PRIORITIES

IDB Lab focuses on multisectoral solutions around Latin America and the Caribbean’s pressing development challenges. 

Our priorities include:

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  • Democratizing access to sustainable urban services.
  • Creating economic opportunities in cities leveraging urban assets.
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  • Preparing workers and entrepreneurs for 21st century market opportunities.
  • Harnessing the power of disruptive technologies in favor of vulnerable populations.
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  • Regenerating the environment and fight for the climate crisis.
  • Increasing income and climate resilience of smallholders.
Connections

Connections

IDB Lab strives to reduce the inclusion gap and transform the region articulating platforms that connect players for promoting the use of technology with applications for inclusion, co-creating innovative solutions, and developing thematic innovation ecosystems.

Knowledge

Knowledge

We co-create, curate, and disseminate practical knowledge to solve inclusion challenge in Latin America and the Caribbean

Financing

Financing

IDB Lab offers a wide array of financing products that can be mixed and matched to better support our clients. Our objective is to bridge key financing gaps for innovative startups and companies that drive inclusion and systemic change in Latin America and the Caribbean.

Discovery Products

Discovery Products

IDB Lab Discovery products finance innovative projects that generate opportunities for entrepreneurs and vulnerable populations and raise the living standards of low-income people and communities, through private sector led-solutions. Discovery products include: 1) Prototype Projects: up to US$150K, 2) Spark Projects, with funding usually from US$250k to US$700k, and 3) Ecosystem Projects, which they are usually US$1 MM or more.

See detailed discovery products

Investment Products

Investment Products

IDB Lab invests both directly and indirectly in companies to unlock the development potential for inclusion and environmental sustainability in LAC. For our indirect investments, we invest in VC funds and debt funds to promote a wide array of entrepreneurs and sectors and to help expand the frontiers of VC markets and geographies. For direct financing (equity/quasi-equity and debt), we selectively identify highly impactful early ventures addressing key development challenges in LAC, and mostly invest alongside trusted VC co-investors.

See detailed investment products

What requirements must a project and its proponent meet to be financed by IDB Lab?

What requirements must a project and its proponent meet to be financed by IDB Lab?

  • Innovative solution. What new disruptive models or technologies does the solution leverage, e.g. Collaborative Economics, Behavioral Sciences, Circular Economy, etc. / Artificial Intelligence, Blockchain, Robotics, Internet of Things, Big Data, etc.
  • Impact to achieve scale. How the proposed solution will have a systemic and transforming impact on the lives of hundreds of thousands or millions of people in vulnerable situations and/or on the environment.  
  • Thematic alignment to the aforementioned laboratory priorities.  Transversally, it must contemplate: reducing poverty and economic inequality, promoting diversity and gender equality and/or be environmentally sustainable.
  • Geographic alignment. The solution must have an impact on one or more of the following 26 countries in Latin America and the Caribbean: Argentina, Bahamas, Barbados, Belize, Brazil, Bolivia, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay, Suriname, Trinidad and Tobago, and Venezuela.
  • Clear path to achieve sustainability: how the project will be maintained after IDB Lab support ends.
  • Robust implementation capacity: what track record, team, business model, and if applicable, mastery of technology, the organization has to ensure the success of the project.
  • Counterpart (for grant-funded projects): the proponent must provide at least 50% of the project funding, of which at least 50% must be in cash.
How to apply for IDB Lab Financing

How to apply for IDB Lab Financing

IDB Lab uses a combination of inbound incoming opportunities and outbound prospection of opportunities, such as calls for proposals for venture capital funds, and cohort-based investment applications for direct equities, combined with ongoing receipt of opportunities. Contact the IDB country location of your choice to inquire more about IDB Lab financing.

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1. Investments in Funds

Investments in VC Funds

Impact thesis: We invest in VC funds that can help expand the frontiers of VC markets and allow IDB Lab to reach a broader base of early-stage businesses. Support to VC funds represents a “horizontal” approach whereby IDB Lab can promote a wide array of entrepreneurs and sectors, while boosting the VC industry to help close the persistent gaps in early-stage financing.

Ticket size: US$2M-US$4M 

Product characteristics (Three Tracks):
Nascent Ecosystems: Funds targeting as primary markets nascent or emerging early-stage ecosystems such as Central America, the Caribbean, and the Andean region.
Advanced Ecosystems: Funds with a regional strategy which, in addition to targeting more developed early-stage ecosystems, include new markets such as Central America, the Caribbean, and the Andean region and specific approach towards impact thesis and measurement.
Sector-specific focus: Specialized funds focused on sectors with high disruption/impact potential in the region.

Investments in Venture Debt and other Debt Funds

Impact thesis:  We recently started to invest in debt funds that provide startups and companies with venture debt and/or other innovative debt instruments. With this, we aim to promote a new type of funds that gives access to dilution-free loans for highly impactful, revenue-positive startups and innovative companies.  

Ticket size:  US$1M- US$3M

Product characteristics: These funds provide loan to innovative companies, for example senior debt with collaterals often in the form of receivables or warrants or other debt products.

