Bridging the Financing Gap

The concept of the 'missing middle' highlights a critical gap in climate finance for businesses that are too small for large institutional investments but too large for venture capital support. This issue is particularly pronounced in emerging markets, where innovative climate solutions can significantly impact communities. Development finance institutions aim to address this gap while adhering to their mandates and ensuring positive outcomes. An example includes IDB Lab's approach to off balance sheet investments in Latin America and the Caribbean, showcasing a strategy to support these vital but underserved businesses.