The Brief

The Brief: What catalytic capital can and can’t do to mobilize farmer finance

ImpactAlpha · October 21, 2025

Credit: One Acre Fund

Greetings Agents of Impact!

In today’s Brief:

Testing the hypothesis of catalytic capital for smallholder farmers
Battery storage leasing in Europe
Enko Credit’s private credit fund
How lawyers are simplifying impact deals

Featured: Catalytic Capital

What One Acre Fund has learned five years after an infusion of $20 million. Perceptions of risk are hard to shake. For One Acre Fund, a nonprofit social enterprise supplying inputs to smallholder farmers in Africa, even $20 million in subordinated debt that served as first-loss capital wasn’t enough for some senior lenders. “Our rapid growth, the inherent volatility of our earned revenues, our nonprofit structure, and our operations in rural Africa all made lenders cautious,” One Acre Fund’s Clémence Michelsen and Brian Heese write in a guest post on ImpactAlpha. “Subordinated debt helped, but it was not enough on its own.” Still, the infusion of catalytic capital five years ago “has reshaped what is possible” for One Acre Fund, the authors say (for background see, “One Acre Fund secures $20 million to catalyze institutional capital for African farmers”). It’s on track to reach 10 million farmers a year by 2030, up from 2.2 million in 2019, and has mobilized three times the amount of the catalytic capital in new debt commitments, the authors say. “While not every thesis played out exactly as predicted, the collective outcome has been undeniable: Catalytic capital was the spark that set a powerful chain reaction in motion.”

Farmer finance. There are more than 50 million smallholder farmers in Africa who are poorly served by a private sector that doesn’t find them profitable enough, and by a public sector that struggles with resource commitments. One Acre mobilizes working capital finance to purchase farm inputs and other products and sells them to smallholder farmers on credit, with affordable and flexible terms. It uses philanthropic resources to subsidize services such as training and insurance. One Acre’s fastest-growing markets, including Burundi and Malawi, face some of the highest rates of poverty and climate vulnerability in Africa. “We continue to serve the hardest-to-reach farmers and operate a business model that achieves high-impact returns but cannot achieve full commercial viability,” write Michelsen and Heese.
Senior debt. Between 2020 and 2023, catalytic capital proved to be a critical “door-opener” with providers of senior debt, enabling conversations with DFIs, commercial banks, and investment funds that “simply would not have opened without catalytic capital at the table,” the authors say. The credibility and visibility generated by this early financing created a “powerful halo effect” that encouraged lenders to engage with entities serving smallholder farmers. While the layer of catalytic capital “did improve our resilience,” lenders remained cautious. One Acre found that in the long shadow of the 2008 financial crisis, “only guarantees – often from AAA-rated sovereign institutions – provide the level of immediate risk transfer many lenders demand.”
Impact first. Half of the $20 million tranche of subordinated debt came from MacArthur Foundation to advance its Catalytic Capital Consortium initiative (disclosure: The Catalytic Capital Consortium provides support for ImpactAlpha’s coverage of catalytic capital). Other investors included impact-first family offices Ceniarth and A to Z Impact, along with ELMA Growth Foundation, Jasmine Social Investments and Netri Fundación, part of a growing cohort of investors targeting the highest risk-adjusted impact possible, rather than the highest risk-adjusted financial returns (see, “Trimtab’s unapologetic pitch to wealthy families seeking outperformance – on impact”). In making One Acre’s case to Ceniarth, for example, co-founder Andrew Youn argued that, in lieu of financial returns, investors could expect capital-efficient, scalable returns in the form of increased income and improved livelihoods for the communities where One Acre Fund works.
Keep reading, “What One Acre Fund has learned five years after an infusion of $20 million,” by One Acre Fund’s Clémence Michelsen and Brian Heese.
Agents of Impact Call: The surprising resurgence of impact first investing. Ceniarth’s Greg Neichin, A to Z Impact’s Alex Evangelides, Spring Point Partners’ Margot Kane and Trimtab Impact’s Caleb Ballou will discuss One Acre Fund and other impact-first investments on this week’s Call, Thursday, Oct. 23, at 10am PT / 1pm ET / 6pm London. RSVP now.

