Government-funded Green Banks (GBs) are delegated to administer the Inflation Reduction Act funds to amplify private capital investment in reducing greenhouse gas emissions. This paper examines how effectively GBs mobilize local private investment into green projects. Focusing on start-ups, we show a significant increase in venture capital (VC) deals and total investments for climate-tech start-ups located in counties following a GB loan issuance. The increases capture the additionality of GBs, as they seldom finance start-ups directly or participate in VC syndicates. Our evidence underscores GBs’ pivotal role in building local green ecosystems that de-risk climate ventures and foster bottom-up green transitions.
