Impact Guarantee Fund™ (IGF) pools and mobilizes private-sector capital from private, US-based Family Offices, using mainly non-cash, underperforming, semi-liquid or entirely illiquid assets to accelerate completion of “curated” sustainable infrastructure projects globally.
As an innovative form of “catalytic” capital, IGF helps solve pressing social and environmental problems by leveraging these private funds for scalable, mid-market “sustainable infrastructure” projects, typically in the range of $15 million to $2 billion per project or portfolio. IGF’s clients, stakeholders and beneficiaries stand to make a meaningful contribution to several of the UN Sustainable Development Goals (SDGs), revitalizing and enlivening affected regional economies through job creation, profitable climate change mitigation, cleaner and healthier air, water and food, … making a positive difference for life on land and sea.
How? We identify and remove barriers to funding SDG-aligned “impact infrastructure” projects.
Not all barriers can be solved by IGF, of course, but at launch (early 2025), we did address two serious challenges faced by both underperforming asset owners and even quite experienced impact project developers: IGF’s innovative structure leverages short-term, securitized, non-cash security to … scalable, “catalytic” solutions through pre-arranged mid-market capital.
Asset owners gain extra cash using distressed, illiquid or otherwise restricted assets. Project developers secure private capital at attractive terms, using a proven process (In3CAP funding began in 2016), particularly well suited to the middle swath who often lack the financial depth required to reach the highest bankability standards, making their projects investible with more upside as a JV equity partnership. This risk/reward equation works out well for our funding as well as for the project owners, history shows.
Developers face an obstacle course with traditional funding, none of which exist with In3CAP’s model. It is ordinarily very difficult to manage all these obstacles perfectly, as several are blind alleys — such as the inability to properly diligence the funder’s intent until too late in the process. Another is the expectation by traditional lenders for at least 25-30% cash “skin-in-the-game” (unexpended new cash invested alongside any senior debt). Often most of the owner’s cash has already been poured into the project plans, engineering and/or related preparation work … and then what? Senior debt cul de sac. We solve that and many other conundrums … request the In3CAP briefing to know more.
So instead of asking developers to waste precious time and energy, working with traditional project lenders that use these and other “move target” standards to determine bankability, such as the illusive “shovel ready” status, we get deals done using a radically different model that uses old-fashioned common sense, and laboriously screens and properly audits each deal. We know which risks are less important (aside from partial non-completion risk, of course), and with diversity in equity carried interest, the portfolio of investments sustain making more and larger-scale, follow-on investments.
The key is getting new and upgraded projects operating as quickly and reliably as possible. Far too many of the UN SDGs are lagging behind (nearly half of these goals show moderate progress as of July 2024, with about a third stalled or heading in the wrong direction). Together we prime the pump of “triple bottom line” (TBL) benefits, building momentum and scale, a state change that requires a certain “edge” of innovation, like dry ice leaping over the “wet” middle from solid to gas, such as we often encounter with first-of-a-kind, climate-related, decarbonizing innovations. Sample video (less than 2 min).
Conclusion: IGF’s innovative financial structure helps both developers and guarantors to “meet the moment,” with value streams generated for both — a non-traditional hypothecation* of the assets results in immediate liquidity, on a relatively short-term basis (during only the pre-operational phase of project construction and commissioning) but with longer-term, TBL benefits from helping to fund ambitious mid-market “impact” projects.
Guarantors often seek liquidity through IGF because
- Safe structure: The capital structure is safe enough to generate reliable, risk-adjusted returns via pledges that meet their criteria for sector focus (if any), deal size, duration and hurdle rates. The risk profile is low enough that even pension funds and other risk averse institutional investors can participate.
- Short-term pledges* yield long-term benefits with few restrictions: Illiquid or underperforming assets get new life without encumbering them with a senior lien or other restrictions that would interfere with optimal, longer-term asset management. For example, building owners can still renovate, upgrade or convert low-occupancy office buildings into housing, or whatever the local market demands. Arrangements can be made to sell or divest held assets so long as the buyer accepts the temporary pledge status.
