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The IDB Group has the sole purpose of improving lives in Latin America and the Caribbean (LAC). That said, IDB Lab, was born of the conviction that the region needs to find ways to deliver on social inclusion, environmental action, and productivity. Core to IDB’s work is advancing early-stage entrepreneurial innovation and supporting solutions and ecosystems. IDB Lab also fosters new technologies, activates innovative markets, and catalyzes existing sectors.
The Lab serves as a testing ground for the IDB and IDB Invest – and for other IFIs that have the financial resources and knowledge to scale innovations. It fulfills this role by design, operating with agility and a high-risk appetite.
It supports a range of private sector actors, including startups, small and medium-sized enterprises (SMEs), and social enterprises. Projects vary in size from pilot initiatives (150.000US$) to scalable ventures (1.000.000US$). Examples include technology-based solutions for efficiency in water purification, social enterprises working on community-based sanitation projects, and SMEs developing new infrastructure models for water distribution. IDB Lab also promotes the development of ecosystem projects with entities such as water companies, universities, and accelerators to enhance a strong supply of technological solutions in the region. Its support involves both financial investment and strategic guidance, to ensure that projects can scale and achieve a sustainable impact.
IDB Lab approaches the water and sanitation sector uniquely, through an alliance called Source of Innovation. This is a strategic alliance between IDB Lab, the IDB, and external partners, including public and private entities. The collaboration allows for a holistic strategy to address safe access to water, sanitation, and solid waste services, promoting innovative solutions. By leveraging the combined expertise and resources of the partners, the initiative can pilot new technologies, implement best practices, and promote sustainable models that can be replicated across the region. This approach differs from those taken with other infrastructure sectors, where IDB Lab often works directly with startups and other entities to develop and deploy new technologies. Nevertheless, all energy, transport, and water projects emphasize multi-stakeholder collaboration, community engagement, and integrated solutions that combine technological, social, and financial innovations.
It has been fostering innovation, enhancing service offerings, and cultivating a culture of innovation through various ecosystemic projects. Some examples are the following. A Clean Solution to a Dirty Problem is expanding access to safe sanitation in the Dominican Republic. It introduced an outcomes-based contracting mechanism called Payment by Results, aimed at increasing formal sewage system connections for vulnerable coastal populations. Development of a Robust Offer of Deeptech Technology Providers (RG-T4302) supports startups in Latin America that could meet the demand for digital transformation. The project maps, analyzes, and validates startups’ technologies.
The Toilet Board Coalition – Boosting the Sanitation Economy in LAC (RG-T4144 and RG-T4148) is aimed at supporting entrepreneurs and facilitating partnerships between SMEs, corporates, NGOs, investors, and governments. Through its Accelerator program, the Coalition focuses on improving sanitation and hygiene for low-income markets, contributing to the goal of universal sanitation by 2030. Brazil Trial Reservoir (BR-T1532 and BR-G1017) accelerates adopting innovative technologies, reducing risks on the path to commercialization, and improving service delivery and environmental impacts. It leverages Brazil’s Legal Startup Framework to enable public utilities to experiment with and scale innovative solutions while developing a financing model that supports technology companies in conducting pilot tests.
The ‘Lab’ in IDB Lab shows a commitment to experimentation and a willingness to take risks. This involves piloting new ideas, testing their feasibility and impact, and refining them based on measurable outcomes. By adopting this mindset, IDB Lab can identify the most effective solutions and scale them up for broader implementation. The Lab’s high-risk appetite, unique among multilateral organizations, allows for derisking large public and private sector operations to create and activate innovative markets through entrepreneurship. The method embraces learning from failures and continuously improving successful models to maximize their impact across the region.
In this sector, all projects are designed to meet demand, fostering both supply and demand from the start. Scalability is in mind from the outset, ensuring that solutions can be adopted by utilities and service providers, and expanded to reach larger populations. This involves creating adaptable models, fostering partnerships with local and regional stakeholders, and securing ongoing funding and support. By aligning with public sector priorities and leveraging their resources and influence, the potential for successful implementation and scalability is enhanced. Specifically, 71% of IDB Lab projects approved through Source of Innovation, already have a utility or service provider as a client or partner from the design stage; the other 29% have this as their main target.
Irene Arias Hofman is the CEO of IDB Lab, the innovation and venture laboratory of the Inter-American Development Bank Group. Previously, Irene worked for 20 years at the IFC, the private sector arm of the World Bank Group, where she managed the Financial Institutions Group and the LAC region with its 16-billion dollar portfolio. Her focus has been on innovation and technology, venture capital, and organizational development.
IDB Lab is the innovation and venture capital arm of the Inter-American Development Bank Group. It discovers new ways to drive social inclusion, environmental action and productivity in Latin America and the Caribbean. It leverages financing, knowledge and connections to support early-stage entrepreneurship, foster new technologies, activate innovative markets and catalyze existing sectors.