Dealflow: Energy Transition

Dutch pension backs Return to lease battery storage to European utilities. Europe now generates more than 40% of its power from renewables after an aggressive push to green its energy mix since Russia’s invasion of Ukraine. The bloc is in need of more storage for its growing wind and solar generation, electric vehicles and energy demands from data centers. Amsterdam-based Return builds battery farms and leases the storage capacity to utilities, grid operators and large energy users. Its model differs from battery developers that actively trade energy. “This model is attractive because it generates predictable cash flows, underpinned by contractual commitments,” said Sanne Hofland of APG, which invested €300 million ($348.6 million) for a minority stake in Return. Return has 70 megawatts of storage in the Netherlands and is developing 450 megawatts more. It says it has €2 billion worth of long-term customer contracts in place.

Infrastructure mandate. The Dutch pension fund manager made the investment on behalf of ABP, a nearly €600 billion pension fund. ABP is boosting its infrastructure mandate from 5% to 10% of its portfolio, focusing on sustainable infrastructure, which Hofland cited as “central to ABP’s impact investing strategy.” It first screens opportunities for financial returns, then for impact. “Return meets both: it offers stable, contracted cash flows and supports the energy transition through grid-scale battery infrastructure,” Hofland told ImpactAlpha.
Battery recycling. Separately, UK-based Allye Energy raised $2.5 million in seed equity to support its portable battery systems that use retired EV batteries. It makes two sizes – one for commercial use and a larger system for industrial use – that can be purchased, leased or rented. “Allye’s innovative approach to repurposing EV batteries represents a circular economy breakthrough,” said Benedikt Sobotka of Alpha Future Funds, which backed the company alongside Elbow Beach.
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Enko Credit secures $100 million for Africa-focused private credit fund. UK-based Enko Capital has closed more than $1.3 billion in private equity and public debt investments in Africa since 2008. The firm is in the market with its first private credit fund to support mid-sized businesses in agriculture, manufacturing, renewable energy and other core economic sectors. The fund will focus on businesses that can take on or need dollar-denominated lines of credit, such as companies with customer contracts in dollars or which export their products. Backers include the International Finance Corp., British International Investment, SICOM Global Fund, as well as an undisclosed European impact investor, family offices and African pension funds. Enko is looking to raise $150 million to $200 million.

Debt risks. The collapse of auto parts maker First Brands triggered worries on Wall Street about the private credit market. In emerging markets, investors have flocked to private debt opportunities amid a prolonged downturn in equity financing. Demand for debt in emerging markets still far outpaces the capital available, and deals tend to be underwritten conservatively. Data has shown emerging markets debt to be a relatively low-risk asset class. Earlier this month, asset management firm Janus Henderson raised $125.5 million for its fourth private credit fund for small businesses in the Middle East and North Africa. The fund, which provides financing that complies with the principles of Islamic finance, was backed by SIDF Investment Company and the Saudi Venture Capital Company in Saudi Arabia, and Abu Dhabi Catalyst Partners in the United Arab Emirates.
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Dealflow overflow. Investment news crossing our desks:

San Francisco-based Stand secured $35 million in Series B equity to insure homes in natural disaster-prone areas in the US, including California and Florida, by offering coverage linked to climate mitigation upgrades. It was backed by Eclipse, Inspired Capital, Lowercarbon Capital and Equal Ventures. (Stand)
Omidyar Network and the MacArthur Foundation launched Humanity AI, a five-year, $500 million initiative to support inclusive design and access to artificial intelligence. Other supporters include the Siegel Family Endowment and the Ford, Kapor, Lumina, Packard, Doris Duke and Mozilla foundations. (Omidyar Network)
Chennai-based Fragaria Fruits raised $2 million in seed equity to expand its vertical berry farming operations to a new facility in Bangalore. It was backed by WEH Ventures, Rainmatter, Spiral Ventures, Perpetual Capital and an angel investor. (iGrow News)

