Today we have one of our popular investor interviews for you. This time, we meet Check Warner from Ada Ventures, which backs founders who don’t fit the traditional tech founder stereotypes.

She started her career in VC after hanging out in the tech-focused conversations on Twitter. Fun fact: That’s exactly how I started my career in tech media too!

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Ada Ventures wants to help VC break free of pattern matching

Who is Check Warner?

Check Warner comes from an unusual background for a VC, having studied English Literature at Cambridge before going into the marketing world.

Attracted to the tech sector, she got to learn about VC through following people on Twitter. She made it her mission to get into venture.

She met Matt Penneycard and they worked together at Downing Ventures before going on to co-found Ada Ventures together.

Ada Ventures puts inclusivity and diversity ahead of traditional VC ‘pattern matching’ to find and invest in high-potential outlier founders at pre-seed.

Warner is also the co-founder of Diversity VC, a non-profit organisation that exists to drive greater diversity, equity, and inclusion in venture capital.

Ada Ventures’ portfolio includes three startups previously featured on PreSeed Now (before investment, natch!): PHINXT Robotics, HACE, and Blend, plus Radiant Matter which we covered just before Ada announced they’d invested.

__________

MB = Martin SFP Bryant. CW = Check Warner

MB: Tell me about Ada Ventures and what you do differently.

CW: Ada is a pre-seed fund that was started to do venture differently, and we invest with an inclusive lens; that's what makes us different from other funds.

When we first started, we stepped back and thought from first principles, about everything to do with how you source, how you pick, how you support founders and the underlying investment strategy. How could we do that with an inclusive approach in order to drive performance? And that's what we do.

We invest anything from about £250,000 up to about £750,000 in companies that are tackling hard problems for society across health, climate, and future of work and money, which we call economic empowerment.

MB: Inclusivity is an interesting thing in VC. VCs need to make outsized returns from a small number of the bets they make, and that traditionally leads them down the route of picking the same kind of people because it seems like a safer bet.

And obviously that's not necessarily the best way of going about things. But a VC might say ‘it's not my job as a VC to fix societal inequality, it's my job to pick winners, so I'll pick the Oxbridge white dudes, because they have so many societal benefits and advantages that mean they've got an inbuilt advantage versus others’.

So how do you look at that, and how you balance the needs of a VC fund versus the need to be inclusive?

CW: It's a really interesting tension within VC; we are supposed to be about risk taking and finding outliers, but yet the approach to that is risk mitigation and pattern matching.

And I think that is just a really strong tension that exists. I think what the reason we called the fund Ada is that we wanted to find the Ada Lovelaces of today.

Ada Lovelace is a really good example of what we're talking about, which is people who are somewhat outside of the typical societal homogenous group actually can see things in a completely different way, and they're the ones most likely to have innovative, breakthrough ideas.

I think the whole point of venture, especially at pre-seed, is to take serious risk, invest in things that are non-consensus. But you have to be right.

And we think that the Adas of today, people who have come from different backgrounds, have different intersectional perspectives, actually are the people who tend to come up with most innovative ideas. They tend to be really creative thinkers, and I think that's why Ada Lovelace was able to predict the future of computing.

If she hadn't come from where she came from, I suspect she wouldn't have had such innovative ideas.

There’s a book I haven't yet read, but I want to, which is called Pattern Breakers. And it's all about the fact that at VC funds we often talk about pattern matching, but actually pattern breakers are the people that we're really looking for here, so we have to take a different approach.

MB: How is Ada Ventures performing in 2024?

CW: It has way exceeded our expectations in terms of where we are now. We have now invested in more than 40 companies. We have invested in companies that have raised money from some of the top funds in the world. We have invested in companies that are tackling some of the hardest challenges that we face in society.

To give you an example, Materials Nexus is a company that is synthesising new materials for the climate transition. Another company called Organise is tackling workers rights and building a pseudo-anonymised network for workers to talk about challenges that they experience in terms of their rights being taken away.

