Chasing Unicorns: Embracing Financial Models Where Everyone Can Win

Chasing Unicorns: Embracing Financial Models Where Everyone Can Win
News & Blog | Blog Posted 06.12.17 by Eric Letsinger, Founder and CEO of Quantified Ventures

Global water challenges are immense, complex, and have little regard for political boundaries. Water quality, stormwater management, drought, coastal and river flooding, urbanization…pick an issue and get ready to go deep because easy answers are in short supply, if not unicorns. 

While finding solutions is hard enough, taking on the Herculean task of figuring out how to finance them adds a daunting layer of risk and complexity that makes mere mortals look elsewhere to make their impact. This stuff is not for the faint of heart.

Now more than ever, we need financing tools that attract the right capital to new and natural solutions to old problems that align interests around outcomes. We need models where everyone can win—private sector players, public entities, and NGOs alike. We need to bring the best that each of these players has to offer. Single-sector solutions should be questioned and there should be fewer “zero-sum game” financing structures. If we rely less on models that require government to shoulder the entire weight of the challenge, we can move away from thinking that the only alternative is privatization. 

It’s time to broaden the spectrum of options and embrace models that align public interest in generating positive, measurable outcomes with investors seeking to “bet” on solutions that can move the needle across positive health, economic, and environmental measures.

While far from a panacea, we believe the Environmental Impact Bond (EIB) model that Quantified Ventures developed with DC Water is a decent starting point. Private investors (Goldman Sachs and Calvert Foundation) shouldered part of the financial risk of building green infrastructure in Washington DC, making it a rational choice for the government to choose green innovation over grey “business as usual.”  If the innovation works, everyone wins. If the innovation doesn’t work, the government isn’t left with the full bill and stack of receipts for a failed attempt to innovate.

EIBs can’t help find unicorns, but they can help get them through piloting and scaling to full deployment, where otherwise they would die. As a first-of-a-kind “outcomes-based-bond,” it’s far from perfect. Yet, future applications and replications of the EIB model are improving and innovating upon this model with every turn of the crank. That’s terrific—and precisely how innovation should work.  

Governments, NGOs, and private sector actors are advancing EIBs across multiple uses cases across the globe to address coastal restoration, coral reef protection, water quality and quantity, wildfire prevention, forestry preservation, urban wood reclamation, agricultural nutrient runoff, and more through natural capital-based solutions. Through the EIB model, we’re beginning to monetise the outcomes associated with both promising innovations and evidence-based, proven solutions.

But again, this just a starting point and we have a lot of work to do. We’re opening up and enabling action-oriented conversations with multinationals, international banking authorities, development intermediaries, NGOs, and investors who are interested in tying financing directly to outcomes. It’s possible…and it’s happening.
We invite you to join the conversation.


Eric Letsinger is the Founder and CEO of Quantified Ventures, a for-profit impact investing firm that helps clients finance specific and measurable environmental, health, and educational outcomes. 


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