242. Structural Disadvantages in Venture, Investing in the “Overlooked,” and Open-Sourcing the VC Fund Raise and Investment Playbook (Check Warner)

242. Structural Disadvantages in Venture, Investing in the "Overlooked," and Open-Sourcing the VC Fund Raise and Investment Playbook (Check Warner)
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Check Warner of Ada Ventures joins Nick to discuss Structural Disadvantages in Venture, Investing in the “Overlooked,” and Open-Sourcing the VC Fund Raise and Investment Playbook. In this episode, we cover:

  • Background / Path to Venture
  • The thesis at Ada Ventures
  • Is it tough getting the up-rounds from Tier 1 VCs when the profile of the founders doesn’t look like the standard, obvious profile that’s been funded for the past couple of decades?
  • You look for founders and markets that have been mis-priced… what are the three that you believe to be underpriced?
  • Novel scout program — how many scouts and who are they? How did you recruit them and how are they incentivized?
  • Talk about your recent fundraise…
    • How did you determine how much to raise?
    • Walk us through the timeline of the fundraise.
    • What resonated most w/ LPs?
    • What was the biggest surprise?
    • How did you create urgency and get LPs to move from a maybe to a yes?
    • What will you do differently next time?
  • You and I have discussed your seed investing framework — how you make decisions on investments. Can you give us the broad strokes?
  • You have an incredibly transparent approach… from your fundraising to your sourcing to your evaluation. Are there any concerns about revealing too much about your strategy?
  • You publicized your investment process and shared some of your funnel data. Have you noticed any differences or changes (relationships with founders, LPs, brand, PR) from when you shared the inner workings?
  • Many issues w/ racial and gender diversity in the news… what message would you like to share re. Diversity?
  • “3 Data Points”
    • Let’s say you are approached to invest in a consumer user-growth company with 30k DAUs, and has a 10% WoW growth rate for the last 4 months.
    • Catch is you can only ask for 3 data points to make your decision.
    • What 3 questions do you ask for?

Guest Links:

Transcribed with AI

Intro 0:02
welcome to the podcast about venture capital, where investors and founders alike can learn how VCs make decisions and reach convictions. Your host is Nick Moran. And this is the full ratchet.

Nick Moran 0:18
Check Warner joins us today from London. Check is a partner at eight ventures, an early stage firm that invests in overlooked founders and markets. She’s also the co founder of diversity, VC, a nonprofit promoting diversity in venture capital. Prior to launching ADA check worked at both downing ventures and Sarafem. Capital. Check. Welcome to the show.

Check Warner 0:38
Thank you so much. It’s amazing to be here.

Nick Moran 0:41
No, it’s so nice to have you. So tell us a bit about your background and your journey to ADA. Yeah,

Check Warner 0:46
so I have a slightly unusual background for VC. I started my my career in advertising. And then I came into venture capital after that, what sadly not that unusual about my background is that I had a lot of privilege growing up, I went to a private school, I grew up in London, I went to Cambridge university. I studied English literature before going into advertising. I was always very interested in technology and leadership. And I thought that working in venture capital would be an amazing way to kind of apply the things I’d learned in advertising, but also kind of work with amazing entrepreneurs and build the future and help them realize their visions. So I was quite fortunate to join a startup fund within an asset management firm, which was downing ventures. And whilst there, I co founded a nonprofit, as you mentioned, called diversity, VC, which is all about promoting diversity and inclusion in venture capital and tech. And that experience really, for me highlighted just how much opportunity there was to invest in diverse underrepresented talent. And that’s what led me to, along with my partner, Matt, founding Aida, back in

Nick Moran 1:53
the creative agency days, did you know that you wanted to work with tech startups? Or did you kind of stumble upon it?

Check Warner 2:01
I did always want to work in tech. And in fact, I actually started when I was at university, I went along to the first recruitment day for entrepreneur first, which is this amazing accelerator, which is all about people forming companies and becoming entrepreneurs. But I was encouraged by kind of parental pressure and probably my own sort of feeling of I need to get a proper job before going into the tech nology industry. So that’s what I did. I joined a graduate scheme, initially. And then I kind of found my way back into tech and have reconnected in a different way to if further down the line.

Nick Moran 2:36
Sounds familiar. I remember many years ago, wanting to go into tech, but worrying that it would disappoint some people around me. So I sort of had a delayed entry on into tech, but check. Tell us a bit about the thesis at Ada.

