Asia Natural Capital Design Funding Window

The application deadline for the Window is September 30, 2022.

The Asia Natural Capital Design Funding Window provides grant funding for the design and launch of catalytic blended finance solutions focused on natural capital in Asia. This Window is funded by the RS Group, a family office based in Hong Kong.

This Window will support blended finance solutions that find new ways to enhance and protect the world's stock of natural assets, including water, land, soil, air, plants and animals, by attracting private investment at scale. For example, solutions could be aimed at:

Protecting biodiversity
Reducing ecosystem degradation (e.g. deforestation)
Mitigating and adapting to climate change
Reducing unsustainable use of land and oceans
Restoring and rehabilitating impaired terrestrial, coastal and aquatic ecosystems

...while providing a fair and sustainable living to local communities.

Please refer to the Factsheet on the Asia Natural Capital Design Funding Window for more information

Types of Applications

Practitioners can apply for feasibility study or proof of concept funding:

Feasibility study: Funding to explore the feasibility of the vehicle. For example, assessing the investability/bankability of the transaction, conducting market scoping and developing the vehicle structure. Convergence will award grants between $50,000 and $200,000 for feasibility studies. Promising feasibility studies funded through the Design Funding Window will be considered for follow-on proof of concept funding.
Proof of concept: If a feasibility study (or equivalent) has been completed, funding to complete all design and structuring activities to launch the vehicle. For example, finalizing the capital structure and financial model, establishing the legal structure, and producing key documents. Convergence will award repayable grants between $200,000 and $500,000 for proof of concept work. Determination of whether a grant is repayable will be made on a case-by-case basis.

Eligibility Criteria

To be eligible for consideration for the Asia Natural Capital Design Funding Window, proposals must meet the following criteria:

The proposal must be for a blended finance vehicle. The vehicle must aim to use catalytic capital from public or philanthropic sources to attract private sector investment to the identified development challenge.
The vehicle must focus on the natural capital sector.
The target region for the blended finance vehicle must be in Asia. Preference would be given to proposals targeting Southeast Asia. Practitioners should have on the ground presence or partnerships in Asia.
Practitioners can only use the awarded grant funding for the design and launch of the blended finance vehicle – not for investment capital or to fund operational activities of an already established vehicle. See grant portfolio for examples of previous grants made by Convergence.
The proposal must adhere to the applicable proposal template, detailing the development challenge, proposed blended finance vehicle, key risks and mitigation strategies, design activities and costs, and the applicant's relevant experience.
- Feasibility study proposals must 1) include an initial vehicle structure and investment thesis, and 2) have initiated engagement with potential funders and relevant stakeholders.
- Proof of concept proposals must 1) detail interest and ideally commitment to participate, from funders and relevant stakeholders, and 2) include an initial financial model.
Convergence aims to select the strongest proposals based on the eligibility and evaluation criteria. Convergence does not prioritize repayable grants and selection of proposals will not be based on whether a grant is repayable or not. If a grant is structured as repayable, the terms of repayment will be determined on a case-by-case basis with the grantee. Repayment is often contingent upon the launch of the proposed blended finance solution.
Proposals are only accepted from organizations or consortiums of organizations. The lead organization must be able to provide 1) proof of incorporation, and 2) financial statements for the previous fiscal year.
Practitioners awarded funding are expected to regularly report key challenges, learnings, and results. This will be synthesized into a case study or learning brief and published to support market-wide learning.

Evaluation Criteria

Proposals will be evaluated on the following criteria:

Scalability and/or replicability: How much private capital does the vehicle aim to catalyze? If the vehicle is successful, can other practitioners use a similar approach? Will the vehicle contribute to creating a pipeline of investable deals/projects in natural capital in Asia?
Demonstration effect: Is the vehicle testing a new design? Is the vehicle replicating an existing approach in a new market? Is the vehicle attracting partners that have not participated in the blended finance space before?
Impact: Does the vehicle propose to drive a significant amount of natural capital impact? Will the vehicle have a measurable impact on an ecosystem? How will environmental impact and risk be measured and will it have a scientific basis? Are there other social, economic, or environmental impacts of the vehicle?
Additionality: Does the vehicle aim to deploy financial instruments that are under-supplied and will therefore catalyze financing with a high degree of additionality? Does the vehicle have strong potential to address a market failure in the short term, and catalyze broader market financing in the long term?
Stakeholder support: Does the vehicle have the support of key stakeholders in the target region / country (e.g., government)?
Likelihood to achieve financial close: Is the vehicle likely to attract investors and close within the short or medium term?
Contributions to portfolio and development risk-return: Does the vehicle represent a strong development risk-return (i.e., high risk vehicles should have the potential to achieve significant natural capital impact)?
Field Building: Does the vehicle contribute to field building? Does is it contribute to building local capacity and strengthening breadth and depth of local markets and communities? Does the applicant have a strong local presence in Asia?

Application Process

Our application process has three distinct stages:

Stage 1: Application questionnaire, proposal submission, and initial shortlisting
Stage 2: Detailed due diligence to shortlist proposals for Funding Committee review
Stage 3: Compliance review and approval by Convergence’s Board of Directors

Further details are provided below.

Stage 1: Proposal Submission and Shortlisting

Applicants are required to submit a proposal to the Asia Natural Capital Design Funding Window using either the feasibility study or proof of concept template. Convergence reviews proposals according to eligibility and evaluation criteria and shortlists the most promising proposals.

Stage 2: Due Diligence & Funding Committee

If shortlisted, applicants will be asked to respond to due diligence questions from Convergence, and if required, provide additional information. Based on the proposals and supplementary information provided, Convergence selects the strongest proposals to present to Convergence’s Funding Committee. The Funding Committee, composed of independent experts, assesses shortlisted proposals and recommends proposals for funding.

Stage 3: Compliance & Board Approval

Following a recommendation from the Funding Committee, selected applicants will undergo a compliance review. Following this review, proposals are presented to Convergence’s Board of Directors for final approval.

Application Submission Instructions

Please read through the following steps carefully before submitting an application:

Step 1: To start an application, fill out our questionnaire and submit a concept note in the Application Portal.
Step 2 (Optional): Submit the draft application atleast two weeks before the application deadline, if you would like feedback from the Convergence team.
Step 3: Submit the final proposal by the deadline.**

All proposals will follow the feasibility study or proof of concept template provided, unique to each Design Funding Window.

Convergence staff may reach out to your team for a brief call to ensure alignment with the window if necesssary.

** An applicant can directly submit the final proposal without completing Step 2.

Please note that Convergence will only consider one application per organization per round. Convergence is unable to provide detailed feedback on applications that are not shortlisted for funding.

Application Submission Deadlines

Applications to the Asia Natural Capital Design Funding Window will be considered on a rolling basis. The next application deadline is September 30, 2022.