- Soft pillow effect: Some IGF participants enjoy the felt sense of making a positive difference in a world that demands decreased reliance on government to “fix” the world’s problems, putting the private sector front and center to lead toward a more circular, life-sustaining, inclusive, diverse (stable), healthy and vibrant economy. Notice we didn’t use the word “woke” :o(
IGF guarantees are for developers that fall short of the Completion Assurance Guarantee (CAG) requirement, but otherwise meet the highest standards of efficacy, with close to zero commercial risk.
* By “hypothecate” or “pledge of collateral” we redefine that from the traditional meaning … know more
Innovative model boasts perfect market timing
Most of In3CAP-funded projects involve some form of innovation, which to some funders would cause fear, uncertainty and doubt since future performance is unknown. But let’s not overthink it. Most of time, well-planned and operated projects that are fundamentally feasible (profitable year-on-year) perform within a reasonable margin of error to generate cash flows that, in turn, enable rapid but sustainable expansion. Securing funds for such innovative projects, often using “first of a kind” solutions, can be near impossible through traditional channels.
Innovative, non-traditional projects require non-traditional finance solutions
Would you agree that our society has problems or “issues” that need to be solved or resolved? Which ones are important to you? The UN’s Sustainable Development Goals (SDGs) have been adopted by global leaders seeking big changes and require that we approach the problems at hand with new perspective — “catalytic capital” delivers and accelerates scalable, profitable, breakthrough solutions to things like climate change, social justice, local self-reliance, quality of life without decreasing the ability of future generations to meet their own needs.
Within the disciplines of precise financial modeling, highly selective management teams (not everyone is cut out to originate complex mid-market infrastructure projects), and teamwork, relying on excellent social relations, analytical and communication skills, so we can together manifest the measurable changes such impact projects aim to achieve, which requires, actually necessitates, some degree of market disruption.
We could claim that all the technological solutions are already proven, to some degree, and just need to scale more rapidly, which taken in aggregate, represents a valid set of opportunities that would “decarbonize” and reduce various carbon footprints in many markets, for example.
Arguably, this is already in progress, measured through UN SDG reports, showing that some of the objectives are well on track. Known solutions like solar, wind, storage, efficiency, baseload power like small hydro, geothermal, waste-to-energy … are progressively reducing the out-of-control CO2 emissions of Western Society, caused by our legacy Fossil Fuels, waste (especially food waste and methane), chemical agriculture, and the mind-blowing inefficiency of “stupid cities” (the reason new, “smarter” cities are springing up everywhere). But is that enough? Can we rely on technological innovations and simply proliferate those solutions that have a better carbon profile than what we have to rely on (oil & gas, for example) before we knew better?
Systems scientists, some of them climatologist experts, have pointed out that to avoid the worst effects of climate change, we need more. Getting there from here — going beyond slowing down the rate of new emissions, that is, being “less bad,” is not the same as cracking the code for a climate that sustains life with minimum disruption, horrible weather events, drought and fires, population displacement (so-called Climate Refugees), and a myriad of other “wicked” problems most of us would rather not contemplate.
We can and must go deeper. Drawing down carbon through nature-based solutions while concurrently decreasing emissions in an economically sensible and sustainable manner has the strongest potential to set this big ship in the right direction. Accordingly, we now seek to identify and scale further “climate tech” innovations such as
- novel methods for manufacturing and supply needed goods (stop feeding the rampant consumerism of “buying useless things” as a poor substitute for therapy),
- recovery and reclamation of resources that would otherwise be displaced (such as burying end-of-life tires or old solar panels in landfills, an embarrassingly standard practice in the US), and/or
- curtailing the unregulated or illegal practices that allow pollutants and persistent compounds to “escape” into the atmosphere, on land or into waterways.
Since behavior change is sometimes near impossible — people and companies will “do what they do” and rail against changed regulations or attempt to “cut corners” and act badly when they think no one is looking (because there is no consequence), whether allowed by law or illegal dumping and littering. Because of that unfortunate truth about some of us, the better approach is better designs, ones that avoid so-called “waste” in the first place.
Forward-looking industry leaders would redefine waste is effectively “food” or “feedstock” to a value-generating process, eliminating not only the problem of loss, but also curtailing the need to change human behavior (in those areas at least), thus saving the associated monitoring and policing costs of protecting the environment and its inhabitants from the irresponsibility demonstrated by those who are unconcerned about cause-and-effect.
* Footnote here about how people will often do whatever it takes to survive, so it is unjust to ask those who are already suffering the consequences of “first world” unsustainable consumerism to ‘clean up their act’.
