Sydney Seed Fund aims to invest in 20 early stage tech startups with about US$95,000 for each company.
When things are not moving forward, you need to give it a kick. This is what the recently launched Sydney Seed Fund hopes to do: spur the startup ecosystem in Sydney by focusing on companies in the seed stage.
Founded by a trio of experienced startup entrepreneurs, the Sydney Seed Fund aims to invest in 20 early stage tech startups at the seed stage with approximately A$100,000 (US$95,000) of funding for each company. According to the press release, the fund’s creation is an outgrowth of the rapidly evolving landscape of startups, incubators and accelerators popping up all over Australia.
We have all seen the signs that there is a lack of pre seed/seed stage investments in Australia: several funds were set up and new rounds were raised earlier this year, notably Blackbird Ventures (A$30 million fund (US$28.2 million), invest in bigger cheques), Pollenizer (raising A$5 million (US$4.7 million), invests in seed stage – A$200,000 (US$188,200)) and Adventure Capital (A$20million (US$18.2 million) fund size, invest in seed and Series A stage). While the local ecosystem in growing, with new catalysts such as co-working spaces and startup centric workshops educating new entrepreneurs sprouting out, there is definitely a need for the growth of funding in the seed stage to support this development.
This is where Sydney Seed Fund comes in. The fund will invest between A$50,000 (US$47,245) and A$150,000 (A$141,150) in 20 companies over the life of the fund for a total investment of A$2 million (US$1.9 million) The fund size falls within the seed stage amount, an investment sector which is currently underserved in Sydney. Typically, at this stage, startups rely on personal sources of finances or seek capital from “friends and family” sources for financing, “which is usually limited,” said co-founder Garry Visontay.
Garry’s statement has its grounds: according to the Startup Genome project which conducts annual studies on startup ecosystems worldwide, startups in Sydney raise 59% less capital than startups in Silicon Valley. According to the same report, funding sources in Sydney are skewed towards self-funding, friends/family and incubators, and are significantly away from super angels and VCs.
The Fund has chosen to target companies with the following corporate profile:
- Internet/technology sector
- Less than 18 months old
- Exhibiting signs of potential growth
- At prototype or near completion stage
- High capital efficiency
- Sound management team
- Global scalability
- A clear exit mechanism
One key requirement which Sydney Seed Fund will be looking out for is monetization and revenue model.
“Critically, show us how you’re going to make money. A lot of business ideas get off the ground and their founders have lots of enthusiasm, but they haven’t worked out how their model will actually make money.” – Garry Visontay
The fund will be managed by three seasoned entrepreneurs: Benjamin Chong (co‐director of Sydney Founder Institute), Ari Klinger, (partner at Right Click Capital), and of course, Garry Visontay, (an active angel investor with significant board‐level experience).
If you are interested in applying to Sydney Seed Fund, you can check out their official website.