GIF Strategy

Executive Summary

This strategy outlines an ambitious agenda for the five-year period 2019-2024, animated by the vision that led to the founding of GIF and responding to lessons learned since 2013.

This strategy is based upon four strategic objectives, which are underpinned by a strategic framework presented in the form of organisational goals. The core objectives of the GIF 2019-2024 strategy are:

1. One Mission: Multiple Vehicles: GIF “core”; GIF Growth; and the Advance Fund: We have recognised that GIF’s unique model can support not only the deployment of Official Development Assistance but also create unique impact for (i) pools of returnable capital that are being invested in more traditional impact investors and (ii) corporate social responsibility funds.
2. One Mission: One Deal Team: The power of the GIF team is that we bring together rigorous economic analysis grounded in evidence, a deep understanding of the context in which our innovations can scale, financial acumen, a venture mind-set, and an ability to take smart risks. We have learned that the key to unlocking the power of this combination is to structure ourselves in a way that draws on the resources from across the GIF team and breaks down organisational silos.
3. Enhancing the Agency of Women and Girls: With the launch of its gender sub-fund, GIF will continue to apply, and improve on, the gender lens that it brings to all its investments, mainstreaming gender analytics into deal selection, diligence, and venture support. We will continue to partner with world-leading gender experts to grow our expertise and build a portfolio that prioritises gender equality outcomes.
4. GIF will invest where the world’s poor live and in innovations that matter to them: We will strategically complement our commitment to open innovation by deepening our expertise in markets where we have traction and where our capital can catalyse additional investment.

Strategic Priorities and Operational Goals 2019-2014

Our Strategic Priorities and Delivery

1. Evidence-Driven:
   • Evidence-led: The use and generation of evidence is a core component of our investment model, and we will enhance the broader awareness and adoption of GIF’s bespoke Practical Impact tool across the development finance community.
     • A key criterion for receiving support for activities beyond the pilot stage is our assessment of the case for social impact of the innovation. We assess the theory of change by exploring existing evaluations of actual innovation; related evaluations; our understanding of the relationship between the innovation and development challenges, and the track record of related innovations in other contexts.
     • Practical Impacts will be further developed and shared with the broader development community as we tackle shared challenges of impact assessment and its use in investment. This work will include an improved, more user-friendly platform that will facilitate internal and external use of PIA for due diligence, portfolio management and communication. External validation and benchmarking further will bolster the credibility and value of PIA with the prospect of testing it for external adoption as an impact forecast and evidence generation tool.
     • External review is a core aspect of the GIF model and the investment team will continue to engage experts to analyse key aspects of investments under consideration.
     • We will balance our commitment to evidence with ensuring that that the burden of evidence generation on the innovator is pragmatic and proportionate to the context, scale, and size of the investment.
   • Impact-first: GIF is an impact-first investor with the rigour of thorough economic and social impact analysis at the heart of our investment process. We will share lessons learned on prioritising social return and what that means for building a strategic approach to financial return with the development finance community.
     • We seek social returns first, therefore the forecasting of potential impact is a vital component of our investment process. We have no target on grant or non-grant allocation, and no goal for commercial return on investment for the portfolio.
     • We will continue to share lessons learned and report transparently on the impact generated by innovations in the GIF portfolio and the portfolio as a whole.
2. Strategic deployment of capital:
   • Tiered finance: GIF provides staged financing (with specific caps at each stage) to support entrepreneurs through the stages of proving and refining their business and impact models, alongside the generation of evidence of impact, before seeking routes to scale for the innovation.
     • We will maintain our commitment to staged funding that responds to the needs of innovators and entrepreneurs, and the different funding and evidence needs at each stage of the pathway to scale.
     • Whilst we will retain the tiered approach to investing and investment caps (with board approval to exceed them on occasion), we will reduce the use of the “pilot-test-scale” for our risk capital investments externally, ensuring that the language we use to describe the stages externally in the risk capital space aligns with the language used by other venture investors.
     • We will continue to use the “pilot-test-scale” language with relation to grant investments.
     • We will continue to assign investments to the appropriate stage using the internal GIF language, and report on this basis to donors accordingly.
   • Targeted capital where it is needed: GIF invests where poor people live, driven by our impact-first focus. GIF pursues opportunities for additionality, including by focussing on regions where current capital flows for innovation are not meeting the needs of entrepreneurs.
     • GIF will maintain its commitment to investing in innovations that serve those living on under $5 a day, and will continue to report on that basis to donors and publicly.
     • We challenge ourselves to work on hard problems in hard places so that our scarce capital is valuable.
       • GIF invests where its capital and partnership can be additional.
     • We apply a geographic lens to our work to help us focus and have impact. We seek to work where the poor live, where our donors prioritise, and where the private cost of capital is high. This means we work largely in sub-Saharan Africa and S/SE Asia.
   • Using our capital to catalyse growth – Leverage: GIF will continue to use concessional funding to catalyse private sector investment and de-risk innovations with the potential for outsized social impact by taking on currency or execution risk, or through use of innovative financial instruments.
     • When we support private companies to back, we chose firms that we believe have a business model that is financially sustainable in the long run. That is, the model can be backed by commercial capital ultimately.
     • The purpose of our support is to provide the public good of “de-risking” the model and the patient support that the firm needs to get to the point at with the risk-adjusted rate of return (in local currency) is attractive to other investors over traditional time lines.
     • We recognise that scale may come by replication of a firm’s model by others. That is, the firm we back may not be the ultimate source of social impact. However, we seek to back teams that we believe can be sufficiently successful that the goal of de-risking is achieved. This is less likely to be done if the team we back cannot themselves be successful.
3. Open Innovation:
   • We recognise that great ideas can come from anywhere and structure our work accordingly. We seek innovator-led solutions that tackle major development problems, rather than taking a strategy-driven approach where the problem and solutions are determined within GIF.
   • The ‘open window’ is core to GIF’s model.
   • We are investing in ongoing development of GIF’s website and the ‘open window’, improving the user experience within the site, promoting the window broadly in the development innovation and academic community, and enhance the content available to assist entrepreneurs to navigate GIF funding.
   • We challenge ourselves to tackle development challenges as opposed to any specific focus sectors, whilst maintaining our focus on outcomes with measurable impact towards those living under $5 a day.
   • We are open across sectors and to support any innovator including for-profits, non-profits or academic institutions, and are open to innovations in any developing country. In terms of building strategic partnerships for sourcing and promoting the open window, our focus is on sub-Saharan Africa and Southeast Asia, inclusive of the Indo-Pacific, as markets where the needs of innovators and entrepreneurs is poorly served by current capital availability.
   • We deeply engage with donors to understand their priorities and how we can contribute to them through our investments.
4. Applying a gender lens: GIF applies a gender lens to all investments, mainstreaming gender analytics into deal selection, diligence, and venture support. We will partner with worldleading gender experts to grow our expertise and to continue to build a portfolio that prioritises gender equality outcomes.
   • We will continue to refine and improve our ability to do make great investments that advance gender equality and improve the agency of women and girls.
   • We will do this by removing constraints to equality and opening opportunities. We will track and measure impact accordingly, and ideally against a clear theory of change. This includes fully integrating gender considerations into due diligence and disproportionately benefit women and girls to increase agency.
   • GIF will become a leader in gender lens investing and communicate the results of its investments, and lessons learned in the process, with the broader development community.