Two rising stars in tech investment just raised $34 million to fund underrepresented and diverse founders

• London-based investors Matt Penneycard and Check Warner have closed a $34 million new fund called Ada Ventures to support underrepresented startup founders.
• Warner and Penneycard both formerly worked at Downing Ventures and have named their new fund after computer science trailblazer Ada Lovelace.
• "We're really excited to have this fund raised despite some headwinds which might have made this impossible," Warner told Business Insider.
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Venture capital's diversity problem might see a little improvement, thanks to a new fund dedicated to finding underrepresented founders.

Two London-based investors, Francesca "Check" Warner and Matt Penneycard, both formerly of early-stage fund Downing Ventures, have launched a $34 million vehicle called Ada Ventures to support diverse startup founders.

Warner is also the cofounder of Diversity VC, a group dedicated to widening access to venture from underrepresented groups. The fund is named after British female computer science trailblazer Ada Lovelace, who is credited with having written the first algorithm but was not recognised contemporaneously.

Europe's diversity issue is stark. Currently, 92 in every 100 dollars invested in Europe goes to all male teams, 83% founders are white and 82% are university educated, according to Atomico's recent State of European Tech report. In the UK, a quarter of investment committees saw no female founders in 2017, per Diversity VC.

"We're really excited to have this fund raised despite some headwinds which might have made this impossible," Warner told Business Insider in an interview. "The mission of making venture capital genuinely inclusive is so inspiring."

It goes beyond gender and education however, with race, religion, and age often issues in venture capital. Ada Ventures will focus on finding diverse founders through a programme of "Ada scouts," 50 or so local talent spotters who can recommend startups to the fund in exchange for a finders' fee and potentially further incentives.

Warner cites a network of Muslims in tech in London, Muslamic Makers, an 800-strong group of people who could be potential founders. "The idea is to flip the introduction process which often requires an introduction or prior relationships," she added, referencing the common investor practice of only investing in founders who come recommended.

Funding the future

Ada Lovelace was a mathematician and pioneer in the field of computer science, and is thought to have written the first algorithm for Charles Babbage's "Analytical Engine", an early computer. She was the only legitimate child of famed poet Lord Byron.

Warner said Lovelace was a constant source of inspiration during a tricky fundraising process with Brexit and an election just around the corner in the UK. "I would start every pitch by saying 'We could have had computers 100 years earlier if she [Lovelace] had been listened to,'" Warner said. "I spent a lot of time in meetings educating investors on why this isn't philanthropy but actually a massive market where there's money to be made."

British Business Bank is the main backer of the fund, as previously reported by Business Insider, through its Enterprise Capital Funds (ECF) programme. Other investors include US-based BlueSky Capital and Dubai based Rasmala alongside angel investors such as TransferWise cofounder Taavet Hinrikus, gaming company Supercell's cofounders, and Backstage Capital's Arlan Hamilton. The fund is also backed by advertising executive Dame Cilla Snowball, Silicon Valley law firm Wilson Sonsini and later stage funds Atomico and Inovia Capital.

Ada will focus on seed and early-stage investments with initial funding expected to be approximately £500,000 ($658,000). The plan is to make 30 investments through the fund predominantly in underrepresented companies, especially in sectors including healthcare and the future of work.

Ada has made seven investments to date, five of which the fund has led. These are Predina, a road traffic accident risk monitoring technology; Inoviv, a companion diagnostics tool; Motley, a vertically-integrated jewellery company; Ferly, a female-oriented sexual wellbeing company; Huboo, a multi-channel fulfillment service for e-commerce businesses; Polipop, the world's first flushable sanitary pad, and Juno Bio, which is working on decoding the vaginal microbiome to increase the success of IVF.

"In some ways people who feel disenfranchised think differently," Warner said. "We are lucky to have such amazing investors onboard but there are so many barriers to entry so we need more funds like Ada."