2. Direct Equity & Quasi-Equity Investments

Impact thesis:
We make direct equity and quasi-equity investments to reach exceptional businesses not yet fully satisfied in terms of capital availability by private VC funds. This represents a “vertical” approach whereby IDB Lab can select with greater precision those business models that could be pivotal for addressing key development challenges and transformational in their impact.
IDB Lab’s investments mostly require co-investment from trusted and experienced VC investors.

Ticket size: US$700k-US$2M.

Eligibility requirements: i) have exceptional impact potential towards inclusion and/or environmental benefits, with a focus on the IDB Lab’s strategic areas; ii) have innovative business models coupled with solid financial sustainability profile and clear scalability paths; iii) are in bridge to Series A, Pre-Series-B and selectively in Series B fundraising stages, iv) previous fundraising record and proven willingness to co-invest by qualified institutional investors (with a solid track record in VC). Market terms and so-called “most-favored-nation (MFN)” clause to co-investors.

Product characteristics: We provide a wide array of instruments, including preferred stock, Simple Agreement for Future Equity (SAFE), and convertible notes, among others.

3. Loans & Debt Products

Loans for Early Stage Companies and Financial Intermediaries 

Impact thesis: We make loans to fuel the initial scale of high impact companies by bridging the debt financing gap. We also provide loans to financial intermediaries to amplify their impacts with innovative and transformative solutions.

Ticket size & terms: US$1M- US$3M market-based pricing, commensurate with the risk level. Mostly USD based, but also offer some local-currency denominated loan with/without guarantee.

Product characteristics: We use a wide array of instruments to best serve our clients, including senior and subordinated debt with the option to convert, revenue-based loans, impact discount loans, among others 

Social Entrepreneurship Program (SEP)

Impact thesis: The Social Entrepreneurship Program (SEP) is IDB Lab’s innovative social business financing program. This program supports innovative social businesses that generate impact in local communities, leveraging business innovations to expand their impact and scalability. SEP supports innovative business model that directly and clearly benefit low income and vulnerable populations.

Ticket size & Terms: long-term debt (4-8 yrs) of up to US$1M and grant up to US$250.000, requiring local counterpart contribution.

Product characteristics: SEP provides a combination of long-term debt  and grant, where the purpose of the grant is to facilitate integrate and support adoption of innovation. Proposed projects must deliver new solutions to economic, social, environmental challenges faed by low income and vulnerable populations in their local context.

1. Prototype Projects

Protype projects test highly innovative, early stage technologies, products, business models, and/or solutions with agility in a small scale to measure results, so they can be scaled up, if successful, at a later stage.  Prototypes projects are expected to generate development impact and market data so solutions can be adopted by project partners. Prototype projects usually have three components: 1) design of a solution: such as a technology or a product, 2) testing of the solution, and 3) knowledge generation and dissemination. Each project might include non-reimbursable technical cooperation and contingent-recovery financial grant resources, to a maximum combined IDB Lab support of US$150K per project.  

Preparation and approval process take 2-4 months, and projects are executed in less than 18 months. Projects are usually presented or executed by actors in the ecosystem and entrepreneurship ecosystem. Counterpart funding for prototypes must be at least 20% of total project cost.

2. Spark Projects  

Spark projects pilot innovative solutions and business models that could be scaled-up or replicated, either during project execution or in a subsequent stage with IDB Lab investment products and other financial support from the IDB Group. These projects may arise from challenges on a particular topic, or from specific entrepreneurship and ecosystems actors in topics aligned with IDB Lab thematic pillars, and guiding principles.

Funding to spark projects usually goes from US$250k to US$700k, often in the form of non-reimbursable technical cooperation funding, sometimes complemented with contingent recovery funding, and/or investment products as well.  

Activities supported with technical cooperation funding are advisory services in the design and implementation of solutions, trainings, monitoring, evaluation, knowledge products, events. Existing administrative costs and overhead are not covered with technical cooperation funding. Acquisition of hardware and other purchases of equipment and investments are not a main activity to be financed with technical cooperation, and it could not exceed 30% of total IDB Lab contribution. Non reimbursable technical cooperation resources require a match of at least 50% of total funds for Spark projects. Design and approval process take 4-6 months, and projects are executed in two to three years.

3. Ecosystem Projects

The purpose of an ecosystem project is to support the generation and implementation of innovations in topics that are relevant for the IDB Lab Mandate such as XXI Century Skills, Agtech, Healthtech, Workertech, Digital Financial Services, Water, Energy, Mobility, Housing and Connectivity among others.  Instead of supporting a particular business model or solution, the ecosystem projects improve the conditions and financing of projects that develop a new industry or sectors.  These projects are born from multi-stakeholder design, including partnering with ecosystems actors, such as accelerators, corporate venturing actors, funders, impact hubs, and others.  

Funding amounts to ecosystem projects vary, depending on project scope and counterpart resources funding, but are usually below US$1,000,000, often in the form of non-reimbursable technical cooperation funding sometimes complemented with contingent recovery funding, and/or investment products as well. Counterpart funding of at least 50% of total project cost is expected.  Design and approval process take 4-6 months, and projects are executed in two to three years.

Other Discovery projects

Innovations sometimes cannot be fit into pre-existing categories. Some IDB Lab discovery projects might be different in nature from the three types of projects above.