London-based Ada Ventures, an inclusive venture firm, has announced the final close of a £63M (approximately €73.83M) fund, the second fund from the firm, to support a diverse group of early-stage founders.
Institutional investors, including the British Business Bank, the University of Edinburgh, Big Society Capital, Atomico, the Export and Investment Fund of Denmark (EIFO), Molten Ventures and Legal & General Capital, have contributed to the fund’s success.
The fund also saw support from founder investors, including Taavet Hinrikus of Wise and Illusian, a family office founded by Ilkka Paananen, co-founder and CEO of Supercell.
Operating from its second fund, Ada Ventures follows a thesis-driven approach, investing typically £250K to £1.5M in pre-seed and seed-stage startups, reserving a substantial amount for follow-on investments.
Having already made 12 investments from the second fund, the team aims to make 10 to 12 annual investments in companies focusing on breakthrough ideas in climate equity, economic empowerment, and healthy ageing.
Funding “extraordinary talent” building ideas
Founded in 2019, Ada Ventures is a pre-seed and seed first-check investor with over £100M under management. It specialises in funding “extraordinary” talent addressing challenging issues.
The firm supports its portfolio founders by covering up to 40 hours of ‘back-up’ childcare annually through Bubble, the UK’s on-demand childcare platform and an Ada portfolio company. This initiative helps founders in accessing verified babysitters, night nannies, and holiday clubs, showcasing Ada’s commitment to comprehensive founder support.
Ada Ventures has supported ventures such as Huboo, Boundless, Bubble SideQuest, Spill, Materials Nexus, Greenworkx, Micrographia, Gizmo, and Tooth Fairy.
The firm’s current portfolio is expected to generate over £100M in net revenue in the coming year. The portfolio companies have also garnered co-investment and follow-on funding from firms like GV, NFX, DCVC, and Index Ventures.
The ‘Inclusive Alpha’ approach
Ada Ventures claims to have pioneered an ‘Inclusive Alpha’ approach to its investment decisions, a belief that supports ‘alpha’ ideas with a commitment to inclusion. This strategy focuses on outperforming the market through funds derived from an inclusive infrastructure and investing approach, integrated at every stage of the investment process.
Ada Ventures not only provides mental health support for founders but also makes a European-first commitment to cover childcare costs for parents in its portfolio. Launched in October, this initiative has been embraced by nearly 15 per cent of the firm’s portfolio companies.
According to a February 2024 analysis, the firm’s Inclusive Alpha approach can be effective, with its portfolio being 14 times more diverse than the average UK Venture Fund in terms of gender and race/ethnicity.
About 74 per cent of founders come from underrepresented backgrounds, 48 per cent of portfolio companies have a woman founder (compared to 18 per cent in the wider VC market), and 44 per cent are led by ethnic minority founders (compared to 9 per cent in the wider VC market).
In the pipeline from July 2023, half of the companies pitching to Ada have a woman founder, and over half have an ethnic minority founder.
Ada Ventures also claims to lead in deal sourcing with its Scout and Angel network, involving nearly 100 scouts, including a 20 cohort of “Ada Angels”, who each have access to an investment pot of up to £50K.
30 per cent of investments come from Ada Angels or Scouts, leading to 10 times more investments in women-founded teams. Ada Ventures plans to expand this model to new European markets soon.
Check Warner, co-founding Partner at Ada Ventures, says, “We’re thrilled to announce the final close of our second fund and share more data around the diversity and performance of our portfolio. We believe these metrics show just how powerful and effective the Inclusive Alpha approach is.”
“We’ve worked incredibly hard over the last five years to develop the systems and processes to turn our ambition to build a truly diverse and inclusive fund into reality. Strong returns are strongly correlated with inclusive investment. We want other funds to copy this blueprint.”
“The excuse that diverse talent isn’t ‘out there’ is a cop out. We have proven that you can build a thriving, inspiring portfolio of diverse founders building breakthrough products and hugely valuable businesses,” adds Warner.
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