Diversity VC co-founder Check Warner discusses how her newly launched fund Ada Ventures is seizing an opportunity to address over-looked markets

Author

UK Business Angels Association

07 February 2020

Check WarnerIn 2019 Diversity VC collaborated with the BVCA and British Business Bank for the UK VC & Female Founders report. It found that in the UK for every £1 of venture capital investment, less than 1p goes to all-female teams. 93% of all funds raised by European VC-backed companies in 2018 went to all-male founding teams. The UKBAA holds its regular Woman Angel Investment Forum to explore opportunities to improve the gender balance and there are a number of other initiatives focusing on encouraging diversity. We spoke to Check Warner, one of the co-founders of Diversity VC, who has been leading the charge and is taking her efforts a step further with the recently launched seed fund, Ada Ventures.

Check started her angel investing journey in the venture capital world. She explains:

“My first experience of angel investing came after I’d been working as an associate in a VC fund for a couple of years. I was lucky to have the opportunity to try investing in my day job in private companies. When I had a little bit more money – not very much more money – I was then able to have access to companies who were raising money that were too early for the venture capital fund I was working for. I started experimenting with putting small amounts of money into these companies, more as a sort of relationship building strategy but also as a way to learn about different sectors and get to know entrepreneurs.”

Through her experience, Check began to notice the lack of diversity and inclusion in the industry. That inspired her, along with her co-founders, Lillian Li and Travis Winstanley and a group of other interested individuals all working in the VC and tech space to start Diversity VC. Commenting on the company’s beginnings, Check shares:

“We were really looking around us and just observing the fact that a lot of the industry looked and sounded and came from very similar backgrounds. We thought that that wasn’t a great way to create a thriving technology industry. Venture Capital had this disproportionate impact on the companies that they funded so if we could address that at the source of the venture capital level, then we could have a huge impact on the company’s culture as they grew and make them more inclusive and diverse.”

The first step was to understand what was going on in the VC industry, which Diversity VC achieved through research and analysing data. That started with looking at the number of women in VC but has progressed much further.

“Since then we’ve looked at who is in the industry in terms of socio-economic background, in terms of education, in terms of career background, ethnicity, gender, and the picture is really that it is a very homogenous industry still. We do a lot of work with VCs to help them understand why it’s important to build an inclusive culture internally and how they can work with their companies to make them more inclusive too.”

“We observed over the course of the last five years, the lack of access that a lot of groups had to venture capital funding and the lack of understanding about what venture capital funding was and who it was for.”

When it comes to understanding why there is a lack of diversity in this area, Check believes there are a number of reasons.

“Venture capital is quite a small and quite a relationship driven industry or has been historically. Ways into it, as an industry, come through very narrowly focused industries themselves that recruit from very narrowly focused universities that recruit from narrowly focused subjects. What ends up happening is that your pipeline into the VC fund comes through personal relationships and through finance, consulting, banking and through MBA programs and Oxbridge. That doesn’t lead to having a very diverse employee base. As people move through the industry that just gets narrower and narrower because people drop out of the workforce as well, particularly women.”

Research has shown that women don’t have a large representation in our industry and a large part of that is due to not having the same access points as men do. Check says that the key to encouraging more women, is education.

“It starts with knowing it’s even possible, having teachers and having people to open doors for you into investing in private companies. I think a lot of women particularly count themselves out and that’s a real shame. The UKBAA did a great study on this that looked at IFAs (Independent Financial Advisors) and the fact that women weren’t even being told about the opportunities to invest through EIS for example. Education is a massive part. I found that a lot of the language around investing in private companies is quite intimidating. Unless you have a real guide through that, it can be intimidating and difficult to start.”

Check has been encouraged by the emergence of more initiatives aimed at women, that help equip them with the tools and opportunities they need.

“There are new angel schools springing up, there’s Angel Academe, which has been around for a while which has led the way. AA is doing a great job of trying to get new angels and get people to invest in female-led companies. There’s a new initiative launching shortly, which is all about more female angels. I’m encouraged that more of that’s happening. We need to 10x that now and make it even bigger because we know from the data, a more diverse angel investing community translates to a more diverse set of companies that get funded.”

In December Check and her partner Matt Penneycard launched Ada Ventures in December. The fund aims to help UK founders from under-served customer groups secure investment. Talking about the launch of Ada Ventures, Check comments:

“We observed over the course of the last five years, the lack of access that a lot of groups had to venture capital funding and the lack of understanding about what venture capital funding was and who it was for. We saw a really massive financial opportunity there both in terms of funding different kinds of over-looked people, but also the over-looked markets that those people are often trying to tackle. That’s why we set up the fund. We believe that there’s this incredible amount of untapped potential that could be transformational to the way that the technology industry develops. The fund is named after Ada Lovelace (the first computer programmer) because she’s a fantastic example of someone who had an amazing idea and she never really got empowered or had access to the capital and support to make that into a reality. That story for us illustrates what’s possible with actually going out and finding people who haven’t had access and enabling them to create companies and create technologies of the future.”

Since the launch, Ada Ventures has been overwhelmed by the positive responses they’ve received from not just founders, but the whole investment community. Already Check is seeing exciting trends emerging with opportunities in the childcare, aging population and healthcare markets. When assessing the opportunities coming into the fund, Check and Matt are keeping an eye out for a number of things.

“What we’re looking for are things that really could impact at least one billion people. We’re looking for these huge, huge markets and huge scale ideas. That’s really important for us as a VC fund that we have the opportunity to make these outsize returns. The second thing is we are looking for things that are defensible, that people can’t just come in and replicate. The third thing is, we want to see founders that have really identified, and are really knowledgeable about, an over-looked sector and can really articulate that clearly to us and get us excited about why that’s a huge venture-style opportunity.”

With Ada Ventures still in its infancy but initial response looking very positive, Check is already looking forward to the next 12 months. What does success look like in that time period?

“We would like to have funded eight to 10 world class companies. We’d like to see that those companies are a really broad representation of people around the UK so regionally diverse, ethnically diverse, gender diverse in terms of the teams. We’d also like to have established ourselves as the go-to-fund for entrepreneurs that are starting businesses in this space. We really want to be the fund that people think of straight away when they’re looking at building a company addressing an overlooked market.”

Find out more about Diversity VC at http://www.diversity.vc and Ada Ventures at https://www.adaventures.com.

Join us for the South West Women Angel Investment Forum on 30th April 2020 in Bristol. Book your ticket

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