NDF - Financing for climate change and development projects

ADB Ventures: design, piloting and implementation phase [NDF C120]

3.06.2019
The long-term vision of the ADBV is to become Asia Pacific's leading impact-tech platform that systematically supports early stage companies, enables additional crowding-in of risk capital, and significantly contributes to Sustainable Development Goals (SDGs).

Regional Asia
ADB Ventures; design, piloting and implementation phase
Ref. NDF C120

NDF grant up to EUR 500,000 (USD 500,000, EUR equivalent 11.4.2019:
EUR 443,773.85)
Project Period: 6/2019-6/2020
Partner Agency: ADB, Private Sector Operations Department (PSOD)
Implementing Agency: ADB, PSOD

Objective
The Asian Development Bank (ADB) is developing a new facility to support early-stage companies with technology-driven business models and solutions for impact in the Asia Pacific. The facility, ADB Ventures (ADBV), will scale technology-enabled solutions to meet regional sustainable development goals (SDG). In the initial stage, ADBV will have a geographical focus in the Greater Mekong Sub-region, a thematic focus on climate change, and include a specific gender lens on its funding activities. There are several scalable climate technologies that could have a remarkable potential and impact in Asia Pacific. However, the companies offering these solutions face barriers when considering the region as a potential area for expansion. Many of the individual countries are small and entering them entails high costs and risks. Furthermore, the innovation ecosystems in these markets are less developed than in developed countries. Finally, the availability of venture and growth capital is limited. As a result, solutions are not easily implemented and commercialised in the region. Growth companies will instead choose larger and more developed target markets with larger potential and easier entry.

To address the above-mentioned barriers ADBV will comprise the ADB Ventures Investment Fund I (Fund), and the ADB Ventures Technical Assistance Program (TAP). The Fund will make equity and quasi-equity investments of USD 100,000 - USD 4 million per investment. The TAP will focus on sourcing impact-focused investments and build capacity in local innovation ecosystems through "Tech-for-Impact Lab" platforms. Tech-for-Impact Labs leverage ADB's expertise and networks to (1) aggregate industry needs and local technology adopters (for example, utilities, municipalities and companies), (2) identify early-stage companies, both from within and outside the Asia Pacific, with viable technology solutions, (3) curate match-making between these, (4) de-risk pilots by co-funding, and (5) provide post-pilot support, including venture capital, to scale up successful solutions.

The proposed grant financing would be used for the design, piloting and implementation phase of the ADBV mainly during 2019, with some final activities scheduled for H1 2020. The Investment Fund is expected to be operational by Q 1 2020. NDF will have an opportunity to invest in the ADBV itself.

Expected outcomes
The project would target the following outcomes:
• ADB Ventures Technical Assistance Program designed with operational pilots
• ADB Ventures Investment Fund I designed
• ADB Ventures fundraising completed

Financing
The total project cost estimate of the design, piloting and implementation phase of ADBV is USD 5.0 million. ADB has already committed USD 2.6 million and an additional
USD 1.3 million is being prepared for approval, bringing ADB funding for the preparatory phase to USD 3.9 million. This would be close to 80% of the total planned budget. In addition, the Clean Technology Fund (CTF, a sub-fund of the Climate Investment Funds, CIF) has provided USD 400,000, and the Department of Foreign Affairs and Trade of Australia (DFAT) USD 200,000 as preparatory grants. ADB is proposing NDF to provide USD 500,000 grant funding until the finalisation of the design, piloting and  implementation phase.

NDF Contact

Program Manager Aleksi Lumijärvi
Telephone: +358 10 618 002