As CEO of the crowdfunding platform VentureCrowd, Steve is regularly called upon to help start-ups raise capital, from crowdfunding to venture capital investments. He has also served as judge of a number of venture capital funding competitions, and as an advisory board member for a number of high-growth start-ups and funds.

His stint as a judge allowed him to witness both funding successes and failures. But what does a judge or investor like him look for when choosing a business to support?

What potential investors want to find

“Different investors will have different criteria,” Steve shares. “But what we hear from the investors who use our platform is that they are looking for businesses that are environmentally sound, technologically innovative, and likely to deliver great results.”

Of course, many businesses possess such qualities and as such, the competition is tight and fierce. Given the situation, it is important for businesses to stand out and present a unique and compelling case.

Steve elaborates, “You must have the fundamentals right – technological or business model innovation, ideally with some initial traction and proof of growth potential, and a great team solving an important challenge for your customers.”

More importantly, the business should be able to tell a compelling story that encapsulates its vision and achievements. “Great founders and business leaders captivate investors by sharing compelling stories that highlight what their business is achieving and why it’s worth backing,” Steve explains. “It’s about sparking excitement and building confidence in your vision, making investors eager to invest in your journey.”

The founder gets evaluated, too

But pitching to potential investors does not just involve showcasing the business. The founder must also showcase their own skills and qualities and show potential investors that they are well-equipped to steer the business towards growth. 

“The founder needs to demonstrate many qualities, including strategic, technical and execution skills, plus hustle, resilience, correct mindsets, and emotional intelligence,” Steve says.

Perhaps the most important of these qualities is the ability to communicate effectively. Steve explains it as the ability to know when there is either an opportunity (milestones and wins) or a requirement (quarterly and annual performance reporting) for communication, what that message should be, how to craft it for maximum impact, and how best to deliver it to the relevant audience to achieve the best possible outcome.

“The ability to communicate effectively will help a business raise capital faster. Without it, no matter how solid a product or strategy is, real success will remain a challenge,” he points out.

No guarantees when raising funds

Whether the business chooses to seek out angel investors or take the crowdfunding route, it must take into account the long process involved in raising capital. 

Depending on the target amount the business needs to raise, the process can take as long as two years to complete. Much of this time will be spent gathering interest from potential investors.

What if you’re not able to secure funding? Despite lengthy preparations and well-crafted pitches, not every business is able to reach its targets. Steve says this is not the fault of the business. 

“Not all businesses are suitable for pursuing the venture capital route to raise funds,” he explains. “Traditional venture capital firms typically focus on businesses with unusually fast growth potential, targeting high returns to match their high-risk profile.”

An alternative emerges

While many small businesses look at either angel investors or crowdfunding to raise capital, Steve shares that there is a third option that is emerging: digital capital raising.

Digital capital raising primarily connects businesses with retail investors by providing access to retail, wholesale, and institutional investors in a single platform. It also speeds up the capital raising process, as it can be used to complete it in just two or three months.

Digital capital raising allows the business to test out the market’s interest first through a flexible Expression of Interest phase and establish meaningful investor relationships before the capital raising campaign even goes live, increasing the chances for the business to reach its target funding.

Steve adds that digital capital raising offers more flexibility, accommodating businesses at various stages and growth speeds and can work hand-in-hand with traditional investing mechanisms. 

“Companies with exponential growth ambitions can leverage digital platforms to access a broader pool of retail, wholesale and institutional investors,” he shares. “Similarly, founders seeking to bootstrap can use these tools to raise capital from family and friends efficiently. Founders opting for linear rather than exponential growth may choose to rely on consistent revenue without the need to raise capital.”

Even though there are now multiple viable funding options that are available to small businesses, Steve advises them to take their time, especially if they are not able to prove their capabilities to potential investors. After all, there have been companies like Canva, Airbnb, Uber and Facebook, which underwent multiple rejections before they found the investors who believed in their potential.

“Investment is about capturing the growth potential of the market at a given time,” Steve explains. “If investors aren’t on board, then maybe now isn’t the right time for the market, and you need to demonstrate more growth to attract those investors.”

For Steve, it does not hurt for the business to set modest funding goals and aim to attract a smaller pool of investors. “Digital capital raising platforms offer seamless solutions to make bootstrapping much easier, allowing you to raise smaller amounts efficiently from family, friends or loyal customers, while maintaining control over your business,” he suggests. 

