A year ago this week Ada Ventures â€” a U.K./Europe-focused VC with an â€œimpact twistâ€ aiming to invest in diverse founders tackling societal problems â€” launched onstage at TechCrunch Disrupt. (You can watch the video of that launch below.)
Today Ada announces that it has closed its first fund at $50 million. Cornerstone LPs in the fund include Big Society Capital, an entity owned by the U.K. government, as well as the British Business Bank.
Check Warner, a co-founding partner, said the raise was oversubscribed: â€œWe werenâ€™t even sure weâ€™d be able to raise $30 million. And then to actually get to Â£38 million then $50 million, which was over our initial hard cap of 35 is, is really, really big.â€ All of the fund was raised on video calls during the 2020 pandemic.
Geared as a â€œfirst-chequeâ€ seed fund, Ada is trying to tackle that thorny problem that to a large extent the VC industry itself created: the â€œmirroringâ€ that goes on when white male investors invest in other white men, thus ignoring huge swathes of society. Instead, itâ€™s aiming to invest in the best talent in the U.K. and Europe, regardless of race, gender or background, with the specific aim of â€œcreating the most diverse pipeline, and portfolio, on the continentâ€, while tackling issues including mental health, obesity, workers rights and affordable childcare.
It appears to be well on its way. In 2020, Ada invested in eight seed-stage companies tackling the above issues. Four of the eight companies have female CEOs. This brings the total portfolio size to 17, including the â€œpre-fundâ€ portfolio.
In terms of portfolio progress: Huboo Technologies raised a Â£14 million Series A, which was led by Stride VC and Hearst Ventures; Bubble delivered tens of thousands of hours of free childcare to NHS staff; and Organise grew their members from 70,000 to more than 900,000, and campaigned for the government to provide support for the self-employed during COVID-19.
On Ada Lovelace Day this October, Ada launched its own Angel program, enabling five new Angel investors to write their first cheques. This is not dissimilar to similar Angel programs run by other VCs. It also has a network of 58 â€œAda Scoutsâ€ resulting in around 20% of deal flow, with two investments now made across the portfolio that were scout-sourced.
This is no ordinary scout network, however. Adaâ€™s Scout community includes the leaders of Hustle Crew, a for-profit working to make the tech industry more inclusive, and Muslamic Makers, a community of Muslims in tech.
In 2021, Ada says it will continue to grow its network of Ada Scouts across the U.K., with a focus on the LGBTQ+ community, disabled entrepreneurs and regions outside of London.
And the Scout network is not just â€œfor showâ€, as Warner told me: â€œWe have spoken to the Iranian Womenâ€™s Association and Islamic makers and all these groups that are underrepresented within tech and VC. And they bring us companies. And if we end up investing in these companies, we pay them both an upfront cash fee and also a carried interest share. So there are quite a few things that make it distinct from other scout programs. Many other scout programs just take existing investors like existing angels, and give them more capital and double up their investments. Weâ€™re actually enabling a whole new group of people who wouldnâ€™t otherwise be able to get access to VC. We involve them in our due diligence process, we get their insight into markets that we wouldnâ€™t necessarily understand, like the Shariya finance market, for example. So there are quite a few things that weâ€™re doing differently. And we now have 58 of these scouts, who drive between 10 and 20% of our deal flow on any given month.â€
Warner continued: â€œWhen we launched we couldnâ€™t have predicted the seismic changes and tragedy brought on by COVID-19, or the social dislocation precipitated by the killing of George Floyd. These events have provided the backdrop of the first year of deployment from Ada Ventures Fund I. In light of these events, the Ada Ventures strategy feels more poignant â€” and urgent â€” than it has perhaps ever been.â€
In an exclusive interview with TechCrunch, Warner and co-founder Matt Penneycard admitted the fund is not labeled as an â€œImpact fundâ€ but that it shares a similar orientation.
Penneycard said: â€œThe difference, the difference is often in the eye of the beholder. In that, itâ€™s the way the investor wants to bucket it. Some investors might see us as an impact fund if they want to, and thatâ€™s fine. Other investors see the massive financial arbitrage that you get with a fund like ours, just because youâ€™re looking in very different places to other funds. So, youâ€™ve got more coming in the top of the funnel, if youâ€™ve got a decent process, you should get a better outcome. And so with some of our investors, thatâ€™s kind of one of the primary reasons theyâ€™re investing, they think weâ€™re going to generate superior returns to other funds, because of where were are looking. It isnâ€™t pure impact. Itâ€™s a real fund, it just happens to have the byproduct of quite deep, meaningful social impact.â€