital model. ZHL, Greenway, and Sitara are delivering tangible impact for tens of millions of people living in poverty and will return more than 3x Acumen’s initial investment (in dollar terms). This kind of patient, impact-first investment requires philanthropy: the timelines are long, the risks are high, and the returns do not cover the costs. But it is highly efficient philanthropy. These exits demonstrate that Patient Capital is a viable, replicable, and deeply impactful model for addressing problems of poverty”