Blended Finance: From Innovation to Scale

On Friday the 19th of June, the NAB hosted a Blended Finance Marketplace at FMO’s offices. The event opened with a welcome speech by Jaap Reinking, Principal Investments PE at FMO followed by plenary session featuring Allianz Global Investors, Invest-NL, the European Investment Bank (EIB), and GLS Investment Management. Together, they explored the challenges that blended finance aims to address. This was followed by a presentation from CGAP-World Bank and an update from the Blended Finance Lab of the London School of Economics., offering both global perspectives and practical insights into current developments. As financing needs for building resilient societies continue to grow, many impactful opportunities remain outside traditional investable frameworks. Blended finance aims to bridge this gap by combining public or concessional capital reducing risks and mobilising additional private capital.

Blended Finance today and can it scale?

Across the plenary discussions, speakers agreed that blended finance has not yet reached the scale to meet the requirements of global development and climate financing needs, However, it is clearly evolving beyond one-off transactions.

EIB and Allianz GI underlined that for scaling impact, particularly in innovative sectors, requires a careful balance between customisation and replication, and Invest-NL confirmed this also applies to blended finance initiatives in the Netherlands. Highly complex transactions, especially those involving changing or uncertain risk profiles, still require tailored structuring. At the same time, there is growing potential to replicate frameworks in markets with comparable characteristics, enabling greater efficiency and scale.

In emerging markets in particular, projects often cannot standalone. Financial and technical risks are too significant for a single organisation to bear. As a result, collaboration becomes essential, bringing together multilateral development banks (MDBs), development finance institutions (DFIs), local governments and both national and international partners to reduce the risk. While these processes are lengthy and complex, they remain critical to unlocking investment where it is most needed.

Another challenge lies in the blending of different types of capital. Public and private investors often have different requirements that need to be met which can complicate structuring and slow down deal execution.

A further barrier to scale is the misalignment between blended finance structures and investor mandates. Many institutional investors operate within investment mandates, credit rating requirements, and fixed asset allocation frameworks that weren’t designed for these structures. The challenge consist of ensuring that the blended finance structures effectively align with how institutional investors invest.

GLS IM, an ethical bank from Germany with many impact-oriented clients, obtained a credit rating for one of their blended finance structures. The credit rating allowed them to better communicate risks, returns, and impact potential to clients. This added transparency proved key in building confidence and attracting both institutional and retail investors into impact-oriented investments.

Addressing challenges

Emmanuelle Javoy (CGAP, World Bank), acknowledged the growing popularity of blended finance but added it remains complex, slow to structure (typically 2-3 years), relatively small in scale, and opaque. Questions around its additionality also continue to arise.

To address these issues, CGAP has launched a benchmarking initiative designed to break this cycle. The project focuses on analysing blended finance funds, examining how capital structures and design choices influence development outcomes. In partnership with PRISM/SDG Impact Finance Initiative (Switzerland), CGAP will collect, publish and analyse benchmark data to identify what works and why. The goal is foster greater transparency, standardisation, and coordination across the sector.

Complementing this effort, Harald Walkate from the Blended Finance Lab at LSE highlighted a more practitioner-focused approach. Rather than simply documenting barriers, the lab seeks to develop practical solutions.

Their work involves analysing real-world investment mandates of large asset owners and mapping these against existing blended finance structures. By identifying where alignment already exists, and where it does not, the lab aims to provide actionable guidance for structuring vehicles that better match how institutional investors actually allocate capital.

Key Takeaways

Blended Finance structures will continue to require a balance between customisation and replication to achieve scale
Perceived risk is as important as actual risk, and remains a major barrier to mobilising private capital
Different challenges require tailored blended finance solutions
The real challenge is no longer proving that blended finance works but scaling it effectively.

Marketplace and Collaboration

Following the plenary session, participants joined a marketplace of workshops, showcasing real-world blended finance initiatives. Across nine workshops, 16 organisations presented practical case studies demonstrating how blended finance is being used to including

Mobilise private capital to supporting ventures and entrepreneurs,
Use grants to stimulate fund creation,
Improving access to energy, funding Agri and SMEs in Africa
Blend with insurance and hedging currency risk and many more

We are very grateful to the organisations that participated in the marketplace: Agtuall, Allianz GI, Anthos, Atradius, Climate Fund Managers, DRK Foundation, FMO, FMO IM, GLS IM, Grant Thornton, Hivos‑Triodos, ILX, Invest‑NL, Regmifa, Oikocredit, and TCX. We thank all speakers for their contribution, collaboration, and for sharing their insights to make this a successful event.

We especially thank FMO for hosting the session and the audience for enriching the session with questions and active engagement. These sessions provided hands-on insights into how blended finance structures operate in practice and the diverse approaches being tested across sectors.

For further insights, the presentations from CGAP & PRISM (Emmanuelle Javoy and Salma Allaoui) is available to view HERE.

The presentation by Agtuall can be viewed HERE.