Check Warner 2:52
Yeah, so Ada, we believe that talent is evenly distributed all over the world. But at present opportunity is not. We believe that the venture capital industry is missing a massive opportunity. And it’s not investing in those groups of really talented people at the moment. So the mission behind ADA is about unlocking that overlooked underrepresented talent and investing in the people who have been underserved by venture and also in companies that are building for markets that have been overlooked and underserved by previously venture backed companies. So that’s what we’re doing with ADA and the fund is named after a woman called Ada Lovelace. And Ada Lovelace. For those who don’t know, her was this amazing woman who was born in 1815. And she was sort of one of the early kind of mathematicians that worked on something called the Analytical Engine, which is one of the first kind of prototypical machines that preceded the computer. So she coined the term algorithm. And she, you know, predicted that computers would one day be able to write music, but she was completely overlooked and never really recognized for the talent that she had. And we believe there are people like Aida out there today, exceptional visionary people who have not yet had the opportunity to make their contributions to the future of the way the world’s going to be. So those are the people we’re trying to fund at Ada.

Nick Moran 4:13
How do you define the overlooked specifically?

Check Warner 4:18
Yeah, so it’s pretty broad. They include women. They include people from ethnic minority background, so black founders, Asian founders, other ethnic minority backgrounds. That includes the over 60s population. They include people from lower socioeconomic backgrounds, neurodiverse founders, founders with disabilities, LGBTQ plus parents, people who don’t live outside living in the main hubs. So it’s very broad. And really, it’s based on the statistics today that you look at which show that 95 to 99% of capital is invested in white male founders that went to Do certain kind of set of colleges that come from certain sort of cities or live in certain cities? And we’re trying to invest outside of that?

Nick Moran 5:09
Very good. And do you find that it’s been tough getting sort of the upper bounds and getting interest from tier one VCs, when maybe the profile of the founders that you guys are investing in doesn’t look like maybe the standard and obvious profile that’s been funded for the past couple decades?

Check Warner 5:27
Isn’t one to say we’re so early in this with ADA, I mean, we literally only launched in December. So we don’t really know how founders will play out with those series A funds yet. But it is certainly a big risk. And it’s probably the biggest risk that we have, within our strategy is that we will invest in these amazing founders that we really believe in, but the rest of the market, the rest of the industry won’t see the potential that we see. So a big part of our job is about helping those founders present their story and present their company in ways that those VCs can digest and get excited about. But also, I think we also have to work with the series A funds themselves to help to educate and share the information about these overlooked markets and these overlooked founders and why there’s such an amazing opportunity that they’re missing. And one of the ways that we’ve done that is actually some of our LPS themselves are those series A funds. So a Tomoko in particular, which is a big European fund, it’s actually an LP in Ada, which is great thing because it means that we can put our founders in front of Tomoko, we know that atomica will definitely take a look at them, you know, engage with them properly and kind of hopefully, fund some of them in the future.

Nick Moran 6:40
Very good. And, you know, what are these main sources of founders or markets that are mispriced? I know that in the past, you’ve talked about three main sources of kind of underprice assets. I think you’ve touched on a few of them already at a high level. But you know, fundamentally, what do you think are these these three sources of underpricing?

Check Warner 7:01
Yeah, I mean, there are so many markets, we’ve picked three for this first one, but there are so many more that you could look at. But the three that we’ve picked, our one is the aging population. So the over 65 segment is the fastest growing segment of the global population. But yet very few tech companies have actually been built for the needs of that group. Women is the second one. So women are 51% of the population. And again, so few of the needs that women have have really been met by venture backed tech companies. In the past, I think more money was invested in the vaping, startup Jew than was invested in the entire category of femtech. That’s just one example. Wow. So that’s the area that we’re investing in heavily. And then the third is customers under the age of 23. So that’s kind of customers between the age of seven and 23 years of known as Gen Generation Z. And we are investing in those companies that are targeting those people, because we think that the needs of that population over the next 10 years are going to be much greater and currently not reflected in what’s getting funded today.

Nick Moran 8:12
Got it? Very good. And you and I have talked about sort of this, this sourcing strategy that you’ve put together a data, you have a novel Scout Program, from my standpoint, can can you kind of give us the broad strokes on on the Scout program and who the constituents are?

