5 Mar 20230 Comments
Adrenaline Fund marks its second full year of investing as it completed its 2022 Vintage. Adrenaline Fund, was founded in 2020 as part of the multi-fund Archangel Network of Funds, uniquely applies a hyper efficient passive model, fuelled by our startup and angel ecosystem, to early stage investing. .
We are fuelled by a remarkable group of Limited Partners who are accredited investors interested in our Purpose and coupled with the high return prospects delivered via a highly diversified portfolio
The entire team at Archangel Network of Funds, and the Adrenaline Fund, is driven by a core Purpose, developed over years of building and supporting early-stage companies. In a nutshell, we want to directly impact Canada’s economic prosperity into the future by:
- Investing in Entrepreneurs who are building the future of the Canadian Economy through Innovation,
- Lowering barriers for accredited investors to participate in, and gain more experience, in early stage investing, and
- Accelerating, and directly supporting, the Canadian Angel ecosystem while enabling Canadian startups to scale up to global leadership.
In this post, I’ll further explore our unique model, an exceptional team, what we’ve done so far, and propose a future where this impact can grow many times larger than our results to date.
The Adrenaline Fund team has unparallelled experience in building companies, mentoring startups and selecting and investing in the next generation of Canada’s tech leaders but at the early stages. In addition to myself, our team includes Benton Leong and Amber French, and is ably complemented by Venture Partners Mike Janzen and Althea Wishloff.
The Archangel Network of Funds model involves a team with even greater breadth, many of whom are pictured above. Years of strategic business leadership, coupled with some of the most sophisticated selection and investment savvy, are a big part of what makes Adrenaline unique.
The 2022 vintage portfolio, reflecting a broad diversity of sectors and stages, comprises 10 great companies:
- Technology: 3
- Medical Technology: 3
- Industry 4.0: 3
- Climate: 1
They join the 10 companies already in our 2021 Vintage, and listed in our post describing the results of our 2021 Adrenaline Vintage: Adrenaline Fund Pumps a High Energy First Year into Early Stage Investing.
We are excited to welcome the following companies to our Adrenaline Fund portfolio, reflecting the powerful value-adds of the Angel Ecosystem we support:
MODEL AND WHY IT WORKS
As mentioned, we believe that the Adrenaline Fund model and thesis is unique in Canada, by fusing the power of a passive approach (like an ETF in the public markets) to the early-stage Angel investment ecosystem.
First of all, the investment decision is designed to support the existing Angel ecosystem through a set of rules to govern the investment process. At a high level, the Rules, shared with LPs, stay largely the same but are tuned in response to changes in the ecosystem. Thus, rather than active decisions, the focus is on tuning the rules and working to ensure that the angel and startup ecosystem remain of high value.
A colleague questioned the wisdom of, such a “blind investment process”, suggesting it is a bit crazy and perhaps akin to wagering on slot machines. Nothing could be further from the truth. The secret sauce of Adrenaline is the collective value-add of the ‘qualified lead investors’ who mentor and provide ongoing strategic oversight (e.g. as a board member or board observer).
In fact, research by Brian Smith, Professor of Entrepreneurship and Finance at Wilfrid Laurier University along with global tech investment trends studied by BDC Ventures, shows an almost 25 times multiplier of success for such angel-backed companies. In summary, in generating larger ‘Scale Up’ companies (with valuations reaching US$250M), Canada has a dismal 0.3% track record (or 1 in 300) compared to the 2.5% that reach that scale in the US (or 1 in 40). Within the Angel ecosystem, specifically GTAN where the study was conducted, an amazing 8% of investee companies reached the $250M threshold. Unpacking the reasons for this incredible out-performance would include factors like: the GTAN selection process, the ongoing value-adds of experienced ‘deal leads’, the strength of the Toronto-Waterloo Tech Corridor ecosystem where GTAN focuses, and syndication with other capable seed/angel stage investment funds.
Further, he model is structured to be open and accessible to the greatest number of Accredited Investors by having the aggregate investment staged over 5 equal annual cash instalments (say $250,000 at $50,000 per year). Since the fund is structured to segregate ‘Vintage Years’, and each Vintage aims to invest in 9-10 companies per year, this ensures a diversified portfolio of about 50 companies at an extremely affordable entry point. The Vintage structure allows new LPs to join once at the beginning of each year, thus growing the maximum amount of each Adrenaline investment and helping startups even more.
Most importantly, the fund attracts investments from individuals new to angel investing since it provides a simple and time efficient path potentially learn more. Quite simply, we are unlocking new capital to support Canadian innovation.