From Backing Pivots to Losing Bureaucracy: Lessons From Caribou’s Latest Catalytic Funding

Too much catalytic funding is wasted on projects that go nowhere and processes that grind founders down. In our experience, lasting impact comes from contextualizing sustainability, stripping out bureaucracy, backing pivots, and meaningful community building. 

Here are key lessons from our Funds and Programs team, who have worked alongside some of the most ambitious and resilient leaders driving small business innovation.

Launching innovative solutions isn’t the only goal—sustaining them is just as important.

Too often, grants focus on trialling a new product, model, or approach. Only 22% of pilots effectively move beyond the early stage, and 84% get stuck in “pilot purgatory” for over a year. When the funding runs out, the innovation can fizzle out with it. 

At Caribou, we’re just as interested in how a project ends as how it starts. What happens after the pilot? Who takes the innovation forward? How will it continue to be funded after the grant? And is the organization in a position of strength or vulnerability when that moment comes?

Getting to “investor-ready” status and then unlocking new funding is highly context-specific. In the EU, startups often contend with longer timelines than in other regions due to labor regulations and slower access to capital. While non-EU investors may be interested, their objective isn’t always an early exit. Anecdotally, we have seen some concerns about uncertainties in the US context, particularly where cloud data is held on US servers under US law but serving EU markets. Increasingly, we see that EU startups aim to grow in ways that align with the EU’s competitiveness, economic security, and infrastructure, a process that requires time, patience, and tailored support. 

In practice, being “founder-friendly” is not about slogans; it’s about making processes less extractive. 

It’s about adding value, building in flexibility, and treating founders not as “grantees” who need to be “managed,” but as partners. When resources are limited, directing partners to activities that bring the most value for founders and funders can be like walking a tightrope. Should we prioritize inviting founders to a regional tech event, or simply make funds available for local investor networking sessions that founders might find more immediately valuable? Or consider the trade-off between a lengthy reporting process that could yield rich insights for the broader program, but places a significant time and effort burden on our partners, thus pulling them away from their core work.

At Caribou, we’ve adapted to the complex needs of both our funders and our grant partners. We focus on adding value to founders where possible, ensuring that timely mentoring and coaching are available (but optional), and matching specific skills from sector experts to the needs of our partners. Instead of requiring lengthy milestone reports, we’ve accepted investment pitch decks, for example. We’ve aligned project milestone reporting with our founders’ internal business/innovation objectives. We’re applying streamlined measurement and impact evaluation processes, allowing founding teams to define how their work delivers impact and growth on their terms. We provide support to founders for these processes, sometimes with hours of a sector expert’s time. 

Every innovation project will hit speed bumps, and the best learnings often come just after a target has been missed. 

Innovation programming doesn’t follow a rigid plan, especially in a small organization facing multiple challenges from cash flow, investment demands, human resources, AI automation, cyber threats, evolving regulations, and many other daily issues. When a project needs to pause, pivot, or redirect funds to respond to an emergent situation, above all, it’s important to listen. 

Not every speed bump needs a contract amendment; sometimes it just needs a conversation. Dedicated grant managers keep Caribou and grant partners focused and ready to pivot when necessary. Programs like Mastercard Strive EU have shown the need for grant managers to be highly attuned to the topics that most plague our partners, who may need to pivot at short notice. 

For example, in the Mastercard Strive EU fund programme, grant partners face challenges ranging from compliance issues with frameworks like IRIS+, the changing EU taxonomy, and NIS2 directives, to developing robust impact narratives and decision-relevant data. Grant partners are building credibility for their solutions, and they need visibility and connections to major investors now to build the road for follow-on capital.

Insight harvesting is vital to improve the shaping of communities. 

One surprising thing we’ve learned is the power of dedicated insights and MEL (monitoring, evaluation, and learning) resources to drive analytical thinking in the curation and ongoing expansion of new communities. At Caribou, we take the time to map connections, assess synergies and risks, and actively weave networks of collaboration. These intentional actions help foster dynamic, learning-oriented communities.

We’re lucky to have a dedicated program team and Community Manager (Jesús Tabares) who gives us space to invest our time in our portfolios to understand challenges, pain points, opportunities, and areas to celebrate. With this support, we are also able to identify opportunities for building community among our grant partners. For instance, in Mastercard Strive programs, our measurement team maps new connections made with fund partners and the outcomes of those on the innovations and organizations being funded. 

Whether links between different grant partners or facilitated introductions to local and scale partners, our program team has mapped out the many introductions and relationships that emerged as a direct result of our community-building efforts. Some of our favorite examples of connections between grant partners include the partnership between SkyEye Pacific and Datasketch Colombia. Together, they explored how AI-analyzed data for small businesses could improve the adoption of digital tools.

While highly valued by our partners, community building is not without its challenges. Our partners, who are spread across the globe, enjoy meeting together to share ideas and brainstorm in person, yet these opportunities are infrequent. These “get-together moments,” such as Caribou Live Learnings, build connections. Community building that occurs remotely, while more frequent, is harder to encourage. 

We’ve found that other priorities, time zones, and technical issues tend to dampen openness and participation by partners. Here we lean on digital tools, such as Slack, LinkedIn, WhatsApp, and other lightweight platforms, to keep conversations going so they don’t take too much time and attention away from project goals.

If catalytic funding is to live up to its promise, it needs to be more dynamic, more patient, and more supportive. Our experience shows that when grants are designed with sustainability in mind, when founders are treated as partners, when pivots are supported not punished, and when insights are harvested to fuel genuine community that lasts long after the grant has ended, we can achieve our impact goals.  

If you’d like to learn more about the funds Caribou manages and programs we co-design, please reach out to: rosie@caribou.global