This paper explores financing methods for the Pakistani Climate Relevant SMEs and Startups. The country offers a microcosm of the challenges and opportunities facing climate-adaptation finance across developing markets. After a record-breaking USD 365 million in venture capital (VC) inflows in 2021, funding fell by ~90 % through 2024 as global liquidity tightened and US aid support withdrew.¹ Yet the diversity of instruments now available – ranging from blended-equity funds to Islamic finance and revenue from voluntary carbon credit – shows how Small and Medium Sized Enterprises (SME) and investors can still mobilise capital amid macro headwinds.

The global financing landscape for startups and SMEs in emerging markets presents both opportunities and challenges. Traditional bank financing is often inadequate, while private funding typically focuses on classic equity deals, which don’t always meet the unique needs of these enterprises. Due to their diverse structures and growth stages, startups and SMEs require a broader range of financing options to promote economic growth, particularly in development cooperation.

This document has been developed by Scio Network, in cooperation with GreenTec Capital, as part of the Private Adaptation Finance project, implemented by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH on behalf of the German Federal Ministry for Economic Cooperation and Development, which aims to mobilize investment in private sector solutions for climate change adaptation. The project supports the supply and demand side of capital for climate change adaptation & resilience investment in a holistic approach that includes ecosystem building and peer-learning, and connects the global debate to the local context and stakeholder scene.

For more information please contact denise.engel@giz.de or visit www.adaptationcommunity.net/private-sector-adaptation