Check Warner 8:29
Yeah, so as you all know, and many of your listeners will know, most Scout programs were formed with kind of angel investors in mind. And the famous example being kind of Jason Calacanis, with Sequoia and people who already were in the flow of deals and already had their own money, you know, these venture funds kind of gave those people a bit more money. Instead, we’ve decided to start from people who are not investors, from people who are actually leaders of diverse underrepresented communities, who are kind of at the grassroots level, and have amazing connections into diverse founders, but may not know anything about angel investing may not know anything about venture capital. And the what we’ve done is we’ve actually built a network of 50 plus of these people who lead these diverse underrepresented communities. And they’re all amazing, dynamic, entrepreneurial people and the communities they represent number over 10,000 underlying entrepreneurs. And the way we work with them is we say to them, you bring us companies that you think might fit the aid or strategy. And if we invest in those companies, we will pay you in two ways. We will give you an upfront 5000 pound finder’s fee. And we will also give you a split of the carried interest that that company will generate if it creates a venture return. So that enables us to sort of incentivize them kind of in an upfront way and reward them fairly for their time if we invest but also bring those people along the journey. so that they learn more about venture capital funding, and they can, you know, in the future, hopefully create their own funds. Because the idea of this is that we don’t just want this to be one eight of ventures doing this, we actually want to create a whole ecosystem of angel groups and other funds that are all investing in and seeing the opportunity in diverse founders.

Nick Moran 10:21
Really interesting, really, sort of equitable and generous program. I mean, for for 5000 pounds plus, Carrie, I might have to start sending you deals, Jack, bring it Oh. Okay, let’s, let’s transition a bit, I want to talk about your fundraise, you were quite transparent and shared a lot about the raise of your first fund with your partner challenges there in I know that you were in the states quite a bit for a portion of that raise. You know, let’s just start at the beginning. How did you determine how much to raise for fun one,

Check Warner 10:54
honestly, we didn’t know much about raising an LP fund before we started. And we learned a hell of a lot along the way. And that’s why we wanted to transparently share a lot of those lessons. But we talked to a lot of people in the early stages, particularly experienced LPs, who let us know that about 30 companies was roughly the right kind of portfolio size for the ownership that we were targeting. And then, you know, thinking about kind of the right size for a fund in terms of the reserve ratio, and the stage that we wanted to operate at, which is precede kind of led us to 30 million being the right number. So we think of precede has been about 500k round in the UK that isn’t in around Europe. And so we wanted to invest in about 30 companies 500k kind of average check if that was our check size, and then about 50% reserve rate leads us to a 30 million fund, so was triangulating a lot of that math kind of backwards and portfolio construction to lead us to that number. But we certainly kind of learned a lot along the way. And in fact, we first started with sort of double that font size. And then we went at certain points, you know, we can’t raise that much, we’re gonna have to do half that font size. So we we definitely moved the number around a bit.

Nick Moran 12:10
And it will walk walk us through the timeline, right? When did you first sort of kick off the process? And you know, how long did it take to close out the 30 million?

Check Warner 12:22
Yeah, I mean, it took us about 17 months. So we started in June 2018. And we finished in 29th of November 2019. And it was really the first sort of stage of the process was defining the strategy. And talking to people getting input, we were lucky enough to have amazing input in the early days, we were actually based in borders and capitals office, which was brilliant, because it gave us a proper kind of infrastructure. And it wasn’t just kind of us in our in our bedrooms thinking about this. And then we set out and did a huge number of meetings, we met sort of hundreds of LPs, either virtually or in person. And you know, over time, kind of built that number up slowly. But one of the things we were very fortunate to have kind of relationship with is we have a fund in the UK called The British business bank, which is a fund that funds a lot of the venture capital firms here and they have an amazing emerging manager program called the Enterprise capital fund. And what they do with that program is they actually anchor new fund managers who were setting out to raise their first fund. And we received funding from that program. And that really gave us a kind of boost and allowed us to kind of close out the rest of the fund. And you know, they run a substantial check. And they have a very kind of structured and clear process. So that was an amazing factor in US actually being able to get the fund away. And we’re very lucky to have got the fund away, because obviously we’re in the middle now talking as there’s a global pandemic going on. And we closed the fund in late November. If we had not managed to close the fund until January we we might well not have been able to close the fund at all. Good timing check.

