Emerging as a response to the inflexibility of financial regulations, a hybrid organization is a setup consisting of one finance first entity and one impact-first entity, where the first caters to investors to attract growth capital and the latter to the philanthropic community as an eligible recipient of grants.
In other words, a tolerable work-around to ensure that impact entrepreneurs can attract the capital needed to scale their solutions to match the size of the problems they are meant to be tackling. The downside being the further manifestation of a divide that should be bridged and a complex operating model for entrepreneurs that should be focusing their time on building scalable solutions.
Lower purchasing power in emerging markets caps the profit potential of many impact entrepreneurs and almost forces them to scale and bring the unit cost down before they are able to serve low or middle-low-income countries. Impact-first investors and philanthropic capital has an important role to play in ensuring that these markets are being served in tandem, and help the entrepreneurs focus on the markets where their products and services will make the most impact.
The EQT Foundation is committed to improving access to capital for impact entrepreneurs and is therefore supporting entrepreneurs with grants for pilot studies and R&D development, either through research institutions or by supporting the startups in setting up non-profit entities.