Signals: Deal Design

Lawyers – yes lawyers – are trying to simplify impact transactions. Ambitious impact deals combining public, private and philanthropic capital sometimes collapse under the weight of their own complexity. A network of impact lawyers is trying to simplify them, creating standardized templates, flexible contracts and strong governance structures. At a Global Alliance of Impact Lawyers convening in Mexico City last week, lawyers discussed templates and frameworks to simplify deal structures, embed impact requirements into contracts, and make social outcomes both measurable and enforceable. One promising avenue: flexible contracts. “We tend to overcomplicate things, and in dynamic projects that’s a mistake,” said James Ritch of the law firm Ritch Mueller, which is advising CO_Capital on a regenerative agriculture fund that shares profits with farmers across its supply chain. “Creating rigid structures that are difficult to manage or adapt can easily bring a deal down. This field demands creativity and cooperation.” The lawyers also proposed a central repository of successful contracts tested across different jurisdictions that could ease the burden of replicability (see related, “How to simplify blended finance in order mobilize private capital“).

Missing the mark. In Mexico’s Jalisco state, a social impact bond designed to help 1,500 women earn a living wage broke down before it could deliver results. The stated goal of “boosting economic resilience” proved too vague to measure, and the legal structure too tangled to manage. “It didn’t make a lot of sense,” said Federico de Noriega Olea of Hogan Lovells, who served as counsel on the project. His team had to rewrite the deal midstream to comply with tax and procurement laws. “That issue, in the end, made the project fail.” Armando Laborde of New Ventures recalled launching Viwala, a flexible lender now providing impact-linked loans to hundreds of small enterprises in Latin America. “The first loan was a revenue-based loan. I ended up with a lawyer that didn’t have experience, so it was really challenging,” he said.
Paying for results. One approach reshaping the field is “outcomes-based contracting,” where payments are tied to verified results rather than completed activities. Under this model, an independent verifier confirms whether agreed outcomes are achieved before any money moves. The shift puts pressure on lawyers to draft contracts where success isn’t measured by job training workshops delivered, for example, but by people actually getting and keeping jobs. In Mexico’s Nuevo León, the state government piloted a social impact bond that flipped the traditional public contract model. Investors funded a women’s employment program and were repaid only if participants hit specific milestones. “At the end, what we want is for these young people to get a job, to get a better life,” said Irina Alberro of Alberro & Asociados who helped structure the deal.
Keep reading, “Lawyers, yes lawyers, are trying to simplify impact transactions,” by Erik Stein.

Agents of Impact: Follow the Talent

Jaspal Sandhu will replace Margaret Laws as president and CEO of Hopelab, effective January 1. Laws will become executive in residence to support Hopelab’s mental health and wellness projects (listen to ImpactAlpha’s podcast conversation with Laws)… US Green Bank 50 taps Dan Adler, formerly with IBank, as executive director… Impact Capital Managers promotes Justin MacLennan to senior analyst of impact management and research… Charles Wade is resigning as investment director of Black Farmer Fund. Myra Marcellin, currently business support director, will step into the role.

Mesirow adds Mikiyon Alexander as managing director and Ryan Carter as a director on its impact finance team… Community Preservation Corp. is hiring an assistant vice president of asset and investment management in New York… Also in New York, VC Include is recruiting a program manager… MacArthur Foundation seeks an investment operations analyst in Chicago… Omidyar Network is on the hunt for a director of California programs and policy in Sacramento… Paul Ramsay Foundation has an opening for an impact investing manager in Sydney… Brookfield Asset Management is hiring a sustainability senior manager in London.