The Development Marketplace provides early stage grant funding to support testing and development of innovative initiatives. To date, out of 20,000+ entrants, the Development Marketplace has selected over 1,000 finalists to participate in its global competitions. Ultimately 220 winners were selected for funding. An additional 1,000+ winners have been supported under national level competitions.

The Development Marketplace is Ten Years Old

This year marks the 10-year anniversary of the Development Marketplace. Historically, the Development Marketplace placed an emphasis on projects that could achieve social scale, but little emphasis on commercial scale or viability. Some of the supported ventures did go on to receive additional funding from foundations, charities, impact investors, but this was not an outcome of a deliberate process led by the program. Funders picked up a few grantees with scalable projects but in an opportunistic ad-hoc manner.

Changes in Social Investment Sector

The social and impact investment sector has undergone dramatic changes. There is an increasing willingness to support social entrepreneurs, an increasing willingness to take risks and a strong push towards constructing innovative funding instruments and funding vehicles that combine different risk-return preferences of different classes of investors. But search and due diligence costs tend to be high because of limitations of financial data, remoteness of the enterprise and absence of standardized metrics.

In response, the Development Marketplace is placing more emphasis on scalability, financial sustainability and connecting SEs with providers of growth finance. Over the years Development Marketplace grantees encouraged the program to leverage its convening power and identify follow-on investors to help bring their work to scale. We have been listening and we heard you. We spent the last year meeting with foundations and social investors to understand their pain points.

The Development Marketplace senses a unique opportunity to help the entire social investment sector by developing a collective approach to coordinating pipeline activities, sharing investment risk, and achieving unprecedented scale.

Vision for the Future

The Development Marketplace will target SEs that deliver public goods targeting the poor and can be scaled quickly using one of the following tests: (a) reach operating break-even point on a pure commercial basis. (b) reach this point after a fixed period of subsidies or concessional support; (c) have high social rates of return warranting some level of subsidies on an ongoing basis.

In turn, the DM team has been consulting different classes of funders to ascertaining their investment preferences, risk-return tolerance, and due diligence requirements. Investors have expressed an interest in collaborating with the Development Marketplace to develop funding mechanisms and platforms to systematically tap its pipeline, increase volumes of scalable projects, identify and support viable business models and minimize costs of due diligence that precede an investment decision.

Creation of a New Asset Class

Just as microfinance began as a fledging idea in the 1970s with the Grameen Foundation, today societies are looking to social entrepreneurs (SEs) to leverage the capitalist market to solve more of our social woes where traditional aid models and the government provision of public services have fallen short.

The long-term goal of the Development Marketplace is to contribute to the creation of asset and investor classes to support growth of innovative SEs using market based funding methods. In addition to hosting competitive granting competitions, the Development Marketplace will build out a service platform to connect SEs with investors in a cost efficient coordinated manner.