Announcing Ada Ventures Fund II
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Today we announce the launch of Ada Ventures Fund II and our first close of £36m.
Ada Ventures II enables us to continue building an inclusive venture capital fund investing in breakthrough ideas for the hardest problems we face. We are delighted to be backed by so many returning Fund I investors including the British Business Bank’s Enterprise Capital Fund programme, Atomico, Inovia, Taavet+Sten, the Supercell founders and many more. We are also really pleased to be joined by new mission-aligned investors including Plexo Capital, the University of Edinburgh and Molten.
So what happened with Fund I?
- Fund I has now been invested in 28 companies with our first cheque written in March 2020.
- We’ve invested in bold founders building breakthrough ideas including Huboo, Organise, Micrographia Bio, Bubble, Spill, Boundless, SideQuest and Moonhub.
- We’ve invested at pre-seed and seed with an average cheque size of £557k, average first cheque ownership of 9%.
- The performance of the Fund I portfolio is strong, generating over £40m of annual recurring revenue in aggregate, with £100m raised in follow-on investment including from notable investors such as GV and Mubadala.
- 1/3rd of the portfolio has been sourced by our fantastic scout network.
- We’ve paid £45,000 of finders fees to scouts who also have long term carried interest in those investments.
- 64% of Ada Portfolio companies have one underrepresented founder with 57% having female founders and 32% having non-white founders.
So what will stay the same between Funds I and II?
Open Venture
We still operate ‘open venture’, the three principals that Ada was founded around in 2018:
- Founders come from anywhere. We will invest in anyone, no matter where they come from or who they are.
- Investment decisions should be objective, transparent and fair.
- Venture Capital should be invested responsibly and for the good of society, without compromising on returns.
Pre-seed and Seed, UK Focus
We still invest in UK technologies at two stages, pre-seed and seed. We plan to make about 30 pre-seed investments over the next four years and about 10 seed investments.
What will change for Fund II?
Thematic focus — climate, healthcare & ageing, economic empowerment.
We’re focusing on three thematic areas for Fund II — three of the most pressing issues of our time. These are — the future of the planet, the ageing population and access to fair and equitable financial products and fairly paid, dignified work. We are looking forward to investing in founders building a fairer, more equitable future for millions of people in these areas.
- Climate. As we are all reminded by nearly every news story, we need to radically cut carbon emissions to address climate change — from 41 GT in 2021 to net zero by 2050. This will require an overhaul of our economy and presents myriad opportunities for innovation. At Ada, we’re looking for innovative companies using capital efficient technologies to address these challenges. Climate change is inextricably linked with social inequality. Marginalised people are disproportionately affected by climate change because they are more exposed to climate hazards, more susceptible to the damage these cause and less able to cope with the consequences. Fund I companies in this theme: Circa5000, FINDS.
- Healthcare & Ageing. The question of where you live, and the circumstances into which you were born, has a disproportionate impact on your quality of life. Indeed, it is alarming to consider that even in developed nations such as the UK, you are more likely to live a healthier life for longer – by almost two decades if you are born in the South East compared to the North-West. We’re on the lookout for innovative and ambitious founders seeking to use technology to equitably address healthcare challenges and reduce inequalities. Fund I companies in this theme: Spill, OMP, Spoke, Micrographia, Mirthy.
- Economic Empowerment. Huge sociocultural and economic challenges are actively disempowering billions of people, preventing them from acting with autonomy over their lives or achieving their potential.For example, there are still 1.4 billion people unbanked globally, including 1.3 million in the UK and 7.1m in the US, limiting their ability to participate in the economy. Hundreds of millions of workers face an uncertain future as automation increases in the workplace. At the same time, young people joining the workforce find their needs, priorities, and values are at odds with the corporate status quo. Fund I companies in this theme: Bubble, Boundless, Organise, Flexa.
If you are building a company in one of these areas, in the UK and raising a pre-seed or seed round, we would love to hear from you! You can apply on our website here.
Doubling down on social impact
During the course of Fund I we invested in business tackling underserved and unserved people including low paid workers, people over the age of 75, people without access to dignified, fairly paid work. We are even more focused on funding founders building businesses having positive societal impact, particularly for underserved groups, for Fund II and have made a commitment that 60% of our investments will be socially impactful.
Expanding angels and scouts
Today we are also launching an expanded angel programme, building on the learnings of our first angel programme in 2020, focusing on angels investing in the regions and recruiting the angels in part from our scout network. The 20 angels will also have specific operational expertise in areas like engineering, performance marketing, people and product.
Angel investing has incredibly high barriers to entry. Nationally, the estimated total proportion of female angel investors sits between only 15–18% (Investing in Women Code Report, 2021), and 10% for Mixed, Arab, Asian or Black ethnicity angel investors (UK Business Angels Association and British Business Bank, 2020).
We believe that this lack of diversity at investor level has a direct repercussion on the types of companies that get funded — which is why we launched our first cohort of Ada’s Angels. We have been so impressed by the quality of work that this first cohort have provided — each of them has invested into at least four high quality companies which they truly believe in, and six of these have become fund investments as well.
For our second cohort, we want to build on what we have learned with our first cohort and continue to:
- Diversify the angel investing community in the UK. Provide training & capital to people who would otherwise not be able to angel invest due to economic, social or other obstacle.
- Increase the diversity of our pipeline with high quality founders, focusing on our three sectors: Economic Empowerment, Healthcare & Ageing and Climate. We are, first and foremost, a venture capital fund, and our number one priority is to generate exceptional returns for our investors. We believe that our strategy of investing in diverse founders will deliver on this promise, and our Ada Angel (and Ada Scout) programs are designed specifically to help us to achieve this.
We hope you will apply. The applications can be found here.
Finally, but very importantly, we are hiring two more full time people to come and join me, Matt, Xun and Diarra.
If you’d like to be part if the Ada Ventures team, please check out the job posts and descriptions of how to apply here.
Applications close on the 9th October.
Thank you for reading!
Sources:
- https://www.ons.gov.uk/peoplepopulationandcommunity/healthandsocialcare/healthinequalities/bulletins/healthstatelifeexpectanciesbyindexofmultipledeprivationimd/2018to2020
- https://www.ipcc.ch/report/ar5/syr/
- https://www.un.org/esa/desa/papers/2017/wp152_2017.pdf
- https://climatetechvc.substack.com/p/-a-climate-correction-102
- https://blogs.worldbank.org/developmenttalk/unveiling-global-findex-database-2021-five-charts
- https://www.fca.org.uk/publication/research/financial-lives-consumers-across-uk.pdf
- https://www.fdic.gov/analysis/household-survey/index.html