This article first appeared in issue 47 of the Inside Small Business quarterly magazine

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The other retail investors are the UK’s Tesco, Dutch-Belgian multinational Ahold Delhaize, Canada’s Empire Company, and South Africa’s Shoprite.

The fund will invest in start-ups and scale-ups that deploy technology to improve customer experience in-store and online, boost productivity across the grocery value chain, or address the sector’s sustainability challenges ranging from biodiversity in agriculture to sustainable packaging.

“At a time when innovation is reshaping retail and value chains across the economy, we aim to offer our investors incomparable access to transformative innovation in grocery and sustainability across the globe,” W23 Global CEO and chief investment officer, Ingrid Maes, said.

“W23 Global will also work with its investors to identify common unaddressed challenges and identify entrepreneurs best placed to innovate new solutions,” Maes added. “Our ambition is to offer our portfolio companies faster pathways to global scale, without being exposed to a venture fund anchored by a single strategic investor.”

Maes also currently leads Woolworths’ corporate venture capital fund, W23 Australia, which invests in retail innovation, sustainability and digital health. The two funds will be managed from the same office in Sydney.

This story first appeared on our sister publication Inside FMCG

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We were bootstrapped initially and spent the first nine months validating the idea, market testing the concept then developing the MVP version. We were incredibly fortunate to bring our CTO onboard early on and during this time we were also accepted in residence at Stone & Chalk at the Sydney Startup Hub.

Tech is expensive. Despite early interest and pilot customers, we knew that if we were going to propel Humanico to the global stage we needed to raise capital. As first-time founders, the world of capital raising was somewhat foreign. Entrepreneurs have a tendency to lean into the unknown with disproportionate comfortability and that’s exactly what we did. A now proven formula for Paul and I; do our own research first, ask for help where we need it and then just get on with it.

It was suggested to us that a Family and Friends round would be a good place to start, however, we knew that if we could leapfrog that step to a pre-Seed round that would be our preference. We presented our first pitch deck to the Stone & Chalk team who pulled it apart and provided plenty of ‘constructive’ feedback. And, 32 versions of that deck later, we closed the round with $330k from an incredible group of angels.

We learnt a few key lessons during that first round.

• Don’t be afraid to leverage your existing networks. You never know who might be interested.
• Ask for advice, not investment. The latter will often follow the former.
• 80 per cent of the investment decision was based on the founding team, above product/market fit or GTM.

It was actually during our pre-seed round that it was suggested to me that I should ‘play the Female Founder’ card.

What?! Up until that point I had considered myself an equal. Why on earth should it matter that one of us is female and one of us is male?

As our journey continued, the ‘Female Founder’ narrative became louder. Stats were circulating to suggest that diverse businesses generate 12 per cent more revenue and burn one-third less capital than companies solely founded by men, yet female founders in Australia only receive 23 per cent of investment deals. Programs were launched to support female founders, funds were established solely to invest in female founders, and grants appeared to try to bridge the gap.

Amazing! Until you read the fine print and realise that you don’t qualify because you don’t have a majority share. The double-edged sword of an equal female/male co-founding partnership.

We lent into our Seed round at one of the most challenging times in recent history to raise capital and closed it out in June 2023, raising just shy of $1m. The majority of our early investors followed on, impressed by the traction we had built and the 4x increase in valuation over 18 months.

I’m proud to be part of a diverse founding team and have seen first-hand the benefits that bring along with it, but diversity of gender is only one factor. Don’t lose sight of other diversity metrics that matter, especially the value of diversity of thought.

As a curious explorer, I’ve found my true north as an entrepreneur. But it hasn’t been an easy journey. I’m a first-time founder, a non-tech tech founder and a female founder in a sea of males. Whenever I tell my story publicly, it resonates loudly…mainly with underrepresented groups.

If I’ve found a way to navigate the journey, then maybe they can, too.

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The report notes that global M&A (mergers and acquisitions) deal value declined from US$98.2 billion in 2022 to US$56.4 billion in 2023, and that global VC (venture capital) investment fell from US$88.8 billion to US$46.3 billion in the same period.

Australia reflected the global trend, experiencing a 76 per cent drop in fintech deal value in 2023 to US$587.5 million, while the deal count fell by a third to 95 transactions.

