Across the Caribbean, entrepreneurship has become a powerful driver of solutions that can benefit the region’s development. In recent years, the founders have launched startups addressing challenges in financial inclusion, environmental transformation, agribusiness, health, and talent development.

However, despite this creativity, the region’s entrepreneurial innovation ecosystem continues to face structural constraints related to financing and knowledge transfer that limit its ability to scale and generate impact quickly.  To help overcome these challenges, the regional initiative CARIBEquity, financed by IDB Lab and the European Union, addresses through an inclusive approach, the structural market gaps that limit early-stage entrepreneurship within the entrepreneurial ecosystem of 15 beneficiary countries.

Financing and Fragmentation: Challenges for a Region with Potential

Access to early-stage, risk-tolerant capital is one of the most pressing challenges. According to a recent study conducted with our partner Startup Genome, most of the venture capital ecosystem in the Caribbean, continues to be characterized by a scarcity of investors, limited angel and seed capital funds, and weak links between startups and investors.

As a result, promising companies often face the “valley of death” that lies between ideation and growth, exacerbated by limited local capacity to structure, evaluate, and manage early-stage operations.

Additionally, the ecosystem remains fragmented. Key organizations that play a critical role in training founders, known as entrepreneurship support organizations (ESOs) — such as incubators, accelerators, innovation hubs, and academic institutions — operate in isolation, with uneven quality service and limited access to shared regional data, tools, and networks. Geographical dispersion and the small market size further limit collaboration and scale.

Despite these challenges, momentum is real. Caribbean governments are increasingly prioritizing entrepreneurship within their development strategies, and private investors, diaspora networks, and development partners are showing renewed interest in the region.

What has been missing is a coordinated ecosystem-level approach: one that simultaneously addresses funding gaps, data constraints, and regional connectivity. Isolated interventions, however well-designed, are rarely enough to transform systems with scale.

CARIBEquity: A Blended Finance Initiative

That is the reason why IDB Lab and the European Union teamed up to create CARIBEquity, a regional blended finance mechanism to consolidate a Caribbean investment ecosystem that drives inclusive innovation in the private sector.

The initiative operates in 15 Caribbean countries, directly addressing the structural market deficiencies that limit early-stage entrepreneurship, as well as the institutional foundations necessary for long-term sustainability.

Rather than focusing solely on startups, the platform operates at the ecosystem level, building on three mutually reinforcing pillars:

1) Risk-tolerant capital to drive innovation: Providing support to early-stage, growth-oriented small and medium-sized enterprises through grants and hybrid financial instruments, channeled via competitive calls for proposals. These resources bridge funding gaps at critical stages, attract private co-investment, and enable experimentation with new business models.

2) Strengthening ecosystem actors: Through initiatives such as Conecta Caribbean, implemented alongside Bridge for Billions, the mechanism strengthens entrepreneurship support organizations across the region, helping them professionalize services and collaborate across borders. Its Caribbean Playbook offers shared frameworks, and the first toolkit for early-stage investors in the Caribbean, developed with Seedstars and Entrepreneurs of Growth (EOG), reinforces practices in due diligence, valuation, and the integration of ESG criteria.

3) Data, knowledge, and connections at scale: To help governments, investors, and entrepreneurs understand who is who in the Caribbean ecosystem, the initiative conducted the most comprehensive assessment of the ecosystem in Caribbean15 countries. The effort resulted in two analytical reports and an interactive digital mapping tool that identifies startups, investors, and ESOs, helping governments, investors, and entrepreneurs connect and collaborate.
 

"The Caribbean’s entrepreneurial potential is undeniable. What initiatives like CARIBEquity demonstrate is that, through regional collaboration, inclusive financing, and stronger ecosystem connections, innovation can scale beyond borders and create lasting impact across the region.” 
— Lidia Martinez Frances, programme manager and private sector specialist from the European Union
 

IDB Lab: Driving Systemic Change

The initiative tackles three of the biggest barriers holding back the region’s innovative ecosystem: limited access to financing, gaps in knowledge, and weak connections between key players.

Instead of addressing challenges in isolation, IDB Lab takes a holistic approach—combining financing, capacity building, and evidence to support solutions that can truly transform the system.
 
By doing so, it connects capital with talent and innovation, filling a critical gap and creating the right conditions for solutions to take off and grow sustainability across the region. CARIBEquity shows how IDB Lab is stepping in where markets haven’t yet delivered, unlocking solutions that can grow, scale and make a difference across the Caribbean.  

Looking to the Future

CARIBEquity continues to expand, and the results are already visible: 10 projects approved and underway, more than 30 ESOs in capacity-building programs, and almost 1,800 stakeholders connected through over 30 networking and knowledge sharing events.

As the Caribbean faces overlapping challenges — from vulnerability to extreme weather events to youth unemployment — the need for scalable, locally driven innovation has never been greater.

The next phase will require sustaining coordination, deepening partnerships, and translating early evidence into policies, financial products, and practices that endure beyond the mechanism to continue advancing toward a stronger entrepreneurial innovation ecosystem that harnesses the significant potential of Caribbean countries.

For more information, to access ecosystem data, or to learn about ongoing initiatives, visit the CARIBEquity website.