International development assistance is evolving, and complex development challenges across regions are competing for a limited pool of resources. Increasingly, what matters is not only how much capital is available, but how well it is allocated, and whether it can reach the markets, sectors, and business models where it can generate the greatest development impact.

Turning that ambition into practical investment strategies, however, is far from straightforward. In this landscape, institutions able to connect public purpose capital with private markets play a growing role in sustaining innovation ecosystems.

This is where IDB Lab plays a distinctive role.  Through its combination of reimbursable and non-reimbursable instruments, IDB Lab connects public mandates with the venture capital (VC) ecosystem across Latin America and the Caribbean (LAC). In doing so, it helps accelerate the innovation the region needs to address some of its most pressing development challenges.  

Equity Investment as a Development Tool

Reimbursable equity investments are investments through which IDB Lab acquires ownership stakes in startups or venture capital funds, providing long-term growth capital while expecting to recover its investment through future exits.  It is one of IDB Lab’s most strategic tools for advancing development through innovation.   As investments mature and generate returns, capital can be redeployed to back new entrepreneurs, funds, and solutions, multiplying development impact over time.

Since 1996, IDB Lab has invested in more than 100 venture capital funds and today maintains a portfolio of over 50 active fund relationships across LAC. This long-standing commitment has made IDB Lab one of the region's most consistent limited partners and a key catalyst for the growth of its early-stage venture ecosystem.

As a limited partner in venture capital funds, we invest in portfolios of early-stage companies developing scalable solutions to critical challenges in LAC. Beyond providing capital, we help strengthen fund governance and leverage our extensive experience and networks to attract additional impact investors.

To expand this work, IDB Lab is accepting proposals from investment management firms raising early-stage VC funds. The call for proposals is open through September 30, 2026, and targets funds from Pre-Seed to Series B, with a minimum fund size of $20 million and a focus on Latin America and the Caribbean. Selected funds may be considered for investment beginning in 2027. Fund managers interested in applying can review the guidelines for applicants and submit their proposals through the online application form.

IDB Lab’s Value Added as Limited Partner

When IDB Lab invests equity into a VC fund, it helps attract other investors.  This activates capital toward underserved markets, sectors, and business models across the region, from nascent ecosystems like Central America and the Caribbean, to sectors such as climate tech, agtech, edtech, and health, among others.

IDB Lab's role as a bridge also extends to directly mobilizing funding from multilateral and bilateral development finance institutions (DFIs). Global funds such as the Global Environment Facility (GEF), the Green Climate Fund (GCF), and the Climate Investment Funds (CIF), carry specific mandates centered on climate resilience, biodiversity, or inclusive development. IDB Lab's platform and instruments translate those mandates into equity commitments structured within VC funds, connecting different donors directly with the region's private venture ecosystem.

This model enables IDB Lab to not only mobilize private capital and strengthen governance, but also to incorporate rigorous impact measurement practices. It provides the means to structure impact so that it becomes a fundamental part of how a fund invests and grows its portfolio, driving long-term value creation in LAC.

IDB Lab’s Track Record as a Strategic Investor in VC Funds

For IDB Lab, equity is a particularly powerful instrument for mobilization because it can support more than one company at a time. It is a type of investment where capita stays engaged for the fund’s full life cycle, growing alongside the portfolio, providing a form of patient capital well suited to how venture ecosystems actually mature.  

When a donor supports a VC fund through IDB Lab's equity commitment, it is, indirectly, supporting an entire portfolio, often dozens of companies, technologies, and solutions within a single fund. This approach diversifies the search for ideas and solutions capable of scaling, diversifying the pathways to impact. 

Over the past decade, this has been the case with funds such as AgVentures II (managed by SP Ventures), Opportunity Fund I (managed by The Yield Lab LATAM), EcoEnterprises II and III, and the Caribbean Basin Sustainable Energy Fund, among others.  

IDB Lab's commitments and co-investments alongside green funds like the GEF have enabled more than 7.5 times third-party leverage in these vehicles.  They have also supported the development of impact management and measurement frameworks for emerging markets in sectors such as agtech, foodtech, fintech, cleantech, and nature-based solutions.  

Together, these funds support more than 80 early-stage companies delivering innovative solutions across the LAC region and driving systemic transformation.

To sum up, as public resources tighten, the ability to deploy impact investing strategically has become more important than ever. IDB Lab’s reimbursable equity investments are designed for this purpose: serving as a bridge to connect global funds with the VC ecosystem shaping Latin America and the Caribbean's next generation of innovation.  

Learn more about our call for proposals for early-investment VC funds here.