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 projects, typically in the range of $15 million to $2 billion per project or portfolio of projects. 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 these SDG-aligned “impact infrastructure” projects.
Not all barriers can be addressed by us, of course, but at launch (early 2025), we remove a pair of challenges faced by both underperforming asset owners and even quite experienced impact project developers: IGF’s innovative structure applies short-term, securitized, non-cash completion guarantees to scalable, “catalytic” solutions through leveraged 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 traditional standards to determine bankability or the illusive “shovel ready” status, we get deals done using a 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 the main issue of completion risk, of course), and with diversity in equity carries, the portfolio of investments sustain making more and larger scale follow-on investments. The key is getting started — priming the pump of “triple bottom line” (TBL) benefits, which requires a certain “edge” of innovation, such as we often encounter with first-of-a-kind climate-related, decarbonizing innovations.
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. Let’s not overthink it. Most of time, projects perform within a margin of error to generate cash flows that, in turn, enable rapid expansion. Securing funds for such innovative projects, often using “first of a kind” solutions, can be near impossible through traditional channels.
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 leaders globally who seek big changes require that we approach the problems at hand with a new requires “catalytic capital” and new ways of approaching scalable, profitable, breakthrough solutions to things like climate change. Innovative, non-traditional projects require non-traditional finance solutions.
so we can together manifest the measurable changes they aim to achieve, this requires, necessitates, some degree of market disruption.
We could claim that all the technologies that are needed already are proven, and just need to scale more rapidly, representing a valid set of opportunities that would “decarbonize” and reduce various carbon footprints in many markets. Arguably, this is already in progress, measured through UN SDG reports, showing that some of the objectives are already on track.
Known solutions like solar, wind, storage, efficiency, baseload power like small hydro, geothermal, waste-to-energy are, at best, 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).
Systems scientists, some of them climatologist experts, have pointed out that to avoid the worst affects of climate change, we need more. Further “climate tech” innovations such as novel methods for manufacturing and supply of goods, recovery and reclamation of resources that would otherwise be displaced (such as burying end-of-life tires or old solar panels in landfills, standard practice in the US), or “escape” into the atmosphere whether allowed by law or illegal dumping and littering. Better designs that avoid waste in the first place (where waste is food to a value-generating process) eliminate not only the wastes but the need to change human behavior, monitoring and policing those who are unconcerned about cause-and-effect.
By its very definition, these new solutions entail 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 risk, and offtake risk over time, even if only because of newness. Banks don’t function well in this arena, and neither do traditional project investors, often relying on painfully slow and expensive (in terms of human effort, human hours invested, not just sweat equity but career-limiting commitments to forerunners of what’s needed in the marketplace, subjecting the innovators to extreme criticism, even hostility, as it has not been proven but nonetheless threatens the status quo), even though this space is ripe with opportunity for high IRR and equity JV partnerships. Non-traditional projects require non-traditional finance solutions.