The Inflation Reduction Act (IRA) allocated $27 billion to the Greenhouse Gas Reduction Fund to funnel financing for clean energy and climate solutions. Government-funded Green Banks are delegated to administer the fund with a view to attract and amplify private capital investment in reducing emissions. In this paper, we examine the efficacy of Green Banks on mobilizing local investment in the context of climate-related startups. Pre- and post-introduction of IRA in Congress, we show a significant increase in venture capital deals and the total investment amount for local climate-related startups in counties where a Green Bank has issued loans. Our evidence is consistent with Green Banks de-risking climate ventures to facilitate a bottom-up green transition.