Notable Australian fintech deals tracked by the report include taxi payment platform operator A2B’s acquisition by Singapore-listed transportation firm ComfortDelGro for $109.5 million, and deferred payment loan provider Midkey raising US$50 million in early-stage venture capital. In addition, one of Australia’s leading robo-advisers, Stockspot, was acquired by Korean firm Mirae Asset Global Investments, while Rich Data Co. raised US$17.5 million and SME lender Lumi raised an additional US$15 million.

Dan Teper, Head of Fintech at KPMG Australia, said that 2023 was a challenging year for the Australian fintech ecosystem, with both total deal value and deal count experiencing a sharp decline compared to previous years.

“The local market, as with the majority of global markets, has been impacted by a number of challenges including, but not limited to, a higher inflation and corresponding higher rates environment, and a change in overall risk appetite amongst investors,” Teper said.

“Looking ahead, we expect fintech growth in Australia to continue to be modest, and with interest rates unlikely to shift materially in the near term, funding and availability of capital are likely to remain a key challenge for local players,” Teper warned.

Given the ongoing global conflicts, current high interest rates in place, and the continued lack of exits, fintech investment is expected to remain soft for the rest of the first quarter of 2024. However, as interest rates are expected to stablise, and possibly decline, investment could begin to pick up. AI and B2B solutions will likely remain big tickets for investors, and M&A activity could also start to rebound as investors more seriously look at distressed assets.

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2023 saw fundraising rounds becoming more challenging and valuations closely scrutinised. Later-stage deals experienced the most significant decline, with median Series B or later deals shrinking to under a third of their early 2021 sizes by the second half of 2023, driven by comparisons to publicly listed technology peers. Investors noted reduced competition beyond Series A, but almost half reported increased competitiveness at the Pre-seed and Seed stages, keeping early-stage deal sizes and valuations stable. The diminished competition was paired with improved investor behaviour, marked by a decrease in reports of pulled and re-traded term sheets by investors.

Despite the overall decline, deals at the Pre-Seed and Seed stages were less impacted than those at Series A and B. Early-stage investments experienced a reported average decrease in valuation of 33 per cent, versus a 41 per cent average decrease in valuation for Series B+. Meanwhile, the number of deals at later stages, Series B and later, decreased significantly, as did reported valuations and median deal sizes, with Series C+ valuations experiencing an average decline of 47 per cent.

The investment in Australian venture capital mirrored global patterns, experiencing a 54 per cent decrease from 2022. though this fallout was larger than the reduction witnessed globally in VC investments, which has been reported to be 38 per cent. Furthermore, 41 per cent of investors witnessed a portfolio company shut down, and 90 per cent observed layoffs within their portfolio companies.

Heading into 2024, investors are optimistic. 92 per cent of surveyed founders plan to raise capital in 2024 or 2025 – and 86 per cent are confident that they’ll be successful. And, in matching sentiment, 66 per cent of investors expect start-up funding deal flow to increase in 2024.

Furthermore, there is still noted support from international investors, with 42 per cent of all deals recorded in 2023 including at least one international investor, and 70 per cent of local investors expecting overseas investors to contribute more to Australian start-ups in 2024.

“Considering the global context, the decline in funding during 2023 was expected. However, unlike many start-up ecosystems worldwide, Australia continues to go from strength to strength,” Chris Gillings, founder of Cut Through Venture and venture capitalist at Five V Capital, said. “We have more young people entering the tech sector, more talented executives leaving their day jobs to start companies, and more investors competing to invest in the next great Australian businesses. Despite the headline fall in funding, Australia is now a mature, globally admired ecosystem.”

Folklore Ventures’ founder and managing partner Alister Coleman is excited that, despite the tighter market in 2023, Australian founders continue to punch above their weight globally.

“There’s always an appetite for big ideas and talented founding teams, and from what we’ve seen, Folklore is already expecting a stronger market for early-stage investment and a more positive year ahead,” Coleman said. “We look ahead with optimism to a third generation of Australian founders, who have now founded or worked in some of the most important Australian and global start-ups. Their familiarity with growing venture-backed companies, overcoming adversity, and harnessing their global networks should give us all great optimism for the future.”

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Yume plans to use the additional funding to cement its position in Australia and make preparations for a potential international expansion. It is also set to double its headcount by the end of 2024 with 75 per cent of this growth to be focused on technology and product teams.

Founded in 2016 by serial entrepreneur Katy Barfield OAM (pictured), Yume digitises and automates the traditional manual processes used for sales and donation. It allows manufacturers to automate workflows, while also providing powerful data that allows them to boost revenue and minimise food waste.

