Dealflow | May 28, 2020

From second fund, ADAP Capital aims to cut small checks quickly

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, May 28 – Early-stage impact investor ADAP Capital is offering something many fund managers aren’t: small-ticket checks for emerging-market entrepreneurs.

The investment and advisory firm reached a second close for its second fund to make investments of $75,000 in up to 10 companies focused on alleviating poverty in low-income markets.

“We’re investing at a time when a lot of people are retreating,” ADAP’s Andy Lower told ImpactAlpha.

ADAP invests in social entrepreneurs at the so-called “valley of death” stage: when grants and friends and family funding has run out, but the business is not yet ready for institutional capital.

“We invest small amounts of money, but at the most critical part of a company’s growth,” Lower said. “If entrepreneurs can’t get funding and support to become investment-ready for other funds, then impact investors’ frustration over ‘lack of deals’ will perpetuate.” 

Since launching in 2013, ADAP has invested in 18 companies across Africa, Asia and Latin America (see ADAP Capital closes deals — quickly — with Neopenda and Good Nature Agro). Several have raised subsequent funding, including neonatal tech startup Neopenda, which last year raised $1 million in seed funding. Good Nature Agro, which connects East Africa’s smallholder farmers to markets, raised follow-on capital from FINCA Ventures and debt from family office Ceniarth.

ADAP, famous for its “four-hour due diligence” process, plans to host first-round video calls and cut new checks in June.