Persisting global challenges, widening funding gaps and the rapidly changing funding landscape makes impact investing more relevant than ever.
The volume of impact investments has continued to grow at a compound annual growth rate of 13% over the past six years to USD 49.8 billion in 20241. But the annual funding gap in developing countries to reach the SDGs by 2030 has increased to USD 4.3 trillion2.
In order to scale the impact investing market, we need more and better pipeline and investable markets across Sustainable Development Goals and geographies.
1.GIIN. 2025. State Of The Market Report ; 2.UNDP. 2025. Sustainable finance at UNDP
Market Development is an emerging practice that aims to contribute to developing new markets and building pipeline for impact investors through a variety of instruments and tactics.
It is gaining momentum in the impact investing space. DFIs have embraced the need to move deeper into the market. NGOs are eager to lever their capabilities and networks. Foundations are learning to use their grant funding in more scalable approaches. Governments are exploring systemic ways to scale impact.
While the need for Market Development is widely acknowledge, it less clear what is exactly entails.
6 characteristics of Market Development
Market Development in the Impact Investing space is an emerging practice and not well delineated. In the core it is about building investable pipeline for impact investors – but it goes further then making individual companies investable or bankable. It’s about unlocking the potential of entrepreneurship to find new solutions to persisting challenges. It’s about scaling these solutions across geographies to promote impact at scale – which requires a systemic approach. The toolbox is endless – ranging from grant-making to investment and the art is to understand what to use when. Market Development is an incredible heavy lift – which can only be done successfully in collaboration with other partners. And last but not least, it requires flexible operating structures that allow to blend instruments and respond to market dynamics.
A typology of Market Development in 6 characteristics:
The Market Development Accelerator
Market Development is an emerging practice
An emerging practice with some fundamental challenges and opportunities:
The Market Development Accelerator
It took 30 years to build the Microfinance sector. We need to accelerate!
We need to get more parties to the play and shorten the learning curve. We need to push the Turbo Boost button.