Blended finance through the Fund and TAF Facility collaboration
Many of the successful scale-ups of projects supported through investments by the LDN Fund and LDN TAF are relatively new players with innovative and inclusive approaches, for example by engaging with farmers through outgrower schemes, or scaling agroforestry systems. These projects often have not yet reached the point of break-even and therefore require a long-term investor that can afford to wait until they are cash-flow positive.
Direct partnerships with smallholder farmers and local communities, who remain stewards of their land, are made through provision of technical, financial and market support to create business propositions that empower them. Proper community engagement to support these partnerships requires time-consuming and costly field work. This work is generally funded by grant money (public/ cooperation programs) and/or Series A equity (‘seed money’).
Projects that reach a stage that allows for private investment are typically building on proven business models, reducing commercial risks, but then adding in innovative elements in order to increase positive environmental and social impacts.
Developing a project to the point where it is ready for a substantial investment from a private sector investor such as the LDN Fund takes time (the average time between project inception and LDN Fund financing for these projects is nine years). For example, both Miro Forestry and Mountain Hazelnuts had already secured smaller funding rounds before an investment by the LDN Fund was made to support further growth and increase impacts.