Entrepreneurship has become a highly valuable source of innovation to address various social challenges. Climate change is one of the most latent challenges of our time, so it is necessary to ensure access to funding for initiatives that address this issue.
In order to support climatech startups working to develop solutions through technology, a new $400,000 fund was launched by the IDB Lab, part of the Inter-American Development Bank, and ChileGlobal Ventures, the entrepreneurship, innovation and investment arm of Fundación Chile.
This debt fund is called Green Hub and its mission is to finance at least 10 solutions by 2025, with loans based on revenues of up to USD $40,000. Depending on the success of their business models (revenue generated), the supported startups will repay their debt in fixed installments over a term of up to 36 months.
BID Lab’s lead specialist, Carolina Carrasco, explained that “Chile’s productivity and sustainable growth challenges cannot be addressed without innovation and the incorporation of new technologies, which often face difficulties in obtaining financing precisely because of this innovation”.
A region with climate change mitigation
The region’s high economic dependence on fossil fuels represents a difficult challenge to overcome. In addition to growing emissions from deforestation, high transition costs, and other challenges in the fight to mitigate climate change, the region needs to develop financial plans and adopt green fiscal rules.
According to a report by the United Nations Development Program, while the region has committed to reducing greenhouse gas emissions by 2030 and is aiming for net zero emissions by 2050, ecosystem cooperation and support for innovation are key to making progress towards these goals.
Exclusive opportunity for startups
In a press release shared with Contxto, Sebastián Burgos, Director of Business Development at ChileGlobal Ventures of Fundación Chile, who also leads the fund, said that “this is an instrument that closes a gap faced by startups with climate innovations, which are not accessing venture capital in an agile way, but which are not eligible to be financed by traditional banks due to their characteristics.”
The companies that will be able to access this benefit are those that are being or have been accelerated by ChileGlobal Ventures programs, that are in the growth phase and that implement innovative technologies, technically and commercially validated.
In addition, companies interested in accessing the Green Hub fund must contribute to sustainable growth, resilience and sustainability and ensure commitment to the implementation of ESG criteria and monitoring of their impact metrics, i.e. that their business practices are consistent with the fight for environmental sustainability.