Alongside its partners including Unilever, Kellanova (Kellogg’s) and Mars Food and Nutrition, Yume is also pioneering new standards for inventory clearance and donations. The platform has redistributed almost eight million kilograms of surplus food from manufacturers to other businesses and charities, allowing it to return over $22 million to leading companies who use the platform to commercialise surplus food and has donated over one million meals to charities.

“Australia has a food waste problem, in fact, it’s a 7.6 million tonne problem,” Barfield said. “The amount of land used to grow wasted food in Australia covers more than 25 million hectares, a landmass larger than the state of Victoria.

“Yume was founded to eradicate this problem and our platform has grown rapidly as large food manufacturers have been able to utilise our technology to connect surplus food to Australian businesses and charities, reducing waste and increasing their revenue,” Barfield added. “This latest round of funding will support us as we invest in our technology and team to further push for a world without waste.”

Yume is the latest tech start-up to join Investible’s Climate Tech Fund, a dedicated early-stage VC fund that invests in founders who are creating high-growth technology-enabled companies with a positive climate impact. Being a female-led company is a good fit for Investible, as 48 per cent of their Climate Tech Fund portfolio including companies with a female founding member and 21 per cent being solely led by women.

This funding round also marks a first for Investible, with three of the VC firm’s vehicles investing together in the company. Investible’s Early Stage Fund 2 and Club Investible syndicate joined the Investible Climate Tech Fund to fill out this round.

“Combine the ambitious and proven team with a massive market opportunity which has been validated by blue chip customers, we have the workings of a strong and impactful business,” Charlie Ill, Chief Investment Officer at Investible, said. “On this basis, Investible has made a very high conviction investment, with members of our Club Investible group investing alongside our two funds. Yume is backed by our network of over 180 experienced investors and business leaders, supporting the great work being done by Katy and her team.”

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According to IHV partner Elliot Spiegel, the platform was conceived upon the realisation that the start-up funding ecosystem was highly fragmented and difficult to conquer. To combat this issue, he worked on developing a matching technology based on unique investor data where founders can upload a video listing to receive match requests and investor meetings instantly, much like a modern dating profile.

“Like dating, raising capital is tough, we met many founders who were exhausted from pounding the pavement and getting nowhere,” Spiegel said. “Our platform helps take the friction out of funding and gives them the tools they need to succeed.”

The company sought to help founders facing funding challenges by adding not just traditional venture capital investors, but also family offices and angel investors to the online community. Since launching 18 months ago, they’ve successfully helped broker more than 2000+ matches between investors, founders and thought leaders with a mission to help more than 1500 founders successfully raise and go to market by 2025.

Counting a community of more than 5500 founders, investors, VCs and family offices, IHV also matches members with ecosystem players across marketing, finance, PR and legal, allowing them to navigate the complicated start-up ecosystem and access the capital they need to succeed.

“Australia boasts a rich ecosystem of founders, venture capitalists and thought leaders but the challenge has always been in connecting founders with the right people to succeed,” Scalare Partners co-founder, James Walker, said. “With interest rates climbing and capital markets feeling the pinch, the traditional route to funding success is narrower, but we saw the potential in streamlining the process with Inhouse Ventures to support the next generation of startups and safeguard our ecosystem for the next decade.”

Melbourne-based venture studio, Shadowboxer also added that it is supporting “big ideas and giving them everything we’ve got; our time, money, talent and craft”. Founder Konrad Spilva said the group’s natural synergy with IHV allowed them to be uniquely positioned to support the build and scale of a runway of founders looking to attract funding and grow their business.

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According to the report, the valuation – based on Victoria’s 3200+ start-ups, scale-ups and 19 unicorns – the local start-up ecosystem has grown 18 times in value since 2016.

The report also highlighted that VC investment in Victorian start-ups has returned to 2018 levels, despite a global downturn in VC funding, with $668 million of VC investment being raised between January and November 2023.

In fact, while there have been no ‘mega-rounds’ of $100 million+ in 2023, VC funding rounds have ranged between $15 million and $100 million, remaining above pre-pandemic levels. Early-stage funding continues to remain stubbornly below $100 million investment per annum, with little movement since 2016.

