An Insightful Interview with Nico Goulet from Adara Ventures: Unveiling the Secrets of Early-Stage Venture Investing



Welcome! Thank you for joining us today. Let’s start by introducing our guest, Nico Goulet, the founder and managing partner at Adara Ventures. In this conversation, Nico shares his insights on early-stage venture investing and reveals the secrets to maximizing returns, building balanced portfolios, and the drawbacks of solely focusing on “unicorns” in the venture capital industry.

Adara Ventures, as an early-stage venture capital firm, has been operating for the past 15 years with three funds totaling 180 million euros under management. Their investments primarily focus on tech-first companies, including cybersecurity, data analytics, mlops, digital health, and semiconductors. With a portfolio of 40 investments to date, Adara Ventures understands the risks associated with startups and the importance of balancing these risks to deliver returns for investors.

Creating a balanced portfolio is crucial for success in venture investing. Adara Ventures believes in configuring a diverse portfolio by considering factors such as geographic, sector, and state diversification. By selecting companies that align with their investment thesis and strategy, they aim to maximize returns while mitigating risks. This also means that not every attractive investment fits into their portfolio, emphasizing the importance of coherence and consistency in the selection process.

Furthermore, Adara Ventures follows a two-fold approach when it comes to allocating the portfolio. They believe in a combination of “pickers” and “allocators.” “Pickers” focus on selecting individual companies for their success, while “allocators” build a portfolio and allocate funds strategically to maximize returns. By shifting funds from underperforming companies to overperforming ones, they increase the overall returns of the fund.

When it comes to evaluating companies within the portfolio, Adara Ventures compares them based on investment potential, not just their success as a company. A great company may not always be a good investment if it was initially overpaid for, while an average company can become a great investment if entered at an early stage. This approach enables Adara Ventures to identify investments that have the potential to return the entire fund (known as “dragons”), rather than focusing solely on unicorns.

One difference between venture capital and private equity is the entrepreneur’s control over the capital amount they seek. Adara Ventures believes in aligning the capital raised with the company’s needs. It’s crucial for VCs not to push for higher capital if unnecessary, and for entrepreneurs to raise the required amount. However, the perception of a company’s capital needs may differ from reality. Adara Ventures emphasizes that it’s not just about raising more funds but also how efficiently the raised capital is utilized. Maximizing capital efficiency and spending as little as possible, as late as possible, will create more runway and higher value for investors.

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In this conversation with Nico Goulet, founder and managing partner at Adara Ventures, we learn the different approaches to #earlystage venture investing as he unveils the secrets for maximising returns, building balanced portfolios and why looking for #unicorns might not be the best strategy for #VCs.

#VC #venture #venturecapital #entrepreneurship #startups

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