Can impact-driven finance survive the shock economy?

The global conditions that enabled impact-driven and blended finance are rapidly eroding. Escalating geopolitical conflict, fractured supply chains, shrinking development assistance, and rising economic volatility have created what this paper terms the shock economy: an environment in which frontier-market businesses face increasing disruption while the grant infrastructure that prepares them for investment is being dismantled. It argues that the central challenge is no longer simply mobilising more capital, but ensuring continuity across the investment journey. The persistent "missing middle" is not primarily a financing gap, but a continuity gap, created by fragmented grant, blended finance, and commercial investment systems that rarely connect in ways that support businesses through to scale. The paper proposes an impact capital continuum: a deliberately designed financing architecture in which technical assistance, concessional finance, and commercial capital are sequenced and coordinated to prepare businesses for successive stages of growth. It concludes that, in a world where disruption has become the operating environment, the future relevance of impact-driven finance will depend less on creating new financial instruments than on building stronger collaboration, continuity, and connective infrastructure across the development finance ecosystem.

Simon O'Connell, CEO, SNV