A new venture capital fund, Follow[the]Seed, is building a $50 million cash mound for second-stage funding to Australian startups.
The Sydney-based fund caters to the growing but under-resourced market of startups seeking to raise between $500,000 and $2 million.
Follow[the]Seed has already received more than 60% of its $50 million target in pre-commitments following registration in August as an unconditional Early Stage Venture Capital Limited Partners (ESVCLP) by the Venture Capital Board of Innovation Australia.
Local tech investor and fund co-founder Andrey Shirben says the ESVCLP status makes the fund attractive for local investors because it confers tax exemption status on their share of the fund’s income.
“Follow[the]Seed will fill a significant gap in the Australian investment market, where startups seeking between $0.5 million and $2 million really struggle to find investors,” he says.
“At that stage in their growth, they are too large for angel investors, and too small for first round investment, but just as startups both larger and smaller, they are every bit as much in need of capital.”
Over the next five years Follow[the]Seed will make between 30 and 35 investments with a combined total of $200 million across each of its four global funds.
The focus will be on innovative consumer internet ventures and applying a proprietary data-driven algorithm, RavingFans, to the investment decision processes.
RavingFans assesses the potential of ventures at an early stage by identifying habit-forming products and companies using rapid data analysis which determines how early adopter users interact with that product.
“Our global reach will provide Australian investors with access to diversified quality deal flow from the Silicon Valley and Israel and will make it possible for our local ventures to expand to the US and China and benefit from each of the partner’s wealth of experience and networks,” says Shirben.
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