Blended Finance for Impactful Climate Solutions on Pitchbook

Climate-tech startups may have a novel weapon in their arsenal for fundraising in a dry market: blended finance vehicles.

Climate nonprofit Prime Coalition just launched a $239 million fund run by Azolla Ventures to invest in climate-tech startups with a mix of market-rate capital and charitable capital.

Blended finance funds were developed as a way to bridge the gap between investors' desire to invest in impactful climate solutions and their expectations for returns. As investors and nonprofits have woken up to the opportunities and challenges presented by climate change, these vehicles could play a larger role.

"Both in steering capital and influencing capital, there's just a whole universe that needs to be built in order to thoughtfully marshal the amount of catalytic capital that is interested to come into these types of blended vehicles," said Sarah Kearney, executive director of Prime Coalition.

The blended funding model is relatively novel. Of the vehicles that do exist, most have historically been concentrated on developing economies, where the idea first took off. 

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