Not to condone careless behavior on either side — manufacturer or consumer — but instead seek to understand and optimize for lasting solutions that also maintain or improve quality-of-life (enjoying the parts of life that are enjoyable, such as travel), making it easier or even automatic to do the right thing.
An example probably serves to illustrate this dynamic.
Case Study: Non-biodegradable materials like plastics inevitably end up “escaping” as litter. Why? Some would say complacency. Trashing the environment becomes the norm in some places — the ethical race to the bottom. But the actionable reasons track with human behavior. Consumers face a difficult choice: if one cannot afford to buy, or forgets to bring, a reusable water bottle, and/or the supply of fresh water is limited, do you either keep a purchased water bottle for reuse, or take the time/effort to properly dispose of a single-use bottle?
In parts of the developing world, it is much easier to simply throw the empty bottle away — sometimes out the window of a moving train, even though at the train station arguably be a little better (less “non-point source” pollution). Why is this happening? Because there is no obvious consequence to doing so. The world creates 57 million tons of plastic pollution every year and spreads it everywhere; India has the record with 9.3 million MT per year of plastic waste (source).
This is sadly common practice in many markets, and even more problematic in costal zones (abhorrent to those who long ago switched to reusable bottles in hopes of dealing with obscene amounts of plastics now in the oceans) and precisely why the world is s-l-o-w-l-y shifting toward a new generation of bioplastics (such as PHAs), to give bottle manufacturers an economic way to address the full product lifecycle that must include disposal.
Another solution, at least in part, already in play in wealthier countries, with some cultures figuring out how to “valorize” (turn into value) what would otherwise remain a liability. Take Germany, for example, where vendors offer to “rent” a beverage cup that you can either keep as a souvenir or return and get back your deposit. Putting a monetary value of such items helps create a “marketplace effect” instead of treating things or people as disposable, … as worthless trash. Assigning value to what might otherwise be overlooked or forgotten (put out of mind) is an old trick … incentivizes doing the right thing. Remarkably, we humans can get so familiar with certain problems we stop regarding them as problems. This may seem better and easier on the surface than stepping back to address systemic problems, though temporarily making it very difficult and unpleasant (whether regulatory consequence, locally enforced laws or peer pressure) to continue on autopilot can help a person or company notice they got it wrong.
By its very definition, financing new “breakthrough” solutions entails either technology risk or commercial risk (lacking commercial proof-of-concept with such first-of-a-kind introductions), or both, thus also some degree of supply chain disruption risk, and maybe even market adoption (offtake) risk over time, even if only because of novelty and newness. Banks don’t function well in this arena, and neither do traditional project investors, leaving developers to rely on painfully slow and expensive funding cycles (or no funding whatsoever, as problems get worse).
Underfunding or no funding for well-qualified, first-of-a-kind projects with solid financial fundamentals, world class management, and near-perfect market timing is yet another form of waste, wasted human effort, with massive human hours invested, sometimes “betting the farm” (being so committed and averse to noticing they’ve fallen prey to the sunk cost fallacy), behavior we have witnessed by dysfunctional solution developers.
But even the best-in-class developers invest not just sweat equity but sometimes make career-limiting commitments to commercializing the “right” solutions — forerunners of what’s needed in the marketplace, even if the marketplace doesn’t know it yet. Such boldness often deserves a shot, as the more talent we pour into solving our modern problems the more we advance the state-of-the-art. IGF guarantors will not be affected by the occasional project failure, as the guarantee will have long expired by the time those operational results are in.
On occasion, lacking innovative finance structures, such as what IGF offers, traditional funders subject these world-class innovators to extreme criticism, even hostility, as some of the better solutions have not been proven, and nobody can defend or adequately predict what will be modestly successful versus the breakout “next generation” of leadership, in part because some of these proposals threaten the status quo (for many deep pocketed institutions, there are political ties and/or lobbyists, or the potential for portfolio conflict with existing holdings). Change like this can be hard, even though this space is ripe with opportunity for high IRR and profoundly profitable equity JV partnerships.
Non-traditional projects require non-traditional finance solutions.
The time is now to solve some of the UN-identified problems that we all face, in varying degrees. IGF earns underperforming asset owners a bridge to their future while accelerating and scaling up impacts globally.