Exploring innovative finance mechanisms to unlock capital market investment for science infrastructure in Low and Middle-
Income Countries.
Authored by Raúl C. Rosales, this briefing paper, released to coincide with the opening of the UN Financing for Development (FfD4) conference in Seville, outlines innovative pathways to unlock capital markets investment in science infrastructure across Low and Middle-Income Countries (LMICs), a challenge exacerbated by shrinking aid budgets and geopolitical instability. Science must be recognised as a core pillar of sustainable development rather than a peripheral concern, and finance is critical to its deployment and scale-up.
To help achieve this aim, this briefing paper presents five complementary innovative finance mechanisms:
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Blended finance: Use concessional capital and risk insurance to crowd in private investment. Philanthropic capital plays a catalytic role in de-risking early-stage technology science innovation.
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MDBs leverage: Unlock up to $1.2 trillion without compromising AAA credit ratings, enabling greater allocation to science-focused infrastructure in LMICs.
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Venture capital funds: Deploy science-based venture funds tailored for LMICs to scale deep-tech entrepreneurship, with philanthropic capital de-risking early-stage science-based ventures.
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Private credit and securitisation: Use Significant Risk Transfer (SRT) and structured private credit mechanisms to free up MDB and bank lending capacity for science-related infrastructure.
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Carbon-finance approaches: Turn natural capital into investable science infrastructure revenue streams, supporting data infrastructure.
Prepared for the FfD4 Summit in Seville (July 2025) and the UN General Assembly in New York (September 2025), this paper offers actionable pathways to finance science as a foundation for long-term development and supports the FfD4 discussions around urgent financing mechanisms. It builds on the 2015 Addis Ababa conference, responding to the ongoing need for innovative financing, through market-based tools like pull instruments, blended capital, long-term bonds, and carbon pricing, alongside the strategic rechannelling of Special Drawing Rights (SDRs), to embed science and technology within SDG financing and mobilise public and private finance.
Bridging the Gap for Science Investments
Financing science infrastructure in LMICs requires a shift away from traditional aid models toward innovative mechanisms, ring-fencing geopolitical volatility and declining government aid. While this note focuses on science for economic development, complementary investments in human development, such as healthcare, sanitation, and education, remain equally critical for long-term development.
To operationalise this shift, five actions are recommended:
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Multilateral Development Banks (MDBs) should adopt policy reforms to expand risk appetite and deploy callable capital effectively, enabling them to anchor science-focused sustainable development funds and the scaling of blended finance vehicles in LMICs.
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Development Finance Institutions (DFIs) and supranational funds must design and implement strategic capital allocation policies that support alternative investment strategies and co-create deep-tech financing instruments tailored to LMICs.
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Philanthropic capital should be considered for structured finance vehicles, maximising its catalytic role by absorbing early-stage risk and taking the junior tranche (first-loss position) in the capital structure, which is essential to de-risk investments.
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Research science centres and universities should partner with philanthropic and institutional investors to launch investment vehicles focused on technology transfer and science-based innovation.
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Governments and policymakers should implement market-based policy mechanisms – such as AMCs, tax incentives and public guarantees - to provide a strong investment signals for investors, de-risk science and technology ventures, and secure long-term returns for investors.
Technology transfer is key to translating research into impact, but it must be matched by investment in local human capital. This is where partnerships between investors and academia play a pivotal role - building skills, including PhD programmes, and industry-linked tech entrepreneurship, while enabling access to finance. Investing in local talent remains critical for long-term and sustainable investment.