Data-driven VC fund, Follow[the]Seed is promising to invest $50 million into Australian startups seeking to raise between $500,000 to $2 million in post-seed funding. The Sydney-headquartered fund, which also operates across San Francisco, Tel Aviv and Beijing, will be using its proprietary algorithm RavingFans to identify key investment opportunities.
Follow[the]Seed has a strong founding team behind it. Its founding partners Andrey Shirben, Ajoy Mallik,Curt Shi and Eliav Alaluf boast a track record of over 50 percent Annual Internal Rate of Return in the past decade.
- Shirben, originally from Israel and currently based in Sydney, has been investing in tech companies for the last decade, including over two dozen Australians startups such as Ingogo, Jayride, OpenLearning, Class Cover and StorReduce. His other notable investments include Kenshoo, Storwize (sold to IBM for $140 million) and Face.com (sold to Facebook for rumoured $100 million).
- Based in San Francisco, Mallik’s expertise lies in the enterprise market. He was part of the original founding team of oDesk (known today as Upwork) as well as a senior executive at TATA and Cognizant, in charge of their venture investments and innovation ecosystems. Mallik also invested in Webaroo, EzHome, and Skyblaze LLC.
- Shi, based in Beijing, is a specialist in the telecommunications, media and technology as well as actions sports space. One of his latest investments was Catapult Sports, which listed on the Australian Securities Exchange last year.
- Alaluf, based in Tel-Aviv, is the creator of RavingFans, and specialises in using behavioural analysis and consumer psychology to “pick” winners to invest in.
Follow[the]Seed has received over 60 percent 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. This ESVCLP status makes the fund attractive for local investors as it grants them complete tax exemption on their share of the fund’s income.
Over the next five years Follow[the]Seed will make 30 to 35 investments – with a combined total of $200 million – across each of its four global funds, focusing on consumer-focused internet ventures.
“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. 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,” said Shirben.
“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.”
RavingFans, a proprietary data-driven algorithm, will be used assist with investment decisions. RavingFans assesses the potential of early-stage B2C ventures by identifying habit-forming or ‘sticky’ products. By analysing how early adopters interact with certain products, the algorithm is able to identify which products are likely to hit critical mass – i.e. products that become a daily habit for users.
Follow[the]Seed also applies a Reverse Problem Solving methodology to enterprise ventures that allows it to identify early trends, issues and ‘pain’ points by working closely with large enterprises and Fortune 500 companies. This information will allow Follow[the]Seed to invest in technologies that provide solutions to these identified problems.