Victorian healthtech and biotech start-ups are the most funded sub-sectors in 2023, followed by fintech. These sectors have also managed to capture a slightly larger amount of VC than the rest of Australia. There has also been an increase in the unique number of investors, which is 1.5 times higher than in 2019.

Overall over 1000 Victorian start-ups founded since 2003 have received VC investment, with around 25 per cent raising at least $5 million, though this is slightly lower than the global average of 30 per cent. The report also noted a cause for worry as only 15 per cent of these funded start-ups have had an exit via strategic sale, buyout or IPO – compared to over 30 per cent globally.

Victorian start-ups employ 56,000 people globally, of which 35,600 (63 per cent) are located in Australia, which is a marked 12.6 per cent increase in local start-up jobs from 2020. And 26,400 of the 35,600 Australian jobs are located in Victoria. Of the locally created jobs, 43 per cent are in one of three sectors: healthtech, fintech and real estate.

LaunchVic CEO, Dr Kate Cornick, said that 2023 had been a tough year for investment, but that Victoria’s start-up ecosystem continued to grow in terms of start-up numbers and start-up jobs.

“Early-stage investment continues to be a concern for LaunchVic, as it is essential start-ups get capital to support their early growth,” Dr Cornick said. “It is pleasing to see the work we have done to bring new investors into the start-up sector pay off; however, we remain laser-focused on increasing access to early-stage capital.”

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Eligible funds can either be “brand new funds” or those “new to Victoria,” allowing existing fund managers with operations elsewhere to set up local offices in Victoria, provided they target to raise a minimum of $10 million.

This financial support can be allocated for various purposes, including covering establishment costs such as legal fees and company registration, supporting new staff salaries, and facilitating the raising of capital.

LaunchVic CEO Dr. Kate Cornick said there had been substantial growth in late-stage venture investments beyond Series B, however stagnation in early-stage VC funding, encompassing pre-seed, seed, and Series A stages.

“Just two per cent of total venture funding was invested into pre-seed and seed stage companies in the first half of 2022,” Dr Cornick said. “We intend for this program to invigorate the local VC sector, foster its growth, and ultimately place more capital into the hands of founders during those crucial early stages.”

It has been reported that the enterprise value of Victoria’s entire start-up ecosystem, including start-ups, scale-ups and unicorns, is now at AU$91 billion.

As part of the VC Support Program, LaunchVic is also accepting applications for International Intern Grants of up to $20,000 to enable emerging fund managers working within Victorian early-stage venture capital funds to pursue internships at global VC organisations. This initiative aims to further develop their fund management skills, expand their professional networks, and facilitate connections between local and global VC funds.

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Existing investors Blackbird, AgFunder and Aera VC also participated in the round, along with vegan television personality and podcaster Osher Günsberg and his wife Audrey Griffen.

Fable launched in December 2019 and is renowned for having broken new ground in the meat alternative market with its mushroom-based meat products that are clean label, minimally processed and made with all-natural, plant-based ingredients.

The company previously had an AU$6.5 million seed funding round in August 2021 and brought its meaty mushroom burger patty to market in partnership with Grill’d. It has since expanded its footprint in Australia following up with nationwide launches at Guzman y Gomez and The Coffee Club.

Last year saw Fable enter the UK market with burger chain Honest Burgers, meal delivery companies Gousto and Planty, and the UK’s first organic supermarket chain Planet Organic. The brand also launched into the United States with plant-based quick service restaurant chain Beatnic, New Zealand with Hell Pizza, and Singapore with SaladStop.

Fable also entered into new brand partnerships in North America, with the launch of its meaty pulled mushrooms into plant-based New York-based meal delivery service CookUnity, cult plant-based restaurant chain The Butcher’s Daughter, as well as Canadian cooked meal delivery service Ethey.

Fable will use the funding to accelerate research and development and the launch of new meaty mushroom products to market and accelerate the company’s growth and expansion in international markets and talent acquisition, with a focus on North America, the United Kingdom and Singapore.

“Thanks to the backing and support of K3 Ventures and all of our investors, we will be able to accelerate bringing our delicious, clean label, and sustainable meaty mushroom products to every market in the world,” Michael Fox, Co-founder and CEO of Fable, said.

“We want to inspire the world to make more sustainable food choices,” Fox added. “We believe that eating more delicious, meaty food made from mushrooms will help the world reduce global meat consumption – without compromising on taste, texture, or experience – and this is how we will be able to achieve a more sustainable food system.”

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