Global Innovation Fund goes looking for ‘the missing middle’

The Global Innovation Fund is launching a “spinoff” subsidiary, GIF Growth, designed to help early-stage companies scale-up. The original GIF launched in 2014 with more than $200 million from Western governments’ aid agencies, plus the philanthropic investment firm Omidyar Network. It uses grants, loans and equity to support innovative businesses capable of improving the lives of those living on less than $5 a day. According to its latest impact report, GIF has invested $119 million since 2015, backing 68 innovations. Examples of investments made last year included $1.8 million in risk capital for a solar-powered food dehydrator in India, and a $230,000 grant for a nonprofit providing a radio drama and classroom sessions in Tanzania designed to prevent sexual violence against adolescent girls. Now, GIF Growth is aiming to deploy $100 million to save and improve the lives of over 100 million people in low- and middle-income countries by 2030. GIF Acting CEO Joseph Ssentongo told Devex last week that GIF Growth is being set up “to better enable us to address that missing middle of capital” — i.e. “early-stage companies, which are not able to attract the type of concessional finances they need to scale their operations.” The U.K. Foreign Commonwealth & Development Office and U.S. International Development Finance Corporation are among the early backers of GIF Growth, which Ssentongo said is designed to counter “pilotitis” whereby businesses prove their model is scalable and viable but struggle to attract the extra capital needed to grow. Asked what is holding back investment in the global south, Ssentongo nominated risk aversion, but also “unrealistic return expectations.” “Our mission is therefore not just to make investments, but also to inform,” he said. “What are we learning? What are the market dynamics? What are the constraints? What type of capital do organizations need?” And with GIF Growth, Ssentongo added, “We're really putting an emphasis on debt financing where you're not diluting a founder's stake, but you're really allowing them to concentrate on developing their product and scaling the delivery of their innovation.”