Impact-tech investor ADB Ventures in talks to raise US$100M debt fund

ADB Ventures, an impact-tech fund and a unit of the Manila-headquartered Asian Development Bank, is in the process of raising an over US$100 million debt fund.

The debt fund will target tech startups that are slightly further along the commercialisation lifecycle.

“At this stage, we’re still in the process of finalising the setup of the US$100-million debt fund,” said Daniel Hersson, Senior Fund Manager at ADB Ventures, without disclosing further details.

ADB Ventures already runs an US$60-million equity fund, which recently announced its maiden investments in two Indian startups — Euler Motors and Smart Joules.

Euler is an electric vehicle manufacturer and fleet operator focused on last-mile commercial logistics, whereas Smart Joules is an energy efficiency-as-a-service company.

The ADB Ventures Equity Fund is backed by Finland’s Ministry for Foreign Affairs, the Government of the Republic of Korea, Climate Investment Fund’s Clean Technology Fund, and the Nordic Development Fund.

Also Read: What is Impact Investing?

“Our focus is on backing high-risk, early-stage Asian startups with potentially disruptive solutions. These entrepreneurs need access to equity capital, ideally patient, as they are yet to reach a stable level of positive cash flow. We want to see more of these high-risk startups in Asia,” he said in an interview with e27.

However, in Asia, particularly for impact-oriented tech startups, there is still a significant gap in equity funding.

“Having said that, we also believe that there is a need for more flexible debt in the market. There’s a gap between equity funding and traditional bank financing that needs to be bridged. Even startups with more mature and proven solutions with a strong customer pipeline can often not access affordable debt,” he shared.

In his opinion, this is holding back their growth and their impact.

A solution needs to be worked out to help them transition more quickly from equity-fuelled growth to more leveraged growth.

“That is why we are raising a second fund, which will tackle this particular market gap. We aspire to launch a US$100 million+ debt fund targeting tech startups that are slightly further along the commercialisation lifecycle,” he explained.

More on the equity fund

With the US$60-million equity fund, ADB Ventures looks to back 15-20 companies, with an average ticket size of US$1-2 million. This is aimed at seed-stage, Series A and Series B startups.

The impact tech fund also runs a seed programme which provides a ticket size of up to US$100,000-200,000 to early-stage ventures in Asia.

Both these programmes are largely focussed on climate and gender impact in South and Southeast Asia.

Also Read: What do I need to know as a first-time impact investor?

According to Hersson, the impact-tech investment community in Asia has become sophisticated. “All of a sudden, you have an ecosystem of some incredible investors and entrepreneurs and a market that is is much more receptive of solutions than they were before.”

There is now a race to adopt impact solutions such as electric vehicles. The whole shift is incredibly exciting, he said.

“Impact-tech investment is no longer a niche and it has actually become mainstream. It has reached a tipping point where there are so many incredible players, and if everyone joins hands together, we could do something unique over the next five to ten years in Asia,” Hersson said.

Photo by Markus Spiske on Unsplash

The post Impact-tech investor ADB Ventures in talks to raise US$100M debt fund appeared first on e27.

,

ADB Ventures, an impact-tech fund and a unit of the Manila-headquartered Asian Development Bank, is in the process of raising an over US$100 million debt fund.

The debt fund will target tech startups that are slightly further along the commercialisation lifecycle.

“At this stage, we’re still in the process of finalising the setup of the US$100-million debt fund,” said Daniel Hersson, Senior Fund Manager at ADB Ventures, without disclosing further details.

ADB Ventures already runs an US$60-million equity fund, which recently announced its maiden investments in two Indian startups — Euler Motors and Smart Joules.

Euler is an electric vehicle manufacturer and fleet operator focused on last-mile commercial logistics, whereas Smart Joules is an energy efficiency-as-a-service company.

The ADB Ventures Equity Fund is backed by Finland’s Ministry for Foreign Affairs, the Government of the Republic of Korea, Climate Investment Fund’s Clean Technology Fund, and the Nordic Development Fund.

Also Read: What is Impact Investing?

“Our focus is on backing high-risk, early-stage Asian startups with potentially disruptive solutions. These entrepreneurs need access to equity capital, ideally patient, as they are yet to reach a stable level of positive cash flow. We want to see more of these high-risk startups in Asia,” he said in an interview with e27.

However, in Asia, particularly for impact-oriented tech startups, there is still a significant gap in equity funding.

“Having said that, we also believe that there is a need for more flexible debt in the market. There’s a gap between equity funding and traditional bank financing that needs to be bridged. Even startups with more mature and proven solutions with a strong customer pipeline can often not access affordable debt,” he shared.

In his opinion, this is holding back their growth and their impact.

A solution needs to be worked out to help them transition more quickly from equity-fuelled growth to more leveraged growth.

“That is why we are raising a second fund, which will tackle this particular market gap. We aspire to launch a US$100 million+ debt fund targeting tech startups that are slightly further along the commercialisation lifecycle,” he explained.

More on the equity fund

With the US$60-million equity fund, ADB Ventures looks to back 15-20 companies, with an average ticket size of US$1-2 million. This is aimed at seed-stage, Series A and Series B startups.

The impact tech fund also runs a seed programme which provides a ticket size of up to US$100,000-200,000 to early-stage ventures in Asia.

Both these programmes are largely focussed on climate and gender impact in South and Southeast Asia.

Also Read: What do I need to know as a first-time impact investor?

According to Hersson, the impact-tech investment community in Asia has become sophisticated. “All of a sudden, you have an ecosystem of some incredible investors and entrepreneurs and a market that is is much more receptive of solutions than they were before.”

There is now a race to adopt impact solutions such as electric vehicles. The whole shift is incredibly exciting, he said.

“Impact-tech investment is no longer a niche and it has actually become mainstream. It has reached a tipping point where there are so many incredible players, and if everyone joins hands together, we could do something unique over the next five to ten years in Asia,” Hersson said.

Photo by Markus Spiske on Unsplash

The post Impact-tech investor ADB Ventures in talks to raise US$100M debt fund appeared first on e27.

Leave a Reply