DFIs as Co-Investors: How IFC, EBRD and ADB Shape Private Markets
Development finance institutions (DFIs) shape private markets in emerging economies in three ways: they invest directly, they anchor the funds that invest, and they set the standards everyone else ends up following. For founders and fund managers in Central Asia, a DFI is often the first institutional name on a cap table or an LP list. That name brings credibility and patient capital. It also brings a rulebook and a timeline that commercial investors do not impose.
The scale is meaningful. IFC reports $3 billion invested or committed in venture capital as of June 2024, across more than 175 direct investments and more than 120 investments in funds, and describes a platform to invest up to $225 million in startups across Africa, the Middle East, Central Asia and Pakistan. EBRD's Star Venture program has supported more than 400 startups and 40 accelerators in over 30 markets, Central Asia among them.
This guide maps what the main DFIs do, what they require, and how founders and funds work with them. For how DFI participation changes the risk an investor prices, see pricing risk in frontier markets.
Key takeaways
- DFIs play four distinct roles: direct investor, fund LP, blended finance provider and technical assistance funder.
- At seed stage, founders usually meet DFIs through the funds and programs they back, not as direct investors.
- DFI capital comes with environmental, social and governance requirements that shape the company for every later investor.
- Expect months, not weeks, from first contact to disbursement, and plan the round around that.
- The largest value of a DFI is often the capital it crowds in, not the size of its own check.
What DFIs actually do
A DFI is a government-backed institution that invests in private companies and projects in developing economies on commercial terms, with a development mandate attached. The mandate is what makes them different. They must show that their money produced outcomes, such as jobs, access to services or market development, that would not have happened otherwise.
In practice, DFIs work through four roles:
- Direct investor. Equity, quasi-equity and loans into companies, usually from growth stage onwards. IFC lists equity, quasi-equity and venture or asset-backed lending among its venture capital instruments.
- Fund LP. Anchor commitments to venture and private equity funds. IFC's Startup Catalyst invests in accelerators and pre-seed, seed and pre-Series A funds, usually with commitments of $4-6 million.
- Blended finance provider. Concessional or first-loss capital placed next to commercial money, so that a deal too risky for commercial investors alone becomes financeable.
- Technical assistance funder. Advisory work, training and accelerator programs that prepare companies and managers for investment. EBRD's Star Venture gives selected startups 24 months of support.
The DFI map: who does what
The three multilateral institutions most active around Central Asia have different instruments and different entry points.
| Institution | Main instruments | Early-stage entry point |
|---|---|---|
| IFC (World Bank Group) | Equity, quasi-equity, loans, fund commitments | Startup Catalyst: 30 accelerators and early-stage funds, 760+ startups, 53 markets |
| EBRD | Equity, loans, fund commitments, advisory | Star Venture: 24-month program, 400+ startups, 40+ accelerators |
| ADB | Loans, equity, guarantees, technical assistance | ADB Ventures: venture and seed capital for climate solutions in Asia |
The IFC figures are from its Startup Catalyst page, as of fiscal 2026. EBRD reports that 73% of Star Venture portfolio startups raised funding during or after the program, and that portfolio startups have raised more than $850 million in total. ADB Ventures states targets that 80% of its investments have strong climate impact and 75% have strong female market or management participation.
Bilateral DFIs, owned by single governments, follow similar patterns and often co-invest alongside the multilaterals. The details differ by institution, so read each one's current eligibility rules rather than assuming they match.
How DFIs shape private markets
A DFI's check is rarely the largest part of its effect. The bigger effect is on who else invests and on what terms.
They anchor first funds
Commercial LPs hesitate to back a first-time fund in a new market. A DFI commitment, made after the DFI's own diligence, tells other LPs that the manager has passed institutional review. In thin markets, that signal can decide whether a fund reaches first close at all.
They set the standards
IFC's Performance Standards, eight of them covering risk management, labor, resource efficiency, community health and safety, land resettlement, biodiversity, indigenous peoples and cultural heritage, have become a reference point well beyond IFC's own deals. Once a DFI is in a fund or a company, its standards become the floor for everyone at the table.
They crowd in other capital
ADB reports that its private sector operations committed $2.6 billion in 2024 and mobilized $2.6 of cofinancing for every $1 of its own private sector assistance. That ratio is the point. A DFI that brings commercial lenders and investors with it does more than one that writes a larger check alone.
