It’s been a whirl wind last 7 months. Announcing Galileo and making our first investments at the end of last year I’m now sitting in here with a portfolio of 8 exciting companies (soon to be 10) and led by our first group of incredible founders. The Galileo founder community is just starting to grow.
In fact, on 30 June we’re going to be announcing our group of founders and their achievements to the world at our first ever Founder Showcase (aka Demo Day) and you’re invited!
To put it in numbers:
- Over $2m invested to date (and growing!)
- Co-invested with our first 2 international investors (Europe and USA)
- 8 growing companies now have gone through the first 6 months of the Galileo Accelerator
- 15 of us joined our first Founder Retreat in Bryon Bay
- Over 500 startups and applications reviewed, chatted with and personalised feedback (check out our first feedback article)
Did I mention we’ve been slightly busy? π
So, what are a few early lessons learned to date. Especially for the founders and investors out there? (Disclaimer: we’re at the start of our journey, I’m sure things will change as we build our portfolio)
A few lessons for founders:
- Get comfortable spending cash (and reducing runway): At our pre-seed/seed stage it can be easy for founders (and investors) under appreciate the venture pathway. When you raise money from angels or VCs you want to aggressively spend your cash to make (much) more progress than if you were bootstrapping. Thinking about hiring a Sales rep? Bring it up earlier. Thinking of launching a mobile app to win more customers? Deploy that feature now. I appreciate this applies to post-funded companies but equally it should be factored in when you pitch us β too many founders pitch us with very conservative cash spend goals post funding. We write a cheque to help you move fast, make key hires and make more progress than your competitors.
- Recruitment is hard, pre-fill your key hires: The teams to have made the most progress came into their fundraise with all their key hires ‘pre-filled’. That is, they built the team with no money by first earmarking and discussing with talent before the round was completed so once they were ready to go they could make the hires straight away. It turns out just asking that talented old friend or colleague if they would ever consider working for you can go a long way building your A-team fast.
- Think about ‘early leadership’ not market domination in the early days: Founders eyes can glaze over when they think about the work (and money) required to establish your company as the dominant market leader. So much product to build, so many people to hire, more sales success. But what I think every startup founder should aim for is an ‘early leadership position’ in the niche they’re going after.
Let me explain. Early leadership is about being able to confidently say we’re the leader in the delivery X type of new product/solution for Y niche. Its not about having to fudge numbers or pretend you’re the leader, you should ideally be able to establish yourself somewhat fast as the leader if you’re truely solving a problem with the right niche β good go-to-market strategy is all about winning your early adopters fast and showing results for them. Early leadership should prove two things. First, you’ve worked out the niche you’re going after in terms of sales focus and you’ve built valuable technology (NB: this can and should be clunky, not complete and probably “a bit shit” when compared with your product vision) that clearly demonstrates results. Results don’t have to be revenue numbers but usage. Think about your first couple of years as establishing early leadership in market and using that base to grow your customers and convince investors to part with more cash.
A few lessons for investors:
- Interest in seed-stage AU companies is getting more international: We thought we would be co-investing/competing with AU VCs for our ‘hot’ seed stage investments β nope. It’s been more overseas investors! This means a few things. Firstly, local VCs see a lot more opportunities and don’t like seed as its messy and still feel like they’ll see the good ones at Series A anyway (somewhat true but getting very competitive and this is not factoring in different fund mandates etc.). Secondly, overseas VCs have more research analysts, bigger funds, and are getting comfortable with investing in AU companies. They have more ‘play’ money. Thirdly, its global acknowledgement that tech in AU can now deliver globally competitive returns β this is the best news for all of us investors (and entrepreneurs).
- Aussies still, at large, under-appreciate VC as an asset class: I’m amazed they’re not more investors (of all types including ROWGS* and family offices) knocking down our door to get in on the opportunities we’re seeing. It’s almost like a 2 class economy, the very few that see the emerging VC asset class growth and potential, and the rest that are fighting for same property and listed assets (and old boring companies). If you have $1m to invest in riskier assets spreading say 50% of risk across 3 differentiated seed funds (e.g. exposure to 50-100 companies) plus 25% into growth and 25% into direct is just one example to be well setup to benefit from the next globally disruptive companies being founded right now. But, we’re not seeing any of that activity β I often feel like local wealth managers are sleeping at the wheel and I feel sorry for the investors looking to get out of the same old investment portfolio construction (just different managers).
- The opportunities at seed are much bigger than you realise: When we pitch Galileo fund a large number of investors simply do not believe they’re any investible companies at seed stage in AU. They want to ‘wait and see’ but then don’t realise the VC market at series A+ is now quite competitive and getting much more competitive (good luck if you’re an angel!).
If you have the time, and the will to want to ‘give back’, becoming an angel investor or investing into some small seed funds directly is an incredible way to have an outsized impact (and get far better market intelligence). We’ve screened over 500 seed stage startups and can easily say the quality and ‘investibility’ is much higher than even I realised. For every company we pass on, I’m sure theres another 10+ potential investors out there that would be happy to invest and love the opportunity to help out at the early stage. But alas, they’re not looking^.
As always interested in your thoughts on the topics above. Email or comment away.
Hope to see some of you at our Founder Showcase in-person watch party in Sydney on 30 June.
Footnotes
*ROWGs is a term we have developed internally. It’s a very fancy and formal definition of investors that means ‘Rich Old White Guys’. And we say this with the upmost respect too btw.
^We don’t publicly share investments. We do co-invest with established investors but indvidual investors that want exposure need to invest in the fund (or get to know all the founders themselves :).