Nick Moran 14:09
So it sounds like you had an institution, at the least was where the rest of the LP Max was at family offices, high net worth bond funds.

Check Warner 14:20
Yeah, we had some amazing actual VC funds like atomica that I mentioned, which has been hugely helpful. We also had some excellent, excellent entrepreneurs. So we had the founders of Supercell, investing founder of TransferWise. So that gave us a huge boost and then otherwise it was family offices and individuals. Got it.

Nick Moran 14:41
And what did you find resonated most with LPs, the LPS that did come out.

Check Warner 14:47
I think LPS you know a lot of people who are setting out to raise funds don’t necessarily know this, but LPS often look very broadly across the entire kind of global landscape of lots of different things. They could be investing in one The day there’ll be investing in a kind of cattle farm in Australia, the next day, they’ll be investing in an equity fund in Brazil. And so they don’t spend lots of time necessarily in the kind of nuances of venture capital. But when we pitched them, the opportunity to invest in an ecosystem that was sort of had headroom effectively hadn’t got enough capital for the amount of opportunity there was to build tech companies that really resonated, because that’s what LPs are looking for. They’re looking for these opportunities to make massive capital gain over a 10 year time horizon. So we pitch them the opportunity of investing in venture capital in Europe. And that was, you know, we had mixed success there. But the people who got that really did get it. And then we had a second layer of that kind of opportunity of headroom, which was in this diversity story in these overlooked markets. Because intellectually, people understood this point that actually, talent is everywhere. It is evenly distributed, there’s no one that has a monopoly on talent. So if these groups are underfunded, then there’s going to be an opportunity to make money when they are properly funded. And they kind of can build, you know, the next generation of tech companies. So I think that these sort of arbitrage opportunities, were the points that resonated most clearly with LPs.

Nick Moran 16:19
Was there a way that you tried to create some urgency and get LPs to you know, move off the fence move from a maybe to a yes.

Check Warner 16:29
That’s one of the hardest things in fundraising, particularly when it comes to LP fundraising. And I heard the other day from an LP that they take, on average, two to three years, before they invest in a manager, once they’ve known the manager. That’s the average. And we were told by several people that they would only invest once we’ve been investing together as a team for 10 years. So you know, this is seriously long time horizons. And the temptation is, as an LP, I can imagine, just to sort of wait and see and wait and see and wait and see. So creating urgency was really difficult, particularly as with the program that I mentioned, that we got funded by, we weren’t actually able to do a first close. So we couldn’t generate any of that momentum with the first flows and markups in the portfolio and the IRR and everything else. But what we did do was we actually hosted an event, which was effectively our annual conference before we even had a fund. And myself and my partner, Matt, were very into this idea while we were fundraising of visualization, and of kind of act as if so we thought, you know, why don’t we act as if we already have a fund, we already have management fees, we already can pay for these things. And let’s actually host our AGM. And so we did that. And we did it with the help actually of a Tomoko who helped us pay for this to happen. And that gave us such an injection of momentum, because suddenly, our prospective LPs are committed LPs, our founders, and our scouting network, they were all in the room together. And it just brought the whole philosophy of ADA to life.

Nick Moran 18:06
That’s awesome. I love it. You know, what was the biggest surprise to you during fundraising?

Check Warner 18:11
I think it was really how conservative the LP community was, and kind of knew it intellectually. But some of those comments about we don’t invest until you’re on your third fund together, or we will never invest in a new manager. Or, you know, we only invest in people when they’ve already co invested with other people we’ve already invested in, we’re quite baffling to me, particularly, because I spend a lot of time thinking about diversity. And all those things are terrible for diversity. If you only ever invest in people that effectively you already know, or the people you already have invested in already know, then you’re not going to give yourself the opportunity to invest in someone who’s coming at things with a very different approach. That was kind of surprising and frustrating. What

Nick Moran 19:01
do you think you’ll do differently next time around?

Check Warner 19:05
Many things, I think we will probably do sales training, because I think, you know, we could have invested in that a bit earlier on. I think we will do more visualization of a bit like what I was saying about the event that we ran just starting to behave as if we already had a fund before we had a fund. I think one of the most effective things we did was actually invest in companies as we went. So we invested 2.2 million pounds income in 10 companies as we went along. And that really brought to life our strategy for our LPs. Yeah, so so many lessons learned.

