Insights from the Collaboration for Catalytic Capital Workshop hosted by Toniic & FMO
Last October, we gathered in Amsterdam for a dynamic workshop on catalytic capital, co-hosted with FMO Investment Management . A special thank you to the Catalytic Capital Consortium for their continued support in building a community of practice for impact investors.
The workshop discussed DFIs, family offices, and individual investors' approaches to catalytic capital and its role in tackling systemic changes. Thematic focus areas included investing in forestry, climate solutions, and market building. To capture the depth of these conversations, we’re excited to share highlights from these discussions to help more investors access the rich insights generated by this engaged community of practice and harness catalytic capital effectively.
Follow Toniic for more insights, case studies, and tools to help you deploy catalytic capital with impact! We’re especially excited to share our new open-source Catalytic Capital Transaction Database that highlights deployment trends, what motivates inventors to deploy catalytic capital, transaction-level investment terms, and much more!
What is Catalytic Capital??
Catalytic capital refers to patient, risk-tolerant, concessionary, and flexible impact investments that address social or environmental goals that require longer time horizons or higher-risk tolerance. It is often deployed when commercial capital is scarce or hesitant due to perceived risks or uncertainties.
Workshop Highlights
This workshop explored the critical role that catalytic capital plays in addressing market gaps where conventional capital is underinvested. Investors engaged in in-depth discussions on collaboration, co-investment, systems change investing, increased deal flow, and shared learnings.
FMO’s Approach to Blended Finance
FMO outlined its strategy for deploying catalytic capital to achieve impact across SDGs 8 (decent work and economic growth), 10 (reduced inequalities), and 13 (climate action). FMO's capital is supplemented by private and public investors who finance through various structures, blending capital where needed. Its public finance structures prioritize additionality, crowding in additional capital with a focus on commercial sustainability, reinforcement of markets, and promotion of high standards. FMO aims to influence scalable, impactful solutions. Their work in catalytic capital is backed by the European Commission, the Green Climate Fund, the UK Government, and the Dutch Government.
A specific example of their blended finance work is the Mobilising Finance for Forests Programme launched in 2021, targeting LatAm, Africa, and Asia. This initiative combats deforestation and promotes sustainable land use by funding projects preserving standing forests or integrating forest restoration into commodity production.?
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About FMO
FMO Investment Management is the Dutch entrepreneurial development bank. As a leading impact investor, FMO supports sustainable private sector growth in developing countries and emerging markets by investing in ambitious projects and entrepreneurs. FMO believes that a strong private sector leads to economic and social development and has?a 50+ year?proven track-record?in?empowering entrepreneurs to make local economies more inclusive, productive, resilient and sustainable. FMO focuses on three sectors that have high development impact: Agribusiness, Food & Water, Energy, and Financial Institutions. With a total committed portfolio of EUR ~13 billion spanning over 85 countries, FMO is one of the larger bilateral private sector development banks globally.?
Impact Europe’s Market Insights
Impact Europe (formerly EVPA) is the leading network for investing in impact across Europe. It unites a wide range of capital providers—from foundations and impact funds to banks, corporate impact players, and public funders—across the full continuum of capital. The network’s mission is to advance prosperity and social progress, address inequalities and injustices, and safeguard the planet for future generations. By bringing together people, capital, and knowledge, Impact Europe accelerates impactful initiatives, scales solutions, and ensures their long-term effectiveness.
Impact Europe shared key insights into the European catalytic capital market, emphasizing the need for clearer definitions and greater alignment among stakeholders to improve the perception and role of catalytic capital. While Europe's diversity makes it challenging to identify consistent patterns, the role of catalytic capital in developing sectors such as microfinance and housing stands out.
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They also noted that significant amounts of European capital flow to regions with clear impact gaps like Asia, Latin America, and Africa, rather than remaining within Europe, underscoring the opportunity to deploy more catalytic capital domestically. Additionally, they highlighted the untapped potential of philanthropic resources and emphasized the critical role foundations can play in deploying catalytic capital.
To address these challenges, Impact Europe is creating working groups and fostering communities of practice to explore investor appetite for catalytic capital in the region. Their broader goal is to develop best practices that can help activate and scale catalytic capital across Europe.
Family Office Perspectives
A family office with operations in Asia and Europe shared its unique approach to deploying catalytic capital to drive systems-level change. They emphasized the importance of breaking down silos and moving beyond labels to adopt an integrated approach that spans the full spectrum of SDGs. By considering how different issues and solutions interact, they avoid the divisive effects of focusing narrowly on individual topics, instead fostering a holistic view of global challenges.
Their catalytic capital strategy centers on restoring balance between nature, humanity, and society. Leveraging their multi-generational perspective, they aim to address complex, interconnected issues at a global and systemic level. As a family-funded entity, they have the flexibility to experiment and innovate, using their resources to support transformative projects.
This includes working with entrepreneurs at pivotal growth moments, co-investing with peer family offices or institutions, and taking a tailored approach to leverage their capital effectively. Their flexibility allows them to adapt to unique opportunities, recognizing that this is a distinctive advantage of their structure and funding model.
Discussions during the session touched on:
Breakout group discussions
Discussions during the workshop also extended to breakout groups, where participants took an in-depth look into two concrete examples:
Emerging Key Themes?
These discussions and sharing emphasized the unique role private investors play in driving impact by leveraging their flexibility and independence. They also highlighted the value of sharing best practices, learnings, and insights to enhance collective efforts and amplify outcomes.
We’re thrilled to continue fostering this engaged community of practice and invite you to explore resources like our new Catalytic Capital Transaction Database. This open-source tool provides trends, insights, and transaction-level data to support impact investors worldwide.
Stay tuned for more tools, case studies, and workshops as we work together to accelerate the flow of catalytic capital toward transformative impact.