We officially launched our second ADAP fund at SOCAP17 in October - see this blog post and this video for information about the Deal Room we hosted and how got our first two deals done utilizing our Four Hour Due Diligence process. Here’s what we hope to accomplish with this fund.
A Different Approach to early-stage impact funds
Early-stage impact investing suffers from massive inefficiencies. Learning from the 11 investments in ADAP’s Fund 1, ADAP has developed a different approach that is designed to address these inefficiencies to achieve measurable impact and provide compelling returns for investors. ADAP Seed Fund 2 will invest in up to 50 early-stage companies, each of which have an innovative product or service with high potential for growth and significant long-term social impact. Our innovative approach to due diligence - described in an earlier series of blog posts - enables us to prioritize time spent with the entrepreneur post-investment so that we can help them grow their business. This, plus the fact that we make investment terms as consistent as possible, will keep transaction costs low. We want to strengthen the Fund’s investments by focusing our time and effort on what is most important: supporting entrepreneurs to build their companies by providing structured advisory services for 18 months to each company through ADAP Advisory Services, LLC.
A healthy pipeline
ADAP maintains extensive partnerships with accelerators, incubators, investors, and others in the early-stage impact ecosystem; this gives us access to a stream of qualified companies to consider for investment. We want to position ourselves as a preferred early-stage investor, which will allow us to select the best of the best to partner with. Our experience has shown us that there is fantastic deal flow of companies needing both investment capital and support. We look forward to collecting data from this Fund that adds value for the wider sector in finding indicators of success.
A truly diversified portfolio
ADAP’s Seed Fund 2 does not have a sector focus, and we invest in companies working throughout the developing world. This allows us to build a diverse portfolio of high-potential companies that are willing to take big risks to have even bigger impact. While early-stage investing in emerging markets is inherently risky, we believe that our approach mitigates country-specific and sector-specific risk. And our Advisory Services offering further de-risks each investment by strengthening the entrepreneurs we partner with.
Partnering, not just investing
Early-stage entrepreneurs have access to a wide array of mentors and other forms of advisory support. But most founders do not receive structured, consistent support to help them grow their businesses. Our approach to filling the “pioneer gap” addresses this need through the ADAP Advisory Services offering, which delivers consistent support to every company we invest in. We believe that this integrated approach gives our portfolio companies the best chance to grow in scope and measurable impact, while delivering financial returns to our investors.
Holding ourselves accountable
Everything ADAP does is guided by our core values of integrity, innovation, implementation, and empathy. We incorporate a gender lens and seek to recognize and address implicit bias. To hold ourselves accountable to our values and try to root out implicit bias in our approach, we have created a Guidance Council of diverse professionals whom we respect. They provide structured feedback and insights, sharing their inputs from a variety of perspectives.
Join us in creating A Different Approach
ADAP is working to continue to push early-stage impact investing forward, and we look forward to working with like-minded partners who want to help create an effective ecosystem in the emerging early-stage impact investing sector.