CALL FOR PROPOSALS FOR INDIVIDUAL CONSULTANCY

CALL FOR PROPOSALS FOR INDIVIDUAL CONSULTANCY: 

Support for the construction of a strategy for Blended Finance for Innovation activities in Brazil (BR-T1426)

Blended Finance for Innovation in Brazil

Individual Call for: Support for the construction of a strategy for Blended Finance for Innovation activities in Brazil

Define the conceptual and institutional framework of blended finance for innovation in Brazil and, from this, present a typology of financing instruments according to different stages of technological risk (TRL) and different phases of company development, especially for startups of these instruments.

A call to promote innovation in Brazil through blended finance

Open until June 6, 2022

Context and situation

The importance of innovation and its driving role in economic growth has been highlighted and empirically verified. However, despite a vast literature on the impacts of innovation on increasing competitiveness, creating jobs, new businesses and improving the welfare of society and the spillover effect of these activities on the economy, private financing of these activities at the required levels remains a pending challenge.

Innovation Financing Situation

Regarding public policies interventions, the situation is not favorable; in LAC innovation faces important fiscal restrictions due to recurrent economic crises, as well as difficulties in mobilizing the necessary volumes of resources to face the challenges associated with the Sustainable Development Goals (SDGs).

When we talk about private sector financing and the traditional way in which the financial markets have dealt with these problems, the main requirement is that of collateral assets. When we talk about innovation, the main assets of technology and science-based companies are intangible, because they are human capital and knowledge; that is, scientists, technology workers, highly specialized engineers. Such intangible assets are very specific to each company and are a riskier investment than the investment in fixed asset, since there is greater uncertainty about the quality of the projects, the results, and their externalities.. Intangible assets are not collateral accepted by banks due to the issue of lack of liquidity and difficulty in executing them, generating strong credit restrictions for companies that invest in innovation, since they do not have enough assets to offer to banks.  

The Solution: Blended Finance

So the problem is the low collateral availability (fixed assets) for the traditional financial market, which is why the blended modality or blended financeing is proposed as a financing solution. Blended finance is a form of financial structure that mixes subsidized public funds or funds available for first losses with private funds so that it has the capacity to absorb risk derived from innovation without the need to request guarantees in order to support innovative companies that are unable to obtain financing for scaling.

Blended finance allows the design of financial instruments that mobilize private resources to act in conjunction with resources allocated to certain specific objectives of public innovation policies. The co-financing of innovation activities together with official institutions enhances the desired catalytic effect to the extent that the results of the actions undertaken generate innovation and increased productivity. Non-monetary contributions can also be mobilized such as knowledge transfer, introduction of new policies or dissemination of new practices.

In In this context, the Competitiveness, Technology and Innovation Division (CTI) of the Inter-American Development Bank (IDB) and the Brazilian Development Association (ABDE), in collaboration with its partners, invite individual consultants to submit their proposals to the call “Support for the construction of a strategy for Blended Finance for Innovation activities in Brazil”.

Blended finance is still in its infancy in Brazil, but national development finance institutions of varying size and scope are increasingly exploring the use of this financing model (OECD, 2020).

What work must the individual consultant do?

Therefore, the general objective of this consultancy is to define the conceptual and institutional framework of blended finance for innovation in Brazil and based on this, present a typology of financing instruments according to different stages of technological risk (TRL) and different development phases of companies, especially for startups, of these instruments.

To this end, the following activities and products are expected to be carried out

1. Definition of a conceptual framework for blended finance with a focus on innovation in Brazil, including the development of a Theory of Change (Product 1)
2. Identification of gaps in the supply and demand for blended finance in Brazil, as well as the existing instruments in the country that can correct these gaps and advance the use of blended finance in the country (Product 2)
3. 3.    Design of a blended finance pilot for innovation in Brazilian companies, including the attraction of external actors to the national system of development financial institutions, optimizing the instruments identified in Product 2, observing the SDGs, and integrating g catalyst intermediaries and science- and technology-based projects. This activity also integrates the drafting of an operating regulations document (Product 3)

During the consultancy, the consultant is expected to engage in three virtual workshops, as follows: 1 kick-off meeting to validate the proposed methodology (1 day); 1 follow-up meeting (1 day); 1 closing meeting (1 day). If allowed by health and safety guidelines, the closing workshop will take place in person.

• Type of consultancy: Individual consultancy (with optional support team).
• Duration: June to December 2022 (6 months).
• Workplace: Local. At least 3 virtual workshops are contemplated (1 workshop may be face-to-face, if allowed by allowed by health and safety guidelines).

• Deadline for submitting proposals: June 6, 2022 to the email vanderleiar@iadb.org
• Language: proposals can be submitted in English or Spanish, but proficiency in Portuguese is essential.
• Contents of the proposal (English, Spanish and/or Portuguese): The proposal must include the following sections:

1. Introduction and objectives: 1 page
2. Methodology to be applied to respond to the requirements of the consultancy: up to 2 pages
3. Work schedule (detail of activities and products): up to 2 pages
4. Project manager, including a summary of previous experience related to the project: 1 page
5. Economic proposal including budget detail (includes meeting attendance): 1 page.
6. Annex with CV of the Project manager.

• Selection criteria for the winning proposal: Proposals will be evaluated by a panel of reviewers appointed by the Inter-American Development Bank. The winning proposal will be the one that obtains the maximum score (on a scale of 1 to 5, with 5 being the maximum score) based on the weighted average of the following evaluation criteria:

            o    Technical quality of the proposed methodology: 45% weighting.
            o    Previous experience of the project team: 45% weighting.
            o    List of activities and work schedule: 10% weighting.