Testing novel approaches to brokering impact investment

Frontier Brokers supports four lighthouse models that are testing ways to better meet social enterprises' capital needs. These initiatives have intentionally applied a gender lens to ensure gender equality and empowerment outcomes for target communities. DFAT also supports the Frontier Brokers through a Brokers Network mechanism to promote collaboration and knowledge sharing.

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Innovative Approaches

Innovative approaches to forming partnerships, learning and iterating based on lessons from implementation and market needs, and co-creation in both procurement and implementation have been core features of this component.

  • Co-Creation
  • Collaborative Partnering
  • Adaptive Management
  • Flexible Funding

Outcomes Achieved

Asia Pacific Notes Series, BIDUK, Equity@Scale, and Impact Connect all have been launched. They were selected through DFAT’s first procurement that applied co-creation from among 40 expressions of interest received and 13 final proposal from 25 co-creation participants.

  • FOUR
    FOUR lighthouse models for brokering capital developed
  • 75
    75 SMEs supported with access to finance
  • AUD $9.8M
    AUD $9.8M in capital leveraged through DFAT's investment
  • 78
    78 promotional items developed and disseminated

Development Impact Data

Frontier Brokers launched in 2019, and development impact data will be available in 2021.

Impact stories

BIDUK
06.08.2021

BIDUK

BIDUK is a lending platform aimed at meeting the needs of Indonesia-based small and growing businesses, with an emphasis on those owned by women.

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Impact Connect
06.08.2021

Impact Connect

Impact Connect is an innovative brokering mechanism that leverages risk capital from impact-first investors operating locally and internationally, to stimulate financing for social enterprises and improve lender confidence in missing middle social enterprises.

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Key Takeaways

Interested in learning more about Frontier Brokers? For more information check out Frontier Brokers. The Frontier Brokers Interim Results and Learning report is forthcoming in March 2021.

  • Co-Creation is an efficient procurement approach to facilitate collaboration across public, private, and civil society and contributes to interventions that are coherent with the existing ecosystem. DFAT should consider

    • Using co-creation when designing any program where solutions are unknown, or when existing expertise is being sought from a diverse range of ecosystem players and
    • Training more DFAT staff in procurement that leverages Co-Creation would be beneficial to ensure that this approach can be adopted more widely.

  • Leaving room for adaptive management is essential to allow the opportunity to learn quickly and iterate to help ensure the impact of promising innovations.

    • This approach, combined with flexible funding, has allowed Brokers to have the time and space to learn from implementation and market feedback and to iterate on initial project plans.

  • Applying a gender lens is critical to ensuring the ‘effectiveness’ of brokering approaches and promoting inclusive innovation in order to meet the needs of the poor, vulnerable, and marginalised.

    To ensure a gender lens is applied to future DFAT programs, it is necessary to

    • Research the best way to communicate gender inclusivity with the target market.
    • Apply a common framework for measurement and learning, which will help DFAT capture more specific results across each project as well as enable aggregation of results across the portfolio.

  • Effective and efficient brokering requires partnerships with local ecosystem players. They

    • Are essential to identify locally-driven solutions and ensure alignment with local market needs.
    • Help with building a pipeline of investable social enterprises and developing a reputation as a credible investor among investees in any particular market.

  • Technical assistance is needed for investments to be effective, and DFAT should consider

    • Including it in projects or
    • Helping to ensure collaboration across the ecosystem with other donors and/or providers of technical assistance.