"It's not about us telling them: 'Hey, what about your proportion of bottom-of-the-pyramid clients?'" Roots of Impact CEO Bjoern Struewer tells Impact Investor.
"It's them telling us, 'I could do this if you help me.'" Struewer's company, which he co-founded eight years ago, has just closed its first financing round using a new type of financial instrument called impact-linked finance, or ILF.
ILF offers financial incentives to companies that produce social impact, rather than paying for it.
"ILF is about tweaking enterprises towards better outcomes, not about paying for social interventions," Struewer tells Impact Investor.
The technique was pioneered by ROI and its partner, the Swiss Agency for Development and Cooperation.
The financing round was led by the Delta Fund, the European Social Innovation and Impact Fund, and the public investment arm of the German state of Hesse.
The Swiss Agency for Development and Cooperation also provided funding.
ILF has its roots in social impact incentives (SIINC), a concept pioneered by ROI and SDC eight years ago.
SIINC provides cash incentives to enterprises to achievement positive outcomes conditional on raising investment, while an outcome payer such
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