Our Funding Approach.
Why do we have a staged funding approach?
Our goal is to scale innovations backed by rigorous evidence. Every investment we make is designed to support innovations on their path to scale. However, we recognise that some of the promising innovations that will change the development landscape are currently only in their infancy. That’s why we have the flexibility to support innovators from early stage field pilots right through to large scale innovations.
We take a venture capital approach, using a tiered financing model and offering graduated funding. Our goal is not to fund small organisations that stay small but to support organisations to scale up and reach millions of people.
This also allows us to manage risk sensibly. We can take smaller bets on riskier, unproven innovations at the pilot stage, and we can invest larger amounts in innovations that have demonstrated strong evidence of success. By meeting the financing needs of innovators from the seed stage right through to expansion funding, we can transform high potential ideas into impact at scale.
Pilot
We provide seed capital to support the start-up and field-testing of innovations.
At this stage, our goal is to refine the basic concept or business model and establish the viability of an innovation through testing in real world contexts. This could include initial research and development, introducing an innovation to target customers, assessing user demand and willingness to pay, or documenting social outcomes and costs of spreading the innovation.
We value any relevant evidence or research findings that demonstrate why the innovation is needed. However, we do not expect that strong evidence already exists to prove the value of the innovation.
Test & Transition
We support innovations that have already demonstrated success at a small scale.
This stage is for innovators who require support for continued growth and for assessing the likelihood that the innovation can achieve social impact and/or market viability at a larger scale. During this transition period, innovators may require funding to test new business models or to make operational refinements.
During this stage, innovation teams should propose an appropriate strategy to track and rigorously assess social impacts, cost-effectiveness, operational feasibility, and/or commercial viability, if relevant. For solutions that will require significant public resources to transition to scale, this stage typically includes rigorous testing of social impact and cost-effectiveness, often through randomised experiments. Funds can also be used to build paths to sustainability and scale.
Scale
We support the expansion of innovations that have already demonstrated a strong track record of social impact and effectiveness.
This category of funding helps innovators transition successful approaches to a large scale, usually with the goal of eventually achieving widespread adoption in one or more developing countries.
Activities at this stage could include addressing operational challenges for scaling up; working with partners who will help scale the project beyond our support (e.g. investors, existing large commercial firms, developing country governments, etc.); adapting and expanding innovations to different contexts/geographies; or assessing ways to drive cost-effectiveness as the scale increases.
View investments by funding type
Pathways to scale
Scale is critical to what we do: we only fund innovations that have the potential to scale to reach millions of people. However, we fund organisations at various stages on their path to scale. These pathways may include:
Private sector scaling
We do this through self-generated revenues and growth via injections of market-based capital
Public sector scaling
We do this through support from governments or non-profits/donor organisations
Hybrid scaling
We do this through a combination of support from both the private and public sectors
In practice
When we think about scaling pathways, we consider who might implement and pay for the innovation at scale.
For example, an education innovation may have a private sector scaling pathway, whereby education is paid for by parents and implemented by a private company at scale.
Alternatively, another education innovation may have a public sector scaling pathway, whereby education is paid for by government and implemented in government-run schools.
Whatever the pathway to scale, we want to understand what gives the innovation the potential to be operationally, financially, socially and politically viable when serving millions of people.