Hofman Talks Innovative Investment at HKS Latin American Conference Kickoff Forum

Irene Arias Hofman, chief executive officer of Inter-American Development Bank Lab, discussed supporting early-stage entrepreneurship through venture capital in Latin America at a Harvard Institute of Politics forum on Friday.

The event opened the Harvard Kennedy School Latin America conference, which returned this past weekend following a five-year hiatus. The student-organized conference aimed to highlight the transformative potential of Latin American cities.

Moderated by Fatema Z. Sumar, executive director of the Harvard Center for International Development, the discussion emphasized the importance of investment in the region and the role the Inter-American Development Bank aims to play in fostering innovation and economic growth.

Hofman — the CEO of the innovation and venture laboratory of the IDB — said innovative financing, private-sector partnerships, and venture capital can drive sustainable development and resilience in the region.

“Being the innovation and venture capital arm of a multilateral development bank is a little bit like having a startup mindset,” Hofman said.

“We have to constantly stay agile and be that little sheep that is going to make those bets that require a lot of what-if mentality, that require a lot of risk taking that usually is lacking within a public arm,” she added.

Hofman said the IDB Lab, which was recently approved to deploy $400 million in additional funding to increase its impact in Latin America, is focusing on areas where innovation and technology can create real change on the continent.

“It means that you can’t just fund entrepreneurs in a vacuum, and that the conditions in Latin America and the Caribbean as elsewhere in the world are not the same in every country” she said.

“We do a lot of work to build those foundations, to make sure that the opportunities for venture capital and for entrepreneurship exist across all these countries,” Hofman added. “That means working to support the development of nascent ecosystems.”

While the lab aims to finance development across Latin America and the Caribbean, its approach varies from country to country depending on the economic and political environment.

“In countries that are lagging behind and where the disparities are much greater, you need to use some form of blended finance to be able to even start building the first generation of that sort of companies that we would like to see,” Hofman said.

“So we are using a lot of innovation in financing for development in those countries,” she added.

The venture capital industry and the IDB’s investment approach has also been impacted by artificial intelligence.

“If you’re an entrepreneur that is at the pre-seed stage, you know what to do and how to translate that framework into good governance, into good practice,” Hofman said. “The system that we built around that, to train and to build the capacity of entrepreneurs to use these tools of good governance and stewardship around AI, is through an initiative called fAIr LAC.”

“It's part of that practice that we’ve built and that hopefully will reap the benefits of all of this, but without causing the harm that we all know otherwise can happen,” she added.

-Staff Writer Sebastian B. Connolly can be reached at sebastian.connolly@thecrimson.com. Follow him on X @SebastianC4784.