Frequently Asked Questions
What is Adit Ventures LLC?
Adit Ventures is a late-stage venture capital firm with offices in New York and California. Our business model focuses on purchasing shares from early-stage investors or employees seeking liquidity before the company has a liquidity event. Our investment objective is 3x return of capital within a three to five year time frame. We source shares from our multitude of relationships globally, as we have nearly one hundred years of combined investment experience in the asset management, brokerage and venture capital industries. We seek to capitalize on long-term secular trends in the global economy where we see dynamic areas of growth. It is in these sectors we see the best opportunities for capital appreciation and to make a positive impact on the world by improving quality of life, while generating a healthy return on our invested capital in alignment with our investors, goals and our principles.
What is the Adit difference?
Adit Ventures seeks to invest in dynamic & sustainable businesses with large addressable markets, scalable revenue models, and strong management teams with proper governance, and positive environmental and sustainability records. Our proprietary ten step research process drives our research and portfolio management decisions. All investment opportunities are studied and scrutinized for both top down (thematic and macro) fit as well as fundamental value. All of these factors are important in investment selection and portfolio construction. Stringent adherence to both top down and bottoms up factors help us avoid overvalued situations, inappropriate governance structures, and fads disguised as viable investment themes.
This discipline has helped us and our investor partners avoid poor governance situations like WeWork, companies that are controversial from an ethical/regulatory standpoint like Juul, and companies that drift away from core strengths like Uber.
Adit’s senior management has nearly a century of experience across venture capital, banking, private equity, and investment management, and invest alongside investor partners in every Adit fund. The two founders of Adit and their families have invested in venture capital and private equity together for decades. This type of investment is in our DNA and we offer investors the opportunity to invest and co-invest alongside management in a turnkey approach to diversified late stage private equity.
To date, Adit funds have had four successful exits and proper selection and timing has enabled strong returns for our investor partners.
How much capital has been raised and how much has been deployed?
Adit has raised over $150mm in assets across its AGE funds as well as its single-stock SPV’s. We have returned over $50mm to investors over the past three years with exits in SnapChat, Spotify and Lyft.
We raised approximately $25MM in AGE including co-investments which is closed and fully deployed.
For AGE III (which is active) we have raised approximately 10 million including co-investments.
Adit believes that good governance is good business. The ESG principles; environment, sustainability & governance leads us to focus on investing in businesses that improve people’s lives and the quality of life overall. This is a logical, common sense tenet of value investing, and one which makes Adit unique among its peers. ESG factors have considerable weight in our proprietary investment process.
How can I access information on AGE funds?
Investors receive quarterly statements updating them on the funds positions from our independent fund administrator. Account information can also be accessed via our client portal at aditventures.com .
Can I invest with my IRA?
Yes, you can invest with your IRA if you invest through a custodian. Please contact us to assist in the process.
Does Adit Management invest in the fund?
Yes, Adit’s team invests alongside our investor partners in every deal on the same terms and has invested over $1MM in its various funds.
Adit’s Service Providers?
Auditor: RSM US LLP; RSM Cayman Ltd.; RGNC&S PLLC
Banking: First Republic Bank; Citibank; City National Bank
Fund Administrator: Opus Fund Services
Legal: RCCB LLC; THSH LLP; Appleby BVI
How do you source your shares?
Adit buys both primary and secondary shares on behalf of investors from a global network of relationships cultivated over our one hundred years of principal investing experience.
Who is holding the shares?
Typically shares are held by the underlying target company, or their legal counsel until there is a liquidity event, when the shares can be delivered out by corporate transfer agent in our LLC documents.
How do you distribute the shares?
Following a liquidity event, investors can choose to receive shares or cash, based upon the final value of their capital account. These assets can be transferred to their bank or brokerage accounts, thereby allowing the investor to choose if and when to realize the capital gain.
How did you select your sectors and themes?
Our choice of economic sectors and thematic approach to the construction of the portfolio provides investors with unique investment opportunities. Current themes include AI & Machine Learning, Big Data, Cybersecurity, FinTech, Healthtech, IoT, Life Sciences, Media, Shared Economy and Space.
How do you choose the investments?
Adit Ventures uses a ten-step investment process incorporating its proprietary research on both quantitative and qualitative factors.
- Valuation at entry is a critical discipline, as this is one thing we control.
- Revenue growth rate drives future valuation, so is a key element to Adit.
- Margins and cash flows are vital to an enterprise’s success, and drive valuation.
- Scalability of business across various markets is a big factor in the valuation of any business.
- Profitability: A clear path to profitability is essential to any investment.
- Is it a good business model, in a good sector with long term secular trends driving?
- Is there a good management team, with depth and experience in meeting challenges, competitive threats and executing its goals?
- Does it have a good capital base, board of directors/investors and well-regarded savvy Venture Sponsors?
- Does the business adhere to fundamental ESG principles with character and integrity in its practice?
- Will the business make a difference by adding value for its customers, its employees and the community it serves, as well as its shareholders?
What is the most difficult investment decision Adit has had to make and why?
- It is hard for Adit to forego momentum in names like WeWork, Juul, and Uber. Doing so means that we miss out on gains that other funds may reap. However, investing in names like these would be straying from our process. Our process evolves but is not there so we can stray from it.
