Scale
To scale the reach of blended finance, we must embed coordination across coalitions of partners, scale up deal sizes, reduce complexity and make transactions faster and more cost-effective. Flagship transactions will play a vital role in demonstrating how blended finance can be used to meaningfully address social and environmental challenges, building confidence and momentum across the market.
State of play
Scaling blended finance is crucial to close the funding gap and attract broader investor interest. Recent data shows median deal sizes increasing and growing focus on coordination, however many initiatives still have limited pathways for broader systematic scaling.
Core enablers of progress
Invest in early-stage design: Acknowledge the need for dedicated design time and funding, including feasibility studies, legal structuring, and operational planning, to develop successful structures. Support delivery partners to set up before capital is deployed.
Invest in delivery capacity: Provide funding and technical assistance to strengthen operational systems and skills for managing complex or high-volume investment structures. Leverage new technologies to bring down costs and improve efficiency.
Combine tools effectively: Explore the full toolkit of funded instruments to achieve your goals. Recognise where junior debt and equity can be most catalytic. Expand the use of guarantees, including those underpinned by policy commitments, to unlock private investment at scale. Employ return enhancement mechanisms to incentivise participation and target areas where commercial capital remains hesitant.
Strengthen coordination to grow reach: Broaden coalitions to partners with sector and geography-specific expertise to maximise reach. Make the expectations, roles and contributions of different stakeholders in blended finance transactions explicit. Foster open, consistent and collaborative communication among all participants.
Embed community engagement in scaling strategies: Ensure that the design of large blended structures, platforms and programmes includes local actors and community-led approaches, directing capital to where it is most needed.
Standardise approaches to support mobilisation: Develop and adopt familiar transaction structures based on recognisable archetypes and flagship examples to make blended finance more recognisable and investable. Simplify structures where possible, so blended finance becomes a familiar trusted approach. Greater transparency on pricing, capital structures, leverage ratios and returns will build confidence and encourage participation from commercial players.
Momentum in the market
Green Guarantee Company and the Community Builders Fund demonstrate how guarantees can unlock private investment and scale impact.
SDG Loan Fund, a $1.1 billion fund, is one of the largest blended finance funds launched to date. Developed by Allianz Global Investors and Dutch Development Bank FMO, it combines multiple layers of risk protection, including a $111 million first-loss investment from FMO and a $25 million unfunded philanthropic guarantee from the MacArthur Foundation, under the Catalytic Capital Consortium initiative.
Public finance institutions like Better Society Capital, Access – The Foundation for Social Investment, the British Business Bank, and the National Wealth Fund in the UK, are playing a growing role in scaling blended finance, often with explicit mandates to use blended approaches to mobilise capital.
Accelerator programmes including the Global Innovation Lab for Climate Finance (managed by CPI) and Convergence’s Blended Finance Accelerator support innovation and replication of scalable models.
LSE’s Blended Finance Lab, launched by the International Sustainable Finance Centre, provides a platform for research, collaboration and experimentation on how blended finance can be structured and scaled to meet global development goals.