They build markets before the deals exist
Some DFI work is visibly early. Cassandra Colbert, IFC Regional Manager for Central Asia, has said: "IFC is also supporting the development of the private equity industry in the Kyrgyz Republic." That is market building in the most literal sense, and it is part of why we treat Kyrgyzstan as a deliberate homebase rather than a footnote.
A DFI's most valuable contribution to a deal is often the investors who arrive because it is there.
What DFIs require
DFI requirements are predictable. Founders and managers who prepare for them early lose less time later. Each requirement follows the same pattern.
Environmental and social management
What they ask for: an environmental and social management system proportionate to the business, an exclusion check against the DFI's list of activities it will not finance, and a plan to close any gaps.
Why it matters to them: the DFI is accountable to its shareholder governments for every project's environmental and social effects.
How to prepare: write a short policy, name an owner, and document how the company identifies and handles risks in its own operations and supply chain.
Governance and integrity
What they ask for: audited accounts, a clear beneficial ownership chain, board oversight, anti-corruption policies, and sanctions and integrity checks on founders and shareholders.
Why it matters to them: reputational risk travels upwards. A governance failure in an investee becomes a headline about the DFI.
How to prepare: clean up the holding structure and the cap table before the first meeting, not during diligence.
Reporting and development impact
What they ask for: regular financial reporting plus development indicators such as jobs created, women employed, small businesses served or emissions avoided.
Why it matters to them: development results are how the DFI justifies its mandate.
How to prepare: agree the indicators at term sheet stage and build them into the monthly reporting the company already produces.
How founders and funds work with DFIs
The right route depends on who you are and what stage you are at.
- Early-stage founders: find the DFI-backed funds and accelerators active in your region. At seed, they are the realistic route to DFI capital, and programs such as Star Venture run country-specific calls, including in Central Asia.
- Growth-stage companies: approach DFIs directly once there is a lead investor and a clear use of funds. DFIs usually take minority positions and prefer to invest alongside commercial capital.
- Fund managers: treat a DFI as a cornerstone LP. Expect deep diligence on team, strategy, track record and environmental and social systems.
- Family offices and co-investors: invest alongside a DFI to benefit from its diligence and standards, but run your own work on valuation and terms, because the DFI's mandate is not your mandate.
In the infrastructure and growth deals that GETVISION ASIA structures, we plan for DFI requirements from the first term sheet. A structure that fails DFI review loses the co-investor most likely to stay for a long cycle, a theme we develop in infrastructure equity in emerging markets.
Timelines and trade-offs
DFI processes are staged and sequential. Each stage has its own approvals, so plan the round as a series of gates.
- Stage 1, first contact. Eligibility check and an initial read of the business and its development case.
- Stage 2, concept review. Internal approval to spend time and money on diligence.
- Stage 3, due diligence. Financial, legal, integrity, and environmental and social review, often with site visits.
- Stage 4, approval. Investment committee and, for larger deals, board approval.
- Stage 5, legal close. Documents, conditions precedent and disbursement.
The trade-off is usually worth it, but it is a trade-off.
| What you gain | What it costs |
|---|---|
| Credibility with other investors | A longer process |
| Patient, long-horizon capital | Ongoing reporting obligations |
| Governance and ESG upgrade | Upfront compliance work |
| Networks and technical assistance | Less flexibility on use of funds |
The founders who handle this well run the commercial raise and the DFI process in parallel, with the commercial lead setting terms and the DFI joining on them.
Frequently Asked Questions
A development finance institution is a government-backed investor that finances private companies and projects in developing economies on commercial terms, with a mandate to produce development outcomes. Examples include IFC, EBRD and ADB, along with bilateral DFIs owned by single countries.
Yes. IFC makes direct venture investments and also invests in venture funds, seed funds and accelerators, including through its Startup Catalyst initiative, which backs early-stage funds and accelerators in emerging markets.
Star Venture is EBRD's program for high-potential startups and accelerators in its regions, which gives selected startups 24 months of advisory support, mentoring and access to investors. It runs calls for applications by country, including in Central Asia.
Expect several months from first contact to disbursement, because DFI processes include concept review, full diligence, committee approval and legal conditions. Starting the DFI process in parallel with a commercial raise keeps the timeline manageable.
DFIs typically require an environmental and social management system, a check against their exclusion lists, sound governance and integrity checks, and regular reporting on development indicators. IFC's eight Performance Standards are a common reference point across the industry.
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