- We have found that over time, these go names that do not have the fundamental, quantitative, and qualitative factors that we require often end up fizzling out. This justifies our process in the long term, but still does not make it easier in the short term. That’s a challenge that we take on every day.
How is Adit Ventures managing through the COVID-19 crisis?
- Adit team members are healthy and safe. Adit has a business continuity plan in place, and in a crisis such as this, it incorporates a comprehensive plan for providing complete information, portfolio monitoring and reporting on an ongoing basis in all circumstances.
- In this instance of COVID-19 Pandemic, Team Adit is working closely with each other, LPs, and portfolio companies, albeit from remote locations. The team has regular meetings, communicating on a collaborative basis, working across various functions such as compliance, portfolio management, research, and reporting. Recordkeeping and other compliance activity is uninterrupted as Adit works with best-in-class third party fund administrators, bankers, auditors, and other service providers seamlessly.
- Adit has been early and proactive in reaching out to LPs, clients, family & all other stakeholders via publications, emails, telephone, and video conferences to give updates on the overall portfolio and individual names as news and research develops. Communication is critical to Adit, and if you look at our website, you will see the list of letters provided to our clients, families and friends.
- Adit remains in growth mode, even in this unprecedented time of COVID-19 chaos and uncertainty. Looking at the AGE funds and related portfolios, Adit has assessed and continues to evaluate the situation. Team Adit believes the changes going on in the world are accelerating the trends we invest alongside - themes like AI, Big data, Cybersecurity, Digital Health care, Internet of Things, Educational solutions, and nutrition/wellness are accelerating in this time of crisis and will likely never be the same.
- Fundamental strength in our portfolio names, with good balance sheets, positioning for profitability, positive cash flows and other key elements in our 10-step process such as barriers to entry and good management teams all mean we can be more secure in our disciplined approach to investing in growth.
- Specific to our portfolios, there are many factors affecting risk assets, but the overwhelming majority of the names in the AGE portfolios are thriving. Palantir had a record year in its first one hundred days of this year and as reported by Bloomberg, is on track to top $1 billion in revenues this year as their government and security related business ramps. SpaceX continues to meet milestones and is on track to realize value in Starlink this calendar year according to comments from founder Elon Musk. Decision Sciences continues to build interest among government, corporate, and maritime customers for its unique security solution. Klarna has accelerated its growth as on-line shopping is all many retailers have today, and Klarna helps both retailers and consumers. Cohesity & Rubrik are enterprise software companies seeking to provide back-up storage and cloud-based security so unaffected by COVID-19. Airbnb has seen a fall in revenues related to the economic and travel slowdown, but with a strong balance sheet and iconic brand going into this period, recent raise of $2 billion in debt, and a resolute plan to move forward, Airbnb is poised to benefit from recovery and take advantage of weakened competition. We still see a liquidity event for Airbnb likely in the next twelve to eighteen months. Valuations have come down and history tells us this is an ideal time to enter growth-equity positions.
What is Adit's $100k piece of advice?
- Always be ready for opportunities. In times like these, it is good to have capital ready to deploy – the one thing that we can control in late-stage venture is the price we pay for names like Palantir, Klarna, and Airbnb.
- We can take advantage of low hanging fruit IF and only if we are ready to do so. Great investors are able to do that – and that may be even more important than analysis. Position yourself to do the same.
How do you determine the valuation of your investments?
Adit provides investors with annual audits wherein the valuations are analyzed, confirmed and verified by independent third-party professionals at world-class accounting and valuation firms. Adit seeks to employ best practices across all elements of its business.
What are the fees investors can typically expect from Adit funds?
- Founders Circle: Half off fees on initial $25mm of capital. 1% Annual Management Fee and 10% Incentive Fee over 8% Hurdle Rate.
- 2 % Annual Management Fee and 20% Incentive Fee over 8% Hurdle Rate.
- Co-Investment: Equal to capital contribution in the Fund. Ideal for investors seeking additional direct investments, at a 2% one-time Administrative Fee.
What is the Term of the Fund investors can expect?
Fund life is typically five years; with two, one-year extensions possible. No fees will be accrued if any such extensions occur.
This is not an offer to purchase securities. Any offer to purchase securities must be made in accordance with all local and federal securities regulations, and by a private placement memorandum. All the information provided is deemed to be accurate and obtained from reliable sources. However, there can be no assurances that the information herein is correct and has not been independently verified by Adit Ventures, LLC or any of its affiliates. All investors should make their own investment decisions in conjunction with accountants, advisors and or counsel. There is a risk supplement specific to each individual company which includes information on each of the emerging growth equities we invest in, outlining the issues facing the firms. The information herein is believed to be reliable and has been obtained from public sources believed to be reliable. All information herein reflects the opinions of Adit Ventures, LLC and is subject to change without notice.
Any projections, forecasts and estimates contained in this material are necessarily speculative in nature and are based upon certain assumptions. It can be expected that some or all of such assumptions will not materialize or will vary significantly from actual results. The companies identified were chosen for general commentary and should not be interpreted as any endorsement or recommendation to invest in such companies nor is it a representation of their services provided or profitability. Investments in any companies or in any fund that Adit Ventures, LLC advises is subject to substantial risk including the complete loss of the principal amount invested. Likewise, the composition of an Adit fund may vary substantially if not completely from the investment described in this document.