Eight years ago, there wasn’t much impact investing in the blue economy. In fact, people didn’t really talk of a blue economy. There were no private capital funds dedicated to supporting coastal ecosystems. No established pipelines for investments. No reliable methods for evaluating risk.
Having begun to build a network of philanthropy-supported fishery recovery projects in Indonesia and the Philippines, my colleagues and I at Rare started exploring ways we might also bring private capital to this work. Bloomberg Philanthropies funded Encourage Capital to draft a white paper outlining what it might look like. In Europe, AquaSpark had just started a small impact fund for aquaculture, but we didn’t know anyone interested in investing in small-scale coastal fisheries, especially given chronic overfishing due to the absence of basic rules, regulations and enforcement. And with good reason.
We decided to give it a shot nonetheless, partly because we assumed that if we didn’t, who would? The long-term health of the ocean demands change in the small-scale fisheries sector—and we believe that creating a one-two punch of philanthropy to establish good governance and build local capacity would eventually enable private investment to scale sustainable fisheries. And given the huge gap in funding for Sustainable Development Goal 14: Life Below Water, we started promoting the idea that the world needs a blend of philanthropy, public resources, and private investment to give coastal waters a chance.
So we launched The Meloy Fund, the first impact investment fund solely focused on small-scale fisheries and related enterprises in the Philippines and Indonesia. Despite the harrowing, frustrating, complicated, costly and sometimes even combative first seven years, I’m glad we made the leap.
As you will see in the Meloy Fund’s latest Impact Report, it just might work out, thanks in great part to a network of other risk-takers like the The Grantham Foundation for the Protection of the Environment, Builders Initiative, the Global Environment Facility, what is now the Development Finance Corporation (within the State Department), and a host of others. And thanks to the board of Rare and a very industrious and flexible and creative team within the organization, led by Dale Galvin and others.
In retrospect, this was a big deal. For a non-profit like Rare launching a for-profit entity like the Meloy Fund presented myriad risks: Could we raise the funds? Are there people out there interested in investing in coastal fisheries? Could we hire the necessary team? Could we develop an investable pipeline? Could we make the investments? Would they succeed? Could we return money plus a profit to our investors? Would they forgive us if we failed? Would it harm Rare’s reputation if it didn’t work out? Most importantly, would coastal habitats and local people be better off for the effort?
We haven’t crossed the finish line, but the road ahead is looking good. In fact, the team we eventually spun out to manage the Meloy Fund outside of Rare was recently tapped by Pegasus Capital in New York City to run the Global Fund for Coral Reefs. No one associated with Rare or the Meloy Fund seven years ago would have predicted that the little team we formed to build it inside a non-profit would eventually be running Pegasus’s UN-backed $500M global fund. While we still have a lot of work to do, we are starting to see a suite of measurable triple bottom-line returns for communities, for nature, and for investors, as well as a playbook chock full of insights that are helping advance a true blue economy.