We constantly encourage founders to “share your ultimate ambition with investors” and so it’s probably time we do the same.
The big picture
Outside Silicon Valley, there is a lot of room for new capital to back tech startups and unlock the true value of what they can achieve.
If institutional investors (custodians of capital – pension funds, sovereign wealth, insurance providers) recognises early-stage venture capital as an asset class and allocates capital at scale, the world’s best startups can reach full potential.
This enables investors and savers throughout society to benefit from the high returns available through institutional funds invested in venture capital.
Identifying the asset class
Investors are looking for an ‘alpha’ opportunity. How do you invest in venture capital with confidence that you’re going to ‘beat’ market returns? ADV is building a solution which filters out likely losers and enables focus on likely winners.
Historically venture capital has outperformed the public market while delivering an uncorrelated return to public market equities. We can now consider it an investable asset class.
British Business Bank – The Future of Defined Contribution Pensions (2019)
ADV is building a platform which sits at the heart of the venture ecosystem, connecting institutional investors; early-stage investors; and startup founding teams to enable increased amounts of capital to flow between the three.
The platform serves the needs of all three stakeholders. We ensure that no one takes priority over another.
- Back the leading tech companies with an intent to invest in their full ambition over the long term.
- Partner with leading early-stage investors in order to increase the supply of capital to them and their portfolio.
- Enable large institutional investors to engage with and capitalise the early-stage venture ecosystem.
To build a platform that truly adds value to our stakeholders, our software must enhance the operational approaches of our stakeholders and increase engagement between them.
We develop both financial and software products. All to service the mission of increasing the flow of institutional capital to the best startups.
These products are developed and roadmapped in conjunction with our partners.
- Founding teams: Founding teams struggle to raise capital from investors aligned with their level of ambition. We aim to make fundraising simpler and more efficient so they can concentrate on scaling.
- Early-stage investors: Early-stage investors struggle to raise sufficient capital regularly enough to capitalise their dealflow. We aim to simplify their access to capital, ensure their best companies are backed and allow them to concentrate on finding more.
- Institutional capital: For institutional investors in Europe, VC represents a difficult to access opportunity. We aim to de-risk VC and make it accessible for them; bring the best opportunities together; allow them to deploy large amounts of capital; and ultimately produce market-leading returns.
Progress so far
In 2016 we were backed by institutional investors to solve the challenges of investing in VC and have been working closely with them ever since. Their collective needs have been baked into the way our platform/people operate and interact with the ecosystem.
The capital was used to back companies matching our investment thesis: tech companies with potential to be generation-defining. These investments were made through our software platform to simplify fundraising for founding teams, whilst maintaining efficiency and audit trail required by our investors.
All the founders we’ve backed have incredible knowledge, intelligence and ambition. Backing them with capital and support has been truly rewarding. As primarily a Seed/Seed + investor we’ve seen the standards set by growth investors and the challenge this poses for teams looking to scale.
Our investments to date
Throughout this, we’ve also experienced the challenges faced by early-stage investors: managing ever growing dealflow; portfolio support at scale; and maximising returns for investors.
In addition, we’ve partnered and co-invested with leading early-stage investors (including seven fund of fund investments) that are aligned with our mission and share our values. Again, we’ve experienced the challenges they face in raising capital for their own funds and also continuing to back the best companies emerging from their portfolio.
A distinct need for long term capital has arisen across the ecosystem. Founders raising series A and beyond; early-stage investors raising large enough funds to cope with dealflow; and opportunity funds to back the best companies that emerge.
This under-capitalisation can be fixed whilst optimising returns.
The 2020 vision (a roadmap really… but we couldn’t resist the pun)
Now the ecosystem must work together to increase the supply of capital to ambitious founding teams. These learnings are not unique to ADV, our partners or our portfolio companies. The 2020 vision is about driving forward our platform development and to scale up our partnerships across the ecosystem.
We’re raising significant new capital from institutional investors looking to invest in Europe’s best; scaling up partnerships with the best early stage investors; continuing to back founders with ambition; and driving forward platform development.
So there’s our vision. Come and tell us about yours.