Catalytic Capital

Catalytic Capital: a key strategy to address social and environmental challenges

· Catalytic Capital emerges as a key strategy to address social and economic challenges across various markets by mobilizing investments towards innovative and transformative solutions.

· In underserved or crisis-ridden markets, such as affordable housing, this form of impact-focused investment can be pivotal.

· To delve deeper into Catalytic Capital, Social Nest Foundation is co-organizing the Fi Gathering Zurich in Switzerland on April 22nd, featuring participation from leading global experts.

Madrid, April 4th, 2024. In a world where social and environmental impact is as relevant as financial returns, the concept of Catalytic Capital emerges as a vital strategy to mobilize investments in critical areas. According to the latest report from the Global Impact Investing Network (GIIN), the impact investment market exceeded $300 billion in 2023, reflecting significant growth in interest in generating financial returns while making a positive impact on society and the environment.

The appetite for impact investments with market-rate return expectations has grown considerably, indicating a maturity in the industry that challenges the traditional perception that impact and returns are incompatible. However, despite this growth, concerning financing gaps persist, particularly in developing countries and underserved sectors such as affordable housing, among others.

Defined by the Catalytic Capital Consortium (CCC) as more patient, risk-tolerant, and flexible investments than conventional capital, Catalytic Capital emerges as a fundamental tool for mobilizing capital towards innovative and impactful solutions. It not only enables investments in startups and transformative business models but also plays a crucial role in promoting strategic collaborations and driving social and environmental impact initiatives.

To address Catalytic Capital at its core, Social Nest Foundation is co-organizing the Fi Gathering Zurich, the second such event in the Swiss city, in collaboration with Elea Foundation. Focusing on climate resilience as a triple-purpose strategy (combating climate change, alleviating poverty, and fostering a resilient economy), this event will bring together a wide range of impact investment ecosystem actors to explore new ways to address the most pressing social and environmental challenges. Through panel discussions, interactive workshops, and networking opportunities, the event will promote a deeper understanding of Catalytic Capital and its role in mobilizing capital towards innovative and transformative solutions.

“We aim to inspire and empower more actors in the impact investment ecosystem to understand and adopt the catalytic approach”, says Monica Vasquez del Solar, Head of Strategy and Impact at Social Nest Foundation. “Fi Gathering Zurich 2024 will be a space to build meaningful connections and catalyze collaborations that drive positive change in our communities”, she adds.

In addition to exploring the role of Catalytic Capital in impact investing, the event will highlight innovative initiatives and projects effectively addressing social and environmental challenges. Inspiring case studies will be presented, and best practices will be shared for engaging diverse stakeholders in creating sustainable and scalable solutions.

Fi Gathering Zurich will take place on April 22nd, starting at 5 pm. You can find the full event agenda here.

Catalytic Capital and the Real Estate Market

According to the ‘Access to Housing and Affordable Rental Needs’ study by the Culmia platform, 761,000 new affordable homes will be needed, requiring an investment of €108 billion over the next ten years to meet market demand in Spain. This situation is exacerbated by rising housing prices and the growing proportion of the population allocating a significant portion of their income to housing costs.

Catalytic Capital emerges as a solution to mobilize investment in the affordable housing sector, enabling strategic collaborations and transformative business models to effectively address this crisis. Through initiatives such as the Fi Gathering Zurich 2024 and the ongoing commitment of organizations like Social Nest Foundation, the aim is to catalyze positive change in the real estate market and improve access to safe and affordable housing for vulnerable communities.

Thus, in housing, as in many other sectors, it is impact investment with a “catalytic mindset” that could emerge as a highly attractive solution for investors seeking stable long-term returns and wishing to contribute to the success of the SDGs through their businesses. Only by understanding both the real problems and the opportunities well and designing investment products accordingly can the impact investment industry address existing gaps.