The sole reason we set up financial instruments and investment products is to finance real-world action — to direct capital into restoring ecosystems, supporting Indigenous stewardship, protecting oceans, and regenerating natural and social systems.

In the world of private capital markets, financial instrument formation expenses are part of the playbook — accepted, expected, and eventually reimbursed once the investment product launches. In nature-based finance and the blue economy, however, the playbook falls short.

Why?

Because before any capital is raised… before the first legal document is drafted… before the investment manager can even exist on paper… someone has to pay.

🚧 The biggest bottleneck is not the complexity. It’s the first dollar.

❗ The Cold Start Problem in Blue and Nature Markets

Emerging managers and early-stage nature project developers often have the ideas, the talent, and the mission-aligned partners — but they don’t have the upfront money to:

• Pay for fieldwork, science, legal, compliance, and structuring work

• Engage administrators or financial platforms

• Cover regulatory filings or technology setup

• Start fundraising with credible materials and licenses

Why? Because nature and blue economy investments are still labeled as high risk. Catalytic and philanthropic capital exists, but it’s often hesitant to be the very first mover — especially when those formation costs look like sunk costs.

🔁 We urgently need to move beyond the traditional “high risk / high return” framing. Instead, it’s time to embrace a “high risk / 4 Returns” paradigm — where financial, natural, social, and inspirational value creation defines long-term success. In this model, growth in money is not the sole measure of success — and often, the returns in nature, community, and inspiration lead the way, anchoring the financial return in something far more resilient and meaningful.

💡 But What If Those Costs Didn’t Have to Be Sunk?

This is where revolving formation expenses come in — a structural innovation that can help bridge the startup gap.

By designing an investment product to reimburse its formation expenses, we make it possible to recycle early capital —

✅ giving catalytic funders a realistic pathway or

✅ the possibility to get their money back, or

✅ bridging other early-stage investment vehicles, or

✅ revolve the resources for future project development and

✅ investment managers a lifeline to launch.

Let’s break it down:

🔁 How Revolving Formation Expenses Work

Formation expenses include things like:

• 📄 Legal and compliance: Drafting relevant legal documents, setting up investment vehicles

• 🧾 Structuring & tax: Jurisdiction selection, cross-border setup

• 🎯 Marketing & fundraising: Materials, roadshows, placement costs

• ⚙️ Operational setup: Science, fieldwork, accounting, tech systems.

In a revolving structure, these costs are covered upfront (by the management company or a catalytic partner), but then reimbursed by the investment product once capital is raised. This can take different forms:

• Reimbursable Arrangement The management company fronts the expenses and is reimbursed post-close from the investment product.

• Loan-like Treatment Costs are treated as a loan to the investment product, repaid from: f.i. Future management fees or First-close capital contributions

• Catalytic/Philanthropic Repayment Strategic seed funders (e.g. philanthropies) cover setup costs with an agreed repayment structure: 💸 Conditional repayment after the first close, 🧩 Hybrid models: part-grant, part-repayable, ⛲ Priority waterfall: repaid before distributions to investors

🧭 Why This Matters for Mission-Driven Investment Products

This revolving structure isn’t just clever finance—it’s mission-enabling.

✅ Solves the cold-start problem for new investment managers

✅ Gives philanthropic capital a recovery path, making them more willing to fund early

✅ Frees up the management company’s balance sheet for growth

✅ Creates a reusable pot for future investment products, extensions, or bridging other vehicles

✅ Incentivizes innovation in early-stage ocean, nature, and Indigenous projects

🛡️ And importantly, by initiating and structuring projects through solid, transparent investment products, we strengthen the long-term permanence of the nature outcomes they’re designed to protect. Sound governance, transparent capital flows, and organized structures build trust and resilience — for projects, communities, and funders alike.

🌍 A Call to Action for Catalytic Funders

If you’re a foundation, public donor, family office, or multilateral looking to support early-stage nature and blue economy projects — this is your chance to change the economics of market entry.

You’re not just funding setup. You’re:

• De-risking markets that matter

• Building credible infrastructure for future flows

• Recycling your capital for maximum impact

With a well-structured reimbursement mechanism, your capital isn’t a grant — it’s the key to unlocking ecosystems of investment.

🚀 Together, Let’s Build What Doesn’t Exist Yet

At TogetherForTheBetterGood, we help a.o. design and structure nature and blue economy investment products so that catalytic capital can work smarter — not just harder.

We work across governance, financial structuring, nature-based frameworks, and blended finance to bring these models to life.

If you’re exploring how to set up your investment product, support emerging managers, or fund high-impact ocean and nature initiatives — let’s talk.