Nick Moran 19:44
You and I have discussed your approach to making investments, this seed investing framework. Can you talk about how you make decisions on on new investments?

Check Warner 19:54
Yeah, I mean, the seed investing framework is not rocket science at all. It’s a lot of the Normal questions that you would ask as any other VC. And I’m sure that other VCs have versions of this process. I think what’s possibly slightly different is that we’ve actually published it. And we use it to write our investment papers as well. So we keep a consistent set of questions across the entire end to end of the process. And the reason we came up with this is because we looked across other industries and surgery in particular, and I’ve spent some time reading Atul Gawande, who wrote this book about checklists in, in health care, and how having checklists and having defined processes, reduces bias reduces the likelihood of making mistakes, and increases the quality of decision making. And venture capital is ultimately all about amazing decision making. And so we thought, any way in which we can increase the quality of our decision making makes a lot of sense. So we decided to publish that seed investing checklist. And we found that founders has really, really resonated with it, because so much of venture capital is such a black box. And here we are saying you not only is this you know, what we’re going to be evaluating you against, we’re actually gonna be writing our investment paper with these very same questions. And here they are, you can see them.

Nick Moran 21:14
Is your decision democratic? You know, do you and Matt have to come together on a investment decision? Or if you have differing viewpoints? Can you still do do the deal

Check Warner 21:25
with just two partners, and we debated this actually quite a lot between us while we were considering how he sets up the fund, but we’re 5050 throughout. And everything we do is designed to be completely equitable. And we feel that we have to agree before making a decision. Because actually, if one of us can’t persuade the other one, that this is a good idea, then it’s probably not a good idea.

Nick Moran 21:50
And are you leading most of these precede investments? Are you co investing? You know, what’s the breakdown there?

Check Warner 21:57
Yeah, of the investments we’ve made, so far, we have led all but one of them. So yes, I mean, the opportunity for a leader is to be a lead investor, in an ecosystem where there’s not many lead investors that precede. And there’s actually just not very many funds that precede. And again, that was one of the things that resonated quite a bit with LPs, because, as you know, from being in the US market, the micro VC landscape is quite well established. There’s something like 100 Micro VCs now, whereas in Europe, there’s a handful. Was

Nick Moran 22:28
it tough for you guys to get to conviction on leading these deals and pricing them and doing all the diligence, you know, early on, I

Check Warner 22:38
mean, it’s, it’s what we’ve been doing for the last five years to get there. So man, I kind of are in this fortunate position where we have been investing together as a team for the last five years, and we know each other incredibly well, we kind of know, what we’re looking for, we’ve developed a model around the characteristics of founding teams that we’re looking for, we’ve got these kind of five qualities that we’re seeking, we know with our seed investing framework, kind of what characteristics of companies we’re looking for. So I mean, it’s an ongoing process all the time. And we’re constantly trying to improve that. But yeah, I think when we get to conviction, we feel pretty confident. Yeah.

Nick Moran 23:16
What are the five qualities for founder’s that you’re looking for? So

Check Warner 23:20
this is based on trying to kind of move away from looking at your background or where they went to school or where they found a companies before. And so we looked at the best founders we’ve ever backed. We also looked at founders in in the public domain and what qualities we felt they had. So they are leadership. You know, can they lead teams? Can they hire people, humility, which is a slightly unusual one, which a lot of people have questioned again when we were fundraising. But we feel that it’s really important that founders are humble and can listen to feedback from customers from their employees from their investors. commerciality, that’s something that we haven’t always seen in founders that we’ve backed before. And actually, they really fall down if they aren’t able to sell their product. Mission to they have to have some kind of external or internal mission coming from somewhere that really drives them on that’s going to kind of get them through. And then the final one is relentlessness. So that’s kind of akin to grit. And that’s, again, something that we’ve learned through some experience of backing founders, but they haven’t always had that. So again, it’s not rocket, rocket science, any of this but these are some qualities that we have established as being the ones that in balance are most effective to great founding teams.

Nick Moran 24:43
Love it. You know, you’ve been so transparent from the beginning with your approach, whether it be from from fundraising sourcing your evaluation process. Has there ever been any concerns that you might be revealing too much about about your strategy?

