Aid money is insufficient in tackling climate change and other global challenges at the kind of pace and scale that is necessary. This realization has been driving the shift towards a more "business minded" approach from parts of the civil society and government aid offices.
There are plenty of startups working with scalable climate and environmental innovations in the Global South, but the funding landscape is complex.
Equitable and inclusive climate financing was the main theme when Unicef Office of Innovation invited investors, policy makers and entrepreneurs to an annual Innovation Insights Dialogue conference in Stockholm.
The solutions and the struggle
Four startup entrepreneurs pitched on stage, but they also took time to address the struggles of raising capital for impact solutions in emerging markets: Beren Kayali from Deploy, Kyle Cordova from Aquaporo, Mohamed Khaled from Lifebox and Achim Haug from Airgradient.
One common understanding is that risk averse investors often shy away from hardware development costs, political instability and a perceived lack of scalability.
Elin Ljung from Swedish VC Nordic Capital confirmed the unfortunate situation, and pointed out that many venture capital funds have strict frameworks and mandates that limit them to invest in certain geographies or industries. Also, the ticket size may in many cases be too high for a struggling startup raising a seed fund.
Tobias Axerup from Sweden’s Ministry for Foreign Affairs highlighted the importance of public/private partnerships and the untapped business potential that can emerge within a green and just transition.
David Postlethwaite from KPMG has been assessing the climate funding field in a new report. Among the main findings is the realization that the capital is out there, but hidden in a complex patchwork. One of the main barriers for young climate innovators is access to capital – especially when the vast majority of funding is allocated to companies working with climate mitigation in the Global North, rather than adaptation in the South.
Here are some of the solutions:
1. Unicef Venture Fund
Hanna Burkhart is Head of the Unicef Venture Fund, which over the past ten years has invested in 80 startups with a presence in the Global South – preferably those working with emerging technologies such as AI, blockchain, drones, and virtual reality. A new femtech initiative is currently in the pipeline.
While the fund operates much like a VC, the investments are equity-free grants – offering up to USD 100,000 in seed funding and up to USD 400,000 in growth-stage funding. Each annual cohort of 4–8 startups also receives a 12-month mentorship program with coaching from tech experts. An alumni program encourages members to give back to the ecosystem.
One unique aspect of the Venture Fund is that part of it can be distributed in cryptocurrency—an approach well-suited for startups operating in politically unstable environments where corruption and inflation are major challenges.
A key requirement for funding is that all solutions must be open source, enabling them to be scaled, adapted, and applied across diverse markets and infrastructures.
2. Global Innovation Fund
The Global Innovation Fund (GIF) is another key player in the field of impact investing. GIF’s Senior Managing Director for Impact, Shailaja Annamraju, was interviewed on stage by Impact Loop’s Editor-in-Chief, Camilla Bergman.
GIF provides funding ranging from USD 50,000 to USD 15 million to support innovators with transformative ideas in developing countries. Climate adaptation and resilience are priority areas, and the organization also runs a dedicated Innovating for Climate Resilience Fund.
Annamraju emphasized the importance of rigorous data validation and a credible breakdown of unit economics for startups aiming to attract serious investors. While advocating for an “impact-first” strategy, she also noted that many entrepreneurs need to strengthen the evidence supporting their claims.
3. Global Innovation Lab for Climate Finance
Amanda Brasil is a Program Manager at “The Lab” – the Global Innovation Lab for Climate Finance. The Lab is an investor-led, public-private initiative that accelerates innovative, well-designed, early-stage climate finance solutions and instruments.
Since its founding in 2014, The Lab has mobilized more than USD 4 billion for climate action in emerging economies through public-private collaboration.
On stage, Amanda Brasil emphasized that the current investment pool is not sufficient to meet global climate goals. She stressed the importance of diversifying funding sources beyond traditional venture capital and highlighted the need to support startups in becoming investment-ready and scalable.
4. Green Climate Fund
The Green Climate Fund (GCF) is the world's largest dedicated climate fund, established under the United Nations Framework Convention on Climate Change (UNFCCC). Leif Holmberg, the Swedish Co-chair of the GCF Board, was present during the conference.
Headquartered in South Korea with a staff of around 300, GCF’s primary mission is to support developing countries in implementing climate change adaptation and mitigation strategies. The Fund operates through a country-driven partnership approach, offering flexible financing solutions and leveraging climate investment expertise to accelerate transformative climate action.
As of early 2025, GCF’s portfolio includes nearly USD 17 billion in financing, supporting projects across various regions.
5. Sida's guarantee instrument
While the Swedish International Development Cooperation Agency (Sida) is primarily known for its foreign aid programs, its guarantee instrument has been active since 1999.
The instrument is designed to de-risk debt financing – particularly from banks and local lenders in markets where many impact startups first access capital.
To qualify, certain conditions must be met. One is additionality – the innovation must not be something that would happen without the guarantee. The structure also includes a risk-sharing component.
Transaction Manager Nawar Al-Ebadi explained the setup on stage, noting that perceived risk is often higher than actual risk – pointing out that 98 percent of loans backed by the guarantee have been repaid by the impact entrepreneurs.