The Future of Innovation Challenges

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These learnings suggest that funding innovations in service provision may be more impactful than funding LMDs alone – but they also reveal that partnerships are the key to ensuring that these services are fit for distributors’ purposes. A strong partnership between the service provider and the LMD proved essential for the success of these innovation pilots. Once we recognised the fundamental importance of this sort of partnership, we saw that we could have done more to ensure this relationship was in place during the application stage, by doing due diligence on the quality of the partnerships, and by working to align expectations between LMDs and their partners.

Our process also would have benefited from an inception phase, including seed funding for both partners, to enable them to work through the idea in more detail and help the partners decide whether they wanted to commit to the innovation – and potentially even co-invest in taking it forward. For instance, in one of the partnerships we supported, it transpired that the software solution a service provider had offered was not able to fulfil all of the LMD’s needs, and the LMD’s existing data could not be transferred to the new platform. An inception phase would have brought these challenges to light earlier, and potentially provided time and space to develop an alternative model.



Lesson 3: Innovation Challenges can create a fairer system – particularly through the application and decision-making processes
There is increasing recognition in the development sector that the current system of funding innovations is biased against local and women founders. This bias is not intentional, but the way that investors perceive and measure risk and investability often results in de facto disadvantages for certain groups. For example, local company founders may be seen as a less attractive investment proposition than their international counterparts. But this is not necessarily due to their skills or business acumen (GDC research suggests that locally-led LMDs actually achieve more impact per dollar raised), but because they do not always cambodia whatsapp number data speak the business lingo typically expected by (mostly Western) funders.

We have been vocal about the need for this to change in our sector, given that local, often women-led companies are at the forefront of product and service delivery to the last mile. Our Innovation Challenges represented an opportunity for us to put our money where our mouth is. And creating an innovation challenge that is accessible to and fair for all entrepreneurs is not only the right thing to do, it also increases the replicability of innovations: If a challenge favours a particular group of innovators, there is a risk that the innovations it generates will be optimised for that same group, limiting their replication potential.

To help avoid this, we used a range of techniques in our application process to support traditionally disadvantaged entrepreneurs. First, we supported the efforts of longlisted applicants to improve their ideas through a round of feedback. This meant that companies that might have normally been overlooked in favour of companies that “speak the right language” were supported in developing and finessing their ideas, helping to level the playing field. Second, with the support of our donor, UK Aid, we were able to significantly streamline contracting and due diligence, enabling us to award funding to enterprises that would traditionally be deemed too high-risk. Third, we specifically included gender considerations in our selection criteria, and evaluated the gender balance of the proposed delivery teams – i.e., the staff members who would be responsible for implementing the pilots – as part of our due diligence.