By Lynda Kiernan
The Asian Development Bank (ADB) has officially launched ADB Ventures, an impact tech venture fund to invest in and support startups developing technologies that will add to the achievement of the UN’s Sustainable Development Goals (SDGs) in the Asia-Pacific region.
“This region is brimming with technology solutions to conserve energy, reduce waste, fight climate change, and deliver public services effectively,” said Mike Barrow, ADB director general for private sector operations, ADB.
“ADB Ventures will help bring these solutions to market by leveraging our extensive operational networks and filling the risk capital gap facing innovative early-stage companies in developing Asia and the Pacific, particularly smaller and frontier markets.”
The enterprise’s anchor fund, ADB Ventures Investment Fund 1, which is expected to begin operations in Q2 2020, is targeting $50 million in funding to be raised from multiple sources including bilateral and multilateral development partners.
Fund 1 has a 17-year term, and will be investing in early-stage startups and companies developing solutions that address climate change and empower women in the agtech, fintech, cleantech, and healthtech sectors. It also will be supported by a three-year, $12 million tech assistance program designed to support impact tech startups, according to Deal Street Asia.
A key goal for the fund is to mobilize private capital through co-investing with private sector investors, and so far the Nordic Development Fund, Climate Investment Funds, and the Government of Australia have funded project preparation for the ADB Ventures facility.
“Our vision is for ADB Ventures to become the region’s largest impact technology platform, crowding in more than $1 billion of risk capital to achieve the SDGs by 2030,” said Barrow.
A Global Goal
In recent years the UN’s SDGs have played an increasing role in directing impact investment capital, however, announcements of scaled-up, public-private collaborative investment vehicles with the mission of achieving the UN’s SDGs have spiked since the World Economic Forum recently took place last month in Davos, Switzerland.
For example, a coalition of both public and private partners, including the UN Capital Development Fund, the International Trade Centre, the International Fund for Agricultural Development (IFAD), CARE, Smart Africa, Stop TB Partnership, and Bamboo Capital Partners, launched SDG500 – a first-of-its-kind $500 million investment platform.
The SDG500 will be managed by Luxembourg-based private equity firm Bamboo Capital Partners, and will use debt and equity to make hundreds of Seed, Series A, and Series B investments in the agriculture, finance, energy, education, and healthcare sectors of emerging and frontier markets.
Under the umbrella of the SDG500 Fund will be six underlying funds:
The ABC Fund – an impact investment fund targeting smallholder farmers and SMEs in developing countries. This fund recently made its maiden investment in Socak Katana, a cocoa cooperative in Côte d’Ivoire.
BUILD – a fixed income fund targeting early stage enterprises in the Least Developed Countries.
CARE SheTrades Fund – a gender-lens fund which will use debt and equity for investments throughout Asia.
BLOC SmartAfrica and BLOC Latin America – two venture capital funds targeting investment opportunities in tech enterprises in Africa, Latin America, and the Caribbean.
And HEAL – a venture capital fund investing in health-focused businesses in emerging and frontier markets.
Funds will be allocated to regions worst affected by climate change in line with an underlying mandate to make investments that will address the “missing middle” financing gap equal to US$2.5 trillion per year affecting entrepreneurs across Africa, Asia, Latin America, and the Caribbean and Pacific regions, where this lack of follow-on financing hinders growth and advancement, as has been outlined in a report from the UN in October 2019.
Only days later, The Dutch Ministry of Foreign Affairs and Rabobank announced their commitment to anchor the AGR13 Fund, a $1 billion sustainable agriculture and forestry initiative, with matching cornerstone investments of $40 million each.
Created by the UN Environment Programme, together with Rabobank and The Sustainable Trade Initiative (IDH), and supported by FMO, the Dutch entrepreneurial development bank, the fund was launched with the goal of mitigating climate change.
To meet this goal AGR13 has a funding goal of $1 billion, and will serve as a blended finance vehicle, providing risk mitigating financial offerings and grants for technical assistance for farmers and food value chains.
Even outside of public-private frameworks, the UN’s SDG’s are playing a greater role in wider impact investment as well.
In December 2019, for instance, The Global Sustainable Farmland Income Trust (GSFI), the UK’s first farming-focused trust, announced its goal to raise $300 million through a float on the London exchange to fund investments in farming operations across the U.S., Europe, New Zealand, Australia, and select regions of Latin America.
These investments will be made under the fund’s mission, which “aims to generate capital growth over the long term by investing in a diversified global portfolio, primarily consisting of Private Market Investments, which aims to create positive measurable environmental and social impact,” according to a recently released prospectus.
All assets will be leased to tenant farmers, and will be regularly audited to ensure each operation is meeting environmental and social benchmarks as laid out by the UN’s Sustainable Development Goals (SDGs), which the firm says helps “connect investors to outcomes”.
– Lynda Kiernan is Editor with GAI Media and daily contributor to the GAI News and Agtech Intel platforms. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@globalaginvesting.