6 Insights on Investing at the Frontier
What CrossBoundary's co-founders taught a room of Harvard students about deploying capital where others won't.
One of the great privileges of being a Research Fellow with Harvard’s Center for International Development is that I get to invite and host leading practitioners from my industry, learn from them, and give students direct exposure to the people shaping the field.
This time, I had the privilege of hosting two of the three co-founders of CrossBoundary Group, a firm that has become synonymous with frontier market investing.
Both Jake Cusack and Tom Flahive showed dedication to these markets long before CrossBoundary existed. Jake served as a platoon commander and intelligence officer in the US Marine Corps, deployed in Iraq, where he earned a Bronze Star. He came away convinced that an investment-led approach to economic development could succeed where purely grant-based or military approaches had not. Tom, after studying diplomatic history at the University of Pennsylvania and cutting his teeth in private equity at Lazard, found his way to Ulaanbaatar, Mongolia, doing public and private equity transactions at Mongolia International Capital Corporation. About as frontier as it gets.
Today, CrossBoundary Group is a ~250-person firm operating across roughly 27 offices in most major emerging and frontier markets. It runs both a large advisory practice and an investment management platform spanning distributed renewables, mini-grids, real estate, venture capital, and nature-based solutions. The firm has advised on over $11 billion in transaction value and raised approximately $500 million in debt and equity through CrossBoundary Energy alone.
Here are some of the key insights from our conversation.
You can watch the full video at the end of this article.
1. Where others see risk, they see missing connective tissue
The founding thesis of CrossBoundary was not that frontier markets were risk-free. It was that the gap between investable opportunities on the ground and available capital was not primarily about risk. It was about connective tissue.
As Jake put it, there were businesses in places like South Sudan, Iraq, and Afghanistan that were already making money. And there was capital with a mandate to deploy into these markets, from the IFC, regional PE firms, and development finance institutions. What was missing was the intermediation: someone on the ground who could prepare these companies to be bankable and connect them with the right sources of capital.
Tom refined this model while living in Juba, South Sudan, where the early CrossBoundary team literally sat in plastic chairs building Excel models at a poultry farm with chickens running around. They were helping local businesses develop investable business plans and then pitching regional PE funds in Nairobi, New York, and London. That model of “investment facilitation” became the core of what CrossBoundary then scaled globally.
The data is now catching up to their intuition. Research on IFC and DFI default rates increasingly shows that actual risk in frontier and emerging markets is lower than perceived risk. Jake and Tom sensed this from the start, born from their on-the-ground experience.
2. For-profit, by design
CrossBoundary deliberately chose a for-profit model. The reasoning was shaped by what Jake and Tom had seen in Iraq and Afghanistan, where enormous pools of donor money were deployed through cost-plus or cost-recovery contracts. The implicit incentive in those structures was to maximise costs (more people, more spend) without necessarily maximising sustainable outcomes.
Tom cited a striking set of statistics: the average age of the largest NGOs in the US is over 100 years. And if you look at organisations founded since 1970 that have reached over $50 million in annual turnover, the for-profit sector vastly outpaces the nonprofit sector. The takeaway is not that nonprofits shouldn’t exist. But if the goal is large-scale impact, having profit as a guiding mechanism tends to drive faster scaling.
The for-profit model also helps with talent. People join CrossBoundary because they want to work on something impactful, with smart colleagues, and have the prospect of building wealth over time. That combination of mission and incentive is what attracts and retains people.
3. Diversification as an existential strategy
One of CrossBoundary’s earliest and most consequential strategic decisions, made around 2014, was to build both an advisory arm and an investment platform. The logic was partly about synergies (advisory surfaces gaps that investment can fill) but also about resilience.
Jake drew the analogy to the merchant banks of the 1800s and 1900s, and to the family conglomerates in emerging markets today. Some level of horizontal and vertical integration makes you more resilient to shocks.
Within the investment platform, they now have five distinct vehicles across different sectors and geographies. On the advisory side, they diversified their client base across DFIs, foundations, and the private sector. And the firm’s geographic expansion was, interestingly, not driven by top-down strategy. As Tom described it, they “diversified by being pulled, not pushed,” following talented individuals who wanted to launch offices or investment theses in new markets rather than sitting in an ivory tower spinning a globe.
This diversification proved critical when the USAID shock hit. The impact was real, particularly on parts of the advisory business, but it was not existential. Had it happened in 2013-2015, their Africa investment advisory business was more reliant on a USAID-backed investment facilitation mandate in South Sudan, it could have been much more disruptive.