I think we've shown already, even though it's still very early, that investing with an inclusive lens is a fantastic way to find companies that are doing very different things, that can grow very quickly and can deliver the kind of outsized returns that we look for in VC.

MB: Looking at 2024 versus the market in the previous couple of years, how would you describe 2024 in pre-seed?

CW: It's been a fascinating time to be running a fund over the last four years. We deployed our first cheque in March 2020 so we lived through the shutdown of the whole global economy, but then the huge hype around tech and the crazy growth in valuations, and then this massive tech recession, really, that we've been living through over the last couple of years, with no exits and no follow-on capital.

I think 2024, the first half of it, has been really that continuing, and it's still the case that we're just not seeing the IPOs, we're not seeing the exits, and we're still not really seeing the growth capital markets coming back.

However, there is this very, very exciting and very tangible shift that's happened with generative AI, where, ever since the launch of ChatGPT and all of the developments around generative AI, every single industry and area and market that we're looking at seems to be changing pretty rapidly, and that is a result of the advances and the value that can be derived from this technology.

So that is exciting us, particularly with really hard-to-solve problems, like in healthcare, or in real estate and planning where we've made an investment recently, or in climate.

We're seeing some fantastic quality founders who are really on the front foot on this technology, and who are moving quickly and actually generating value and generating revenue from their customers much earlier than we would have seen, perhaps with companies in 2022 or 2023.

MB: That's something that a lot of investors have been asking for lately, that earlier revenue.

Do you think it's a problem for some companies to chase that early revenue when they haven't necessarily built their business into something that's scalable to venture size yet? Are they chasing the wrong revenue?

CW: It’s interesting you say that because I was literally leaving a voice note for a founder just today on this topic!

I think it could be super-tempting right now to do a consultancy-style model where all these companies desperately want the technology integrated, and they want customisations, and they want it to work for their team, and there are probably some pretty big numbers that are being thrown at these startups.

But I'd encourage startups to be really disciplined in building a product which will be scalable and repeatable, and not accidentally sleepwalking into becoming a consultancy.

MB: As we look to 2025, what does the year look like for Ada Ventures, what are you looking for? And what would you like to see happen in 2025?

CW: I'd very much like to see the exit markets come back, and tech IPOs. I'd like to see some some mid-sized M&A. I think that's really missing from the ecosystem, and that's what's going to sort of generate more angel investors coming back into the market.

But I'd also like to see more of the same, which is really fantastic founding teams tackling impactful problems in some of these really hard to solve areas. Founders who are finding data sets that haven't yet been explored and crunching those data sets using the latest generative AI tools to tackle hard problems.

I'd like to see founders getting to validation from customers fast and growing quickly, as all VCs want.

And I'd like to see more funds adopting this inclusive investing approach. A big part of what we want to do at Ada, is not just invest with this lens ourselves, but open-source and share these best practices with the rest of the industry so the industry also can develop a more inclusive approach.

MB: There’s been a big debate in recent weeks over reports of potential increases to capital gains tax, perhaps to as high as 39%. Some people think that would kill innovation, while others think UK founders should just get on with it and not worry about any particular tax. What’s your take on this topic?

CW: I think the UK needs to be a fantastic place for entrepreneurs to build companies. And that's not just about capital gains tax. That's about so many aspects, particularly talent and making it really easy and attractive for phenomenal talent to come here. Not just the founders, but the C-suite talent that can do functional leadership around sales, or product, or marketing.

SEIS and EIS has been a fantastic lever for pre-seed companies to use, and I think it's been a brilliant policy decision. I think the British Business Bank has been a fantastic thing as well. So I think the UK has a really strong track record in creating these incentives and making it a really attractive ecosystem for people to build.

I would just say, let's not go back on any of that. Let's, in fact, keep going and move forward, because this is going to be such an important pillar of any future economy. We have to maintain our advantage and increase our advantage in making the UK a really attractive place to start, and build, and scale technology companies.

Back on Thursday

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