Check Warner 25:00
I think, you know, imitation is the serious sincerest form of flattery, I think that there will be people who lift elements of what we’re doing. And and that’s okay. To be honest, I think that that forces us to keep innovating and keep getting better and keep adding new ideas into it. I think something that we’ve learned along the way is that authenticity in any of the things that you do matters massively. And it’s quite clear to LPs and founders and, and others that if you’re doing something, and it’s not authentic, that comes through. So, you know, I think we prefer to be transparent and open and take the kind of risk that other people might copy us. Has

Nick Moran 25:44
that impacted any of your relationships positively or negatively with, you know, major stakeholders?

Check Warner 25:52
So far, it hasn’t. And I think, I suppose we see the bigger winners being this world in which other people do copy aider and actually, that creates more funds that are interested in investing in diverse founders. And then that helps with our companies getting funded by other funds, and the entire kind of rising tide raises all boats. So it’s part of our kind of process that we actually want other people to, you know, lift and copy bits of what we’re doing with ADA, and we want that to be more fun to like us.

Nick Moran 26:24
Good. So I do want to transition a bit and talk about diversity, VC, you know, there have been many issues with with racial diversity, gender diversity, especially in the news lately. Tell us about your efforts in goals with diversity, VC?

Check Warner 26:41
Yeah, well, the best VC is a nonprofit is dedicated to promoting diversity and inclusion in venture capital and tech. We started out just in the UK, we’ve now done work throughout Europe, and we have a US branch as well. And we do kind of four things, we collect and publish original data, shining a light on what’s going on, we help young people get into the industry through an internship program called Future VC. And that’s now in its second year, we help VCs themselves to be more inclusive in the way that they operate. And then we help entrepreneurs from diverse backgrounds access capital, the horrific killing of George Floyd, in the last few weeks has prompted a long overdue reaction from VCs and the tech community. And finally, I’ve experienced that people are waking up to the reality of the fact that racism exists within venture capital, that there are huge structural barriers to a lot of different groups to accessing capital. And, you know, those barriers are particularly acute for black founders, for black female founders. So I think it’s been encouraging actually, to see how much more interest and engagement there is, with diversity VC, you know, over the last few weeks and months, but I’m really hopeful that we will see a much, much more, you know, action, you know, because that’s what’s missing still is that people are talking about it, people have published a sort of statement on Twitter. But actually, what they haven’t done is said, we are ring fencing, X number of dollars, or X percentage of our fund to invest in diverse underrepresented founders, what they haven’t done is said, we’re really designing our whole investment process, to remove warm introductions, and to actually allow us to be more accessible to diverse founders. And I really hope that this long overdue conversation actually results in some of that action.

Nick Moran 28:36
I couldn’t agree more. And I, I worry, you know, I’ve found that there’s a whole group of professionals in our industry that are paralyzed, they don’t know what to do. Maybe they’re supporting the conversation, but they’re not really participating in it. And then there’s, there’s a group that are making some really drastic adjustments. And I just worry that there’s a lot of folks that don’t know, you know, how to make sort of incremental changes, and moves in the right direction over time. Maybe we could do a better job of getting folks on the podcast, like yourself, that have, you know, sponsored programs and put together initiatives to, to help professional investors get more involved in promoting diversity.

Check Warner 29:20
Yeah, and I’d love to help with recommending this some incredible people who I think would absolutely jump at the opportunity to have this kind of platform. I think some of the problem is fear. You know, people are really scared of saying the wrong thing and doing the wrong thing. But it’s kind of not good enough. I think you’ve got to be prepared to get things wrong, and to say something that maybe doesn’t work out as long as you’re listening and as long as you’re doing it from a constructive place. I’m sure that Matt and I will get a lot wrong with ADA, but you have to be prepared to engage in taking action and you doing these things otherwise we’re never Gonna make progress on this topic?

Nick Moran 30:02
Yeah, we recently had Brian Hollins on the show and one of the founding partners of black VC. And it made a really good point around mentorship, and how a lot of in this case, you know, a lot of young black individuals just don’t have access to the same types of successful people in their lives. And it made me think that, you know, I’ve had so many mentors and so many mentees over the years, and often they look a lot like me. And so I think one of the small things we’re going to do as a firm is to start cultivating mentee networks that are very diverse, you know, giving some folks that that don’t have access to to a whole lot of mentors, giving them you know, direct access on a regular basis to, to folks that can help them.

