It’s the gift that keeps on giving. The Rockefeller Foundation fully committed its $30 million Zero Gap Fund two years ago, but its recipients are still deploying funds, crowding in capital, and generating impact, according to the foundation’s latest “state of the portfolio” report.
The Zero Gap Fund has helped mobilize more than $1 billion in additional funding across a dozen investments supporting economic inclusion, access to finance, and climate solutions, including $10 million in follow-on financing raised last year.
The catalytic fund, a joint partnership of the Rockefeller and MacArthur foundations, was launched in 2019 to channel program-related investments to promising financial innovations that address the Sustainable Development Goals.
Six years on, the fund “has developed into a flexible, risk-tolerant catalyst for private investment to advance the global good,” said Rockefeller’s Maria Kozloski.
Impact ecosystems
In an interview with ImpactAlpha, Kozloski pointed to “the deepening of the impact of all of the positions in the portfolio.” Zero Gap, she says, has invested in “strong fund managers that know their ecosystems and know how local companies operate and how they can grow in their environments.”
The fund’s 2023 investment in Blue Forest, a conservation nonprofit, helped to scale its Forest Resilience Bond to back projects that reduce wildfire risk, cut carbon emissions and protect watersheds. The investment supported Blue Forest’s FRB Catalyst Facility, a pooled, revolving investment facility that will enable it to undertake more projects. Blue Forest is looking to put some $50 million to work in at least 10 reforestation projects in the Western US.
Last year, Blue Forest added three projects, bringing its total to five projects representing 23,000 acres in the Western US.
When Horizon Capital, a growth equity investor in the Ukraine, was raising its fourth fund in 2022 amid a Russian invasion, Zero Gap’s $3 million investment helped the firm reach a first close, and eventually raise $362 million. Horizon has since deployed more than $100 million to five tech-based, export-oriented companies to help keep the war-torn countries’ tech force employed and build economic resilience.
The fund’s portfolio companies, which include game developer Room 8 Group and customer relationship management software maker Creatio, employ more than 2,000 people in Ukraine.
A $3 million investment helped Leapfrog Investments create an innovative insurance mechanism to mitigate risk and crowd in capital for its Emerging Consumer Fund III, focused on companies serving low-income populations in Asia and Africa. Now fully deployed, it has 17 active portfolio companies.
Other Zero Gap investments include an adaptation-focused fund from Lightsmith Group, Apis & Heritage’s worker ownership fund, and a regenerative food and agriculture fund from Trailhead Capital.
The Zero Gap Fund has been fully repaid from Blue Forest’s first first resilience bond and IIX’s 2020 Women’s Livelihood Bond.
Climate finance
With the Zero Gap Fund fully committed, Rockefeller’s innovative finance team is turning its attention to climate finance, in line with a foundationwide shift. The team has been making program-related investments across two broad themes: clean energy and decarbonization, and nature-based solutions such as regenerative agriculture and reforestation.
Its investments have included Mombak, a Sao Paolo-based reforestation and carbon removal company, and New York-based climate investor Aligned Climate Capital.
The foundation has also provided grant funding to Elemental Impact, the Los Angeles Cleantech Incubator, or LACI, and New York City Energy Efficiency Corporation, or NYCEEC.
“In an era when geopolitics, conflict, climate change, and more create uncertainty and challenging market conditions, innovative financing solutions are not only necessary to drive longterm progress—they can make a meaningful difference,” Kozloski wrote in the introduction to the foundation’s report.
