Despite the growing use of Impact-Linked Finance (ILF) by impact investors, there is still a significant knowledge gap on its application in the development finance and impact investing space, as well as on the impact of ILF, its benefits, and potential downsides. To address this, British International Investment (BII) commissioned Roots of Impact to study how ILF is used in the market and to conduct an early assessment of the effectiveness of their ILF transactions. This report focuses on two key questions: 1. Where, how, and why has ILF been employed by DFIs and impact investors?; and; 2. What lessons can be learned from an early assessment of BII’s ILF investments? The findings offer practical insights and guidance for deal teams and decision-makers into effective ILF structuring, by highlighting ILF practices and early learnings from both the market and BII’s investments. The insights can also benefit the broader ILF ecosystem, including other DFIs, impact investors, and practitioners.