Check Warner 30:50
Yeah, I think that would be brilliant. But I think, you know, Monique Woodward also said on that, you know, amazing, we won’t wait, yes, kind of discussion that the black founders are over, mentored and underfunded. And I think that does exist as well. And I think mentoring has to come with financial support. Getting people need capital to actually deploy in their communities, empowering people, as angel investors, empowering people, you know, with money to get on courses and to level up as well as the mentorship. Jack,

Nick Moran 31:25
I’m gonna put you on the spot. This question is called three data points. Let’s say you’re approached to invest in a consumer user growth company. And this company has 30,000 da use, let’s say they’re growing 10%, week over week, for the last four to six months in the catch is you can only ask for three specific data points in order to make your decision. Now, of course, this is not how investing works. But what three data points would you ask for?

Check Warner 31:54
This is a hard question. You know, VCs love data, and just being able to only pick three data points was quite difficult. But I think I’ve been thinking about the Rahul Vora question, which I think is a very good question, because actually encompasses a lot more data points. So he designed this idea of kind of product market fit and this question of what percentage of your users would be very disappointed if they could no longer use the product next week or tomorrow? And I think that’s a great question, because it encompasses stickiness encompasses product love, it encompasses kind of where the product sits in relation to competition, because if a high proportion of your users will be very disappointed not to be able to use the product again tomorrow, then you know that those users are engaged and that they’re finding something in this product that they’re not able to find elsewhere. So that’s the first question. The second question I’d ask is, it’s great, they got this growth, but what percentage of the growth is coming from organic sources? By not paid for traffic versus paid for traffic? And to really understand kind of what the drivers of that growth? Is? Is it actually virality? Are people telling each other about it? Or are they just buying users? And then the third question I’d ask and this is probably more of an ADA specific question. But we really are looking for opportunities that could reach a billion people, we really want to be investing in markets that are hugely impactful. So I would want to know, you know, what the market sizes are, what the kind of total addressable number of potential users were for this product.

Nick Moran 33:34
Very good. I like it that first metric by roll it almost feels like that’s the new NPS. A lot of people are noticing the power of, of that one question.

Check Warner 33:46
Yeah, I found that founders have really resonated with that and have adopted it in their own companies. And I think it’s, it’s sort of bought that metric to life in a more sort of tangible and sort of emotional way with users. So I think it’s great.

Nick Moran 34:04
Check, what resources have you found particularly valuable that you would recommend to listeners?

Check Warner 34:08
Lots. So I love the femme street newsletter, Sarah, Nick NorCal. It’s all about female founder businesses, well worth checking out. I will say love Azim as ours exponential view. I recently read Arlen Hamilton’s book, it’s about damn time, Arlen Hamilton is one of our LPS Ada, but I’m not just saying it because of that. She is amazing. And her book is really fantastic and very sort of actionable. For founders. I really like the book Thinking in bets by Annie Duke. It’s all about decision making and how do you kind of make sure that you can use feedback loops to optimize your decision making and the right feedback loops, and then I love podcasts, so obviously the full ratchet, but also the 20 Minute VC and I love invest like the best as well.

Nick Moran 34:55
Awesome. Check. What do you know you need to get better at many

Check Warner 34:59
things. I have no problem saying no to great and exciting opportunities. And I at the moment I’m working on ADA obviously is a full time partner, but I also am running a nonprofit. So that takes up quite a lot of my time. So I need to get better at saying no to things as they come through. And I think I also need to get better at saying no, more meaningfully more quickly to founders, if I don’t think they’re a fit. And I think the temptation is often to find out a bit more and engage and because it’s fascinating meeting founders, but it’s much kinder to come back. And the second best answer is a quick No.

Nick Moran 35:43
And finally, what’s the best way for listeners to connect with you and follow along with Ada?

Check Warner 35:49
Ada, just Ada ventures.com is our website. And please do check that out. We have a kind of open submission and our emails are on our website, so you can email us. And then Twitter is also a good way of contacting me. So I’m at check Warner on Twitter. Awesome.

Nick Moran 36:05
We’ll check Always a pleasure speaking with you. You know, I applaud all the efforts that you’re you’re doing in the space to promote diversity and best wishes with the with fun one. Thank

Check Warner 36:15
you so much. Looking forward to catching up about it. And hopefully you can keep me accountable for some of the things I said I was going to do.

Nick Moran 36:23
I think me and many others will. Awesome. Thank you so much check

that we’ll wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest confidently thanks for joining us