Who pays for project preparation?

The session was blunter than most. The consensus was that the $5m–$20m band is too small for the institutional preparation facilities and too large for grant funding, and that this is a structural gap rather than an oversight.

We agreed to write the argument up properly, which became the first white paper.

Preparation capital sits at the worst point on the risk curve. It is spent before anything is certain, it is lost entirely if the project does not proceed, and it is small enough that most institutions cannot justify the diligence cost of deploying it.

We reviewed the models that exist to address this — project preparation facilities, DFI-backed grant windows, developer-at-risk structures, and the fee-on-success arrangements used in other markets — and were honest about how few of them work at the $5m–$20m project size that we focus on.

This session is the direct ancestor of The Missing Middle, and much of the argument in that paper was first made here.

• Why preparation capital is structurally unattractive
• Existing facilities and what size of project they actually serve
• Developer-at-risk: who can afford to carry it
• Recovering preparation cost at financial close
• Open discussion