The Capital Stack
What each instrument actually costs you
The most technical chapter. For each instrument category, it answers: how it works, who provides it, what it really costs (time, compliance, governance, reporting), when to use it, and when to avoid it. The real cost of an instrument is never just the interest rate.
Instrument overview
| Instrument | Return to Provider | Ticket | Time to Close | Best For |
|---|---|---|---|---|
| Grant Capital | 0% | $50K–$5M | 3–12 mo | Early-stage; proof of concept; TA; design phase |
| Concessional Debt | 0–4% | $1M–$50M | 6–18 mo | Revenue-generating; infrastructure; DFI signalling |
| Guarantees / Risk Insurance | Fee 0.5–3% | $5M–$200M+ | 6–24 mo | Unlocking domestic capital markets; credit enhancement |
| Social / Sustainability Bonds | Market coupon | $10M–$1B+ | 6–18 mo | Quasi-sovereign; large use-of-proceeds |
| Impact-First Equity | 2–12% | $250K–$20M | 3–9 mo | Growth-stage social enterprises |
| Results-Based Finance (SIB / DIB) | Contingent on outcomes | $500K–$30M | 12–36 mo | Measurable outcomes with willing outcome payer |
| Biodiversity / Carbon Credits | Market price | $500K–$50M | 12–48 mo | Land-based conservation; stacked credits |
| Blended Finance Structures | Varies by tranche | $5M–$500M+ | 12–36 mo | Risk too high for any single provider |
Key principles
- Grant dependency is a business model failure signal — foundations explicitly look for an exit toward returnable capital
- Currency risk reshapes concessional debt value — a 3% USD loan is not concessional if local currency depreciates 15%
- Guarantees are the most underutilised instrument in Africa — no upfront cash, massive mobilisation ratios (InfraCredit Nigeria model)
- Blended finance is an architecture, not an instrument — justified only when no single instrument fits
- Results-based financing requires institutional change management — government shifting from input- to outcomes-based budgeting is often harder than the structuring
- Correct sequence: design grant → anchor concessional commitment → commercial capital
Where you stand · the capital stack
You are pursuing one instrument (only grants, only equity, only debt) without considering blends.
A capital architecture review to determine whether a single instrument or a blended structure maximises your odds.
You believe a blended structure may fit but lack the design grant, anchor strategy, and tranche logic.
Blended finance design support — including design-grant application and anchor identification.
You have or are close to an anchor commitment but need to mobilise the commercial layer.
Senior tranche placement, guarantee structuring, and investor-package preparation.