November 25, 2020

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Venture platform to invest in impact technology start-ups

The Asian Development Bank (ADB), headquartered in Manila, recently approved the establishment of ADB Ventures, according to a recent press release.

The ADB Ventures is a new venture platform, which will support and invest in start-ups offering impact technology solutions that contribute to the achievement of the Sustainable Development Goals (SDGs) in Asia and the Pacific.

According to ADB Director General for Private Sector Operations Mr Mike Barrow, the region is brimming with technology solutions to conserve energy, reduce waste, fight climate change, and deliver public services effectively.

The platform will help bring these solutions to market by levering on the Bank’s extensive operational networks and filling the risk capital cap being faced by innovative early-stage companies in developing Asia and the Pacific, especially smaller and frontier markets.

About the initiative

ADB Ventures Investment Fund 1 is the facility’s anchor trust fund.

It has a target size of US$ 50 million and is accepting contributions from multiple funding sources including bilateral and multilateral development partners.

It will mainly invest in early-stage start-ups and focus on companies with solutions that can address climate change and empower women.

The fund has a 17-year fund life, allowing the Bank to invest patient capital into cleantech, fintech, agricultural technology, and health technology solutions.

The Nordic Development Fund, Climate Investment Funds, and the Government of Australia funded project preparation for the ADB Ventures facility.

ADB Ventures Investment Fund 1 is expected to begin operations in the second quarter of 2020.

One of its main aims will be to mobilise private capital through co-investing with private sector investors.

The vision is for ADB Ventures to become the region’s largest impact technology platform, crowding in more than US$ 1 billion of risk capital to achieve the SDGs by 2030.

Technical assistance program

Unlike traditional venture capital funds, it is augmented by a three-year, US$ 12 million technical assistance program that will support impact technology start-ups through two main activities.

The first is ADB Ventures SEED, which is a grant program to validate and de-risk technology pilots and promote expansion into emerging markets that start-up companies might otherwise not prioritise.

The second is ADB Venture Lab, which is a suite of corporate innovation programs implemented in partnership with industry and leading accelerators for start-ups.

ADB Ventures will leverage on the Bank’s operational networks and industry expertise to generate technology pilot opportunities and support ADB Ventures Investment Fund 1 portfolio companies.

Initiatives across the globe

Funding is important if start-ups were to bring their great plans and ideas to fruition. OpenGov had previously reported on firms backing up tech start-ups that exhibit strong potential.

In 2018, a leading Singapore-based venture capital firm announced the opening of its Kuala Lumpur office and planned to invest an additional RM75 million (US$18 million) to help back Malaysian based start-ups.

The firm believed that Malaysia has the right combination of talent, diversity and potential to grow more tech high-value start-ups.

According to the company, Malaysia has strong fundamentals in place to sustainably grow its already-vigorous start-up scene, as it possesses the region’s highest rate of initial public offerings (IPOs) as well as high digital penetration.

Meanwhile, leading Thai corporations and investors had plans of marching to Silicon Valley in 2018 through a US-based deep tech venture dedicated to start-ups in order to empower Thailand’s economy.

The company mainly invests in series A funding, worth over TBH32.6 million (US$1 million) per deal, and aims for returns within 7-10 years, mostly in capital gains at a rate of 3-5 times.

Interesting start-ups need to have breakthrough technologies, scalability and an eye for larger markets overseas, according to the deep tech venture’s managing partner.