4. The USAID shock, and what’s filling the gap
Jake and Tom were candid about the impact of the USAID funding freeze. Tom offered the most vivid analogy: it was as if a trillion-dollar foundation (which would be required to disburse roughly $50 billion a year) vanished overnight.
The near-term disruption was not just about future programming being cancelled, but also an abrupt halt in payment (though this was eventually rectified and a substantial amount of US foreign assistance funding remains, now operating through the US State Department).
Jake acknowledged that there were genuine inefficiencies in the USAID system: too much bureaucracy, the phenomenon of “Beltway bandits” that had grown up primarily to serve the agency. But the restructuring was not done in a methodical outcomes-driven way. It was done rapidly and chaotically, causing massive unintended disruption to the international development landscape in 2025.
So what’s replacing it? Jake identified two counteracting forces. On one hand, there is a clear decline in official development assistance as a tool. On the other, development finance institutions are getting larger budgets and more activity. Governments, including the US, UK, and Australia, are becoming more willing to be interventionist in private markets, particularly around geopolitically significant sectors like critical minerals. The US Development Finance Corporation has recently had its investment ceiling raised to $200 billion with bipartisan support. Simultaneously, major foundations are stepping up, trying to figure out how to make their dollars go further in a world of scarcer public funding.
Both of these trends converge in the space of blended finance: how do you align catalytic capital alongside commercial capital alongside various types of mission-driven capital to structure deals that satisfy the needs of different stakeholders?
5. The best frontier investments avoid the government as counterparty
A recurring theme was CrossBoundary’s deliberate strategy of avoiding government as the primary counterparty, at least in the early stages of entering a market. They focused on B2B and B2C business models, particularly for their energy investments, signing power purchase agreements with commercial and industrial customers rather than utilities.
The reasoning was partly about speed (commercial PPAs close faster than government ones, which can stall through election cycles) and partly about risk management. Jake noted that firms in the energy infrastructure space spent years chasing utility PPAs with different governments and never getting there.
They also deliberately entered markets with a low profile, avoiding the trap of flying in and immediately meeting with the president and ministers, which locks you into whoever is in power at that moment. Instead, they worked bottom-up, understanding opportunities before engaging politically.
That said, both acknowledged this is not a blanket rule. South Africa’s renewable energy auction programme has been successful with government offtakers, and CrossBoundary is involved in a major hydropower project in Malawi with a government counterparty. The key insight is about updating your priors. Governments in some markets are considerably more capable now than when CrossBoundary first entered.
6. Cost of capital at the frontier is “more cooking, less baking”
One of the sharpest insights came from a student’s question about how to evaluate cost of capital in markets where you can’t find data on a Bloomberg terminal.
Jake’s response was refreshingly practical. The gating question is simply: does this make money? Not a precise WACC calculation. In these markets, you’re not operating in basis-point precision. What matters is having conviction that a project will generate returns, and then layering different types of capital. Catalytic capital from players like Microsoft or Bank of America at perhaps 2%. Slightly more expensive DFI capital. Then family office or impact capital at higher return expectations.
The “mixing and matching” of these capital stacks is the core skill set of blended finance. And problems tend to be binary rather than marginal: the offtaker won’t actually buy at the stated price, the contract isn’t bankable, the key counterparty is unreliable. As Jake memorably put it: “It’s more cooking, less baking.”
This holds true for instrument selection too. Jake offered a candid assessment of what has actually worked in African markets over the past decade. Private equity funds taking minority stakes (equity risk without control) have generally performed the worst. What has done better is PE firms taking majority stakes, so they can control the company, or flexible debt providers filling gaps that banks aren’t serving. The sectors that lend themselves best to debt are infrastructure (project finance with predictable cash flows) and fintech/financial services (where the customer benefits from embedded finance products). Pockets of venture capital have also delivered, with Flutterwave and Paystack being notable examples.
Jake closed with what I think is the most important takeaway for anyone considering a career at the intersection of investment and international development. Despite the disruption and the uncertainty, this is the most interesting moment to be in this field. The skill sets are more needed than ever. The landscape is being reconfigured in real time, and that creates enormous opportunity for those willing to engage with the complexity.
I couldn’t agree more.
This event was part of CID’s Road to GEM Speaker Series, leading up to GEM26: Reimagining International Development.
Watch the full conversation here: