$100M for infinite recycling, Telstra exits VC & Canva's ESOP clauses with Kim Hansen

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Will Richards: G'day and welcome to The Startup Retro, a weekly show where we help you level up on the Australian startup ecosystem by giving you an insider's view on Aussie startups and venture capital.

Gemma Clancy: The Startup Retro is brought to you by Day One, the podcast network for founders, operators and investors.

Will Richards: I'm Will and I'm joined by my co-host Gemma.

Gemma Clancy: In today's episode, we're going to dive into the top news events relevant to the startup ecosystem that happened over the last week, as well as last week's startup raises, including a huge 100 million deal. And Will's also going to interview Kim Hansen from Cake Equity and dive into the slightly controversial topic of those ESOP agreement clawback clauses that we saw in the news last week.

Gemma Clancy: We're also going to give you a super handy resource from the Rampersand team for founders looking to raise funds. But first, let's jump into the top startup news headlines of the week. And the top headline that caught my eye because I can be a little bit of a policy and politics nerd is the news that the Future Made in Australia legislation is Parliament next week.

Gemma Clancy: And I think all eyes, especially across the startup ecosystem are going to be on that legislation, because I guess the core of it is that we're going to get a little bit more detail around kind of how that policy or the act is going to work. And also give us an idea of how the government is actually going to make decisions around how they're going to allocate those funds.

Will Richards: Yeah. How big is it? Cause it's, it seems like it's a pretty big. Big amount of money. Like, what are we, what are we talking about here?

Gemma Clancy: Yeah, I believe it's about 22 billion. So just a, just a small little bit of cash. They're pretty big deal. And I think so far, really the prime minister in particular, he's really been highlighting the investment that it's going to drive into renewables because from a political standpoint, we're seeing, obviously the government really want to drive the conversation around the energy transition, but the startup ecosystem is hoping that that money is going to bounce back.

Gemma Clancy: Be distributed into industries outside of renewables as well. And it was kind of cool to see that the PM this week, he was saying things around AI and robotics. So hopefully that's a little bit of a sign that the Future Made in Australia fund will be supporting and funding those kinds of companies as well.

Will Richards: Yeah. Because when the budget came out, there weren't many specifics around, you know, what's actually happening for startups. Do you reckon we'll sort of get specifics when the policy's announced this week?

Gemma Clancy: Hopefully. And yeah, there's been a bit of criticism around that. So I think if it's not there, it will be asked for, that's for sure.

Gemma Clancy: And I think it was really interesting as well, kind of alongside this legislation, which is now coming into play, that There's also a conversation around R&D investment in Australia. So at the same time as the Future Made in Australia act was introduced, there was also money allocated in the budget to a review of our R&D system.

Gemma Clancy: And I've read an interesting article from Innovation Aus this week, which was, uh, highlighting some things that Dr. Doug Hilton, who's the relatively newly appointed chief of the CSIRO was saying around. Kind of his vision for how the R&D system in Australia should be revised. And the crux of it was essentially that he thinks for, for projects where it's going to take about a decade for there to be real outcomes, we need to have a lot of collaboration.

Gemma Clancy: We need to have hundreds of researchers working on these things, not having grants allocated to single people or single teams. We need to have allocated to. Huge teams of researchers, and I think that that, um, will really underpin some of these investments that might later be made from, um, the government via vehicles like the Future Made in Australia Fund.

Will Richards: Fantastic, and definitely next week we'll be talking about the legislation in a bit more detail. So, one to watch. Two interesting things that really caught my eye as well this week were two new venture funds or? Not necessarily new venture funds, but one venture fund in particular rebranding and that's, um, Telstra's venture fund rebranding to Titanium.

Will Richards: It's quite interesting. It's actually a, it's a relatively large investor that's been super, super active. And, uh, the reason it's kind of happened is, unfortunately, Telstra is going through a little bit of strife lately. So, you may remember they, they cut about 2. 8 thousand jobs a few months ago. And this is sort of a continuation of that cost-cutting measures and basically what's happening is Telstra is getting rid of their stakes in the fund themselves.

Will Richards: So it's, it's important to note that Telstra, the business doesn't actually manage the money. It's, it's the venture fund itself. So there's a GP that's a separate vehicle. So that vehicle will continue and it will be rebranded Titanium. And we'll be continuing to be managed, but according to reporting done by Capital Brief and financial reports that Telstra's sort of published and whatnot, they own about 62.

Will Richards: 5 percent of the second fund and 50 percent of the fund three. And we're pretty sure most of fund one has been returned to investors. But it's about 1.3 billion dollars worth of, worth of cash that they've got. And there's some pretty interesting portcodes in there as well. So Snapchat was one of them.

Will Richards: DocuSign, they took that to IPO as well. Box was another IPO that they had. Forage was, um, was acquired. Which is, yeah, they've had some pretty good investments. So. It'll be great to see that continue as Titanium Ventures and I think there'll be some pretty big secondaries being sold fairly soon. But Titanium's already off to the races and they've already made their first investment which we'll get stuck into a bit later in the conversation.

Will Richards: And then the second fund is Tenacious Ventures which is an ag tech-specific fund.

Gemma Clancy: Great name.

Will Richards: Yeah, very good name. Very good name, especially in this market because I think you need to be pretty tenacious to raise money at the moment. But they've just sort of closed a big portion of their second fund so they've just raised 18 million dollars.

Will Richards: To invest in, in ag tech and that cash comes from a few different groups. There's quite a few angel investors, a few exited founders, but also large investors, as well as companies who work in the ag tech space as well. So it's great to see a female, majority female venture fundraising their second fund.

Will Richards: They're still looking to raise about another 20 million or so. To get to 35 all in, so we'll keep an eye on that, but it's great to see more ag-tech investment in Australia.

Gemma Clancy: Yeah, and by all reports at the moment, it's not just hard for startups to raise. It's actually pretty hard for VCs to be raising. So it's pretty impressive to see anyone kind of Raising a new fund and we want to see more.

Gemma Clancy: So hopefully we'll be able to report on more in future. And the final headline, I have to include this one because it's about an Adelaide-based startup. And anyone who knows me, I'm based on the sunny coast now, but I'm originally from Adelaide. And so I love to champion my, um, homegrown Adelaide startups.

Gemma Clancy: And so this is, uh, Startup called Space Machines Company has signed a deal with India.

Will Richards: Can I just ask what, what does Space Machines Company do? What do they build?

Gemma Clancy: So they build satellites.

Will Richards: They build machines for space.

Gemma Clancy: They build satellites. Okay. So yeah, they build machines for space. Yeah. So it's, it's a great name.

Gemma Clancy: It does what it says on the tin. And they have a cool new satellite called Optimus that will focus on debris characterization.

Will Richards: It's essentially cleaning space, right? Like, it's, it's going up there and it's, it's working out what satellites are defunct and cleaning them and sort of pushing them back to earth. So.

Gemma Clancy: Yes. Debris in space is bad because debris can get in the way of other satellites and we don't want things to get in the way of satellites because satellites are super, super important. So, Space Machines Company and their new satellite Optimus, yeah, they signed this deal with India, which is pretty important on a diplomatic level, it strengthens our diplomatic ties with India on that front.

Gemma Clancy: And it's supported by an eight-and-a-half million grant from the Australian government. It's good to see Adelaide-based space company, uh, making their mark on space innovation too.

Will Richards: Great to see.

Gemma Clancy: So there was over 122 million of raises announced this week across the Aussie startup ecosystem. Did you have a favourite, Will?

Will Richards: I sure did. I think on that 122 million, pretty important to note that one startup in particular definitely took a fair chunk of that, but we'll get to that in a second. But my favourite startup this week that, that raised some money was the team at Aquila.

Will Richards: So we've been following the startup since they were in the Startmate Accelerator. Gee, probably two years ago now.

Gemma Clancy: Time flies.

Will Richards: Yeah, and I just, I remember chatting to the Startmate team about like, who to watch. In the accelerator and these are sort of always like the sneaky, you know, if they can get it right, it could be really interesting, but it just seems so far-fetched that like it just it just seemed impossible.

Will Richards: Anyway, I ended up meeting with the founders and sort of interviewing them and writing a bit of a write up about their journey. So I've sort of been, you know, personally supporting them for a little while now. It's such an interesting idea, but they're basically trying to create the internet. Of energy and by doing that they're trying to sort of basically create wireless charging technology through laser beams and yeah right it sounds pretty pretty far fetched but I think what I really like about what they're doing is they've made it abundantly clear that they're doing it by sections so they're not basically saying we're going to build the internet of energy tomorrow they're going to build little by little once they sort of complete a An objective, then they go out and raise some more money for the next one.

Will Richards: So, we've now seen them raise money, and this is sort of their third external investment. So, there was a Startmate one, then they raised three million seed, and this is the two million dollar follow on investment. And this is because they've basically just completed the objective of powering a drone, you know, sort of your commercial drone that you might buy from DGI or something like that, from 50 meters away.

Will Richards: So, they can basically set up a laser beam and charge a drone and keep it up in the air forever now. From over 50 meters away, which beats, you know, previous records, which were three meters. So it's really cool to see what they're, what they're building is actually becoming a reality. So the funding itself actually came from a new investor, a new investor led the round called Allure Group, but it was also supported by Blackbird and Icehouse, who previously invested in the round as well, and I know you, you do a little bit of work with, with them Gemma as well, so chime in if I have a question.

Will Richards: Get something wrong, but

Gemma Clancy: no, no, they're, they're absolutely fantastic team. Yeah. We've been working with them through stellar startups for the last little while. And it's been amazing to kind of be able to send out press releases talking about the amazing milestones that they've achieved. But yeah, we certainly had taken a little while to get our head around the technology.

Gemma Clancy: It's pretty challenging copywriting task writing about a technology that actually. Like, you know, pretty much hasn't existed before. So it's pretty cool.

Will Richards: It's awesome. And they've got some pretty cool trials coming up fairly soon with commercial partners and universities to basically keep pushing it forward.

Will Richards: So definitely one to watch. They've managed to smash the goals they've set out so far. I think there's still a little while off, you know, the internet of energy and having satellites in space that are sending energy all around the world. But yeah, definitely keen to follow them along. Who was your pick of the week?

Gemma Clancy: So my pick of the week was the big guy. It was the hundred million dollar raise for Samsara Eco, which is one of the biggest, you know, raises we've seen in a little while now and certainly one of the biggest series and they're calling it a Series A There's lots of different, uh, you know, names for these rounds these days.

Gemma Clancy: People come up with everything, but this is a Series A

Will Richards: Series A2.

Gemma Clancy: A2. Yeah. Yeah, this is a pretty big one. The company's based out of Canberra, um, with the founder, Paul Reilly. The, this round has been backed by, um, Temasek, uh, Main Sequence, Titanium Ventures, who we talked about before previously Telstra Ventures.

Gemma Clancy: And, um, one of the bigger headlines is that Lululemon is one of the. Big backers, and, um, that's off the back of a partnership that they had with Samsara eco to create, I believe one of the first, um, actual like commercial products is out in the market using that technology. So their technology is actually about being able to recycle plastics forever.

Gemma Clancy: Um, particularly those. Plastics that otherwise have been pretty hard to, to recycle. And so they have this system that uses natural enzymes to break down these complex plastics into their original monomers. It enables the creation of new plastics as if they were new, um, without the need for fossil fuels.

Gemma Clancy: And so if you're not already aware right now with most plastics recycling, when you recycle plastics, you can only recycle them a few times before they, um, kind of become. Unusable or you need to include new virgin plastics, which require fossil fuels to be created in the 1st place. So this is pretty groundbreaking.

Gemma Clancy: It's pretty exciting from from the perspective of the fact that I think it actually places an increased value on these plastics and hopefully it will incentivize more recycling because at the moment globally. It's estimated that only about 9 percent of all plastic waste that's generated is actually recycled.

Gemma Clancy: But if now we know that we can recycle plastic infinitely, it's kind of, I think it reframes how we look at plastic as a resource and hopefully increases the value and incentivizes people to actually recycle it because it can be turned into new products forever and ever, um, which is pretty cool.

Will Richards: Yeah, it's great.

Will Richards: It's really cool to see and yeah, one to watch.

Gemma Clancy: Yeah, clearly investors agree.

Will Richards: Yeah, a hundred million dollars.

Gemma Clancy: So there are also a few other raises this week that we'll cover quickly. So a company called Clean have got 750k of pre-seed funding for their e-commerce ESG platform. Dirac, which is aim to create one of the world's first fully error-corrected quantum computers.

Gemma Clancy: And if this sounds familiar, they are directly competing with Psych Quantum, I believe. So they have landed a $10 million Series A round to expand their efforts there. Then Afin, which has been around for a while, will they, I think they've founded in 2012.

Will Richards: Yeah, so they, they bootstrapped for about 10 years.

Will Richards: They've got a really interesting story. They were almost my, my pick for the favourite of the, um, favourite of the week. The founders themselves are a pair of brothers and they're actually related to Helen Toner, who was the board member of the OpenAI board that, um, that kicked Sam Altman out, so, um, she's no longer on that board anymore, but the family obviously has been into AI for a while now.

Gemma Clancy: Imagine their Christmas dinner conversations. They're pretty deep into their AI conversations. Love to be a fly on the wall there.

Will Richards: AI generated Christmas cards and Christmas cracker jokes, that But yeah, so, so their business, they, they basically, you can analyze documents and extract data from it and put that into your system.

Will Richards: So, you know, driver's license and contracts and all that sort of stuff. I think they've basically seen the horizon of what's coming in AI for probably 10 years now and they've been building towards this and now that it's a commercial reality, they've just raised their second round. So, this 10 million raise is at 120 million valuation.

Will Richards: So, really cool to see, to see that happen from a bootstrap business and they've got some pretty, pretty awesome customers that we all use. So, they're definitely powering a few systems that you use every day. And Gem, just fresh off the press as well, I've just been sent a, a press release from uh, Investible's Climate Tech Fund.

Will Richards: Oh,

Gemma Clancy: really?

Will Richards: Yeah. The National Renewable Network, that's the startup, has raised um, one million dollars in pre-Series A funding.

Gemma Clancy: Amazing. Which

Will Richards: is good to see. So, I'm not sure if you've heard of them before, but they No. help homes and sort of small communities. Get sustainable. So they, they sort of do an assessment of your house and, um, work out where a battery might go and where the solar panels might go as well.

Gemma Clancy: Great.

Will Richards: So they sort of get you off the grid and onto a renewable grid in a small little ecosystem.

Gemma Clancy: Sounds great.

Will Richards: So cool to see that. Yeah. So Electrify Ventures was also in that round with a few angel investors too.

Gemma Clancy: That's amazing. Doesn't get fresher than that. Literally, while we're recording the podcast, getting an email about a raise.

Gemma Clancy: So, that's pretty cool.

Will Richards: So, Gem, last week, we saw Canva in a bit of hot water over equity share clawback options. Yeah. Where basically, they're able to take back shares of employees who've left the company. Basically, they sort of have clauses in contracts which I think sound very scary and I don't think sit very well with a lot of people.

Will Richards: But it's the same callback option that we've seen discussed in companies like OpenAI, who've now since removed them.

Gemma Clancy: Yeah, I read that too. It was really interesting. It made me think, like, how pervasive is that? I don't, I don't really know. Is that, like, I just would have assumed that a company like Canva was following fairly standard best practice for those kind of agreements, right?

Will Richards: Yeah, it's a, it's interesting. Like, it's, it's definitely more common. Then you think the sort of open source contracts you see online, you know, if you're the big VCs like Airtree, have them available for all founders to download, they actually include them. So, you know, a founder who's, who's new, who's, who's never sort of been in this world before, or is just taking advice from a lawyer, might just send them that as a template to use.

Will Richards: But it basically just means that a lot of these startups that are getting founded or using these resources online that are sort of free for everyone and get recommended all the time. Have these sorts of clauses. So I think it's a, it's a really interesting topic and it sparked a pretty big debate and I know I'm out of depth because I'm not a lawyer.

Will Richards: So I decided to call on a friend who plays in the space a fair bit. Kim Hansen, the co-founder of Cake Equity and Cake is, they basically do this for every startup in Australia and going global as well. They help manage equity cap tables. So Kim's a perfect person to have on to discuss this and get his opinion and thoughts.

Will Richards: Super excited to bring Kim Hansen from Cake Equity on to chat all things ESOP and equity. There was obviously a bit of news recently with callback options, um, coming from a particular startup Canva, but I think it's, it's something that isn't at all focused on, on them. It's something that exists all across the startup ecosystem.

Will Richards: And I sort of thought to myself, who's the type of person you want to bring on to discuss this and Cake Equity is an absolute no-brainer. 11, 000 companies use Cake and they're currently managing 135, 000 stock option plans in 50 countries across the world. So Kim, maybe do you want to introduce yourself and say a little bit about what Cake Equity does as well?

Kim Hansen: Yeah, absolutely. Uh, I'm the CEO and co-founder at Cake. We had a mission to use equity ownership to accelerate startup team motivation. So it's really all about the belief in that, that team and what they're capable of, and you put that in a, in a startup structure, it's incredible that the positive impact they can have on the planet.

Will Richards: So I think it's, it's good to go back to basics to, to kick off the conversation around maybe what is an Aesop? How does it benefit an employer? Um, and how does it benefit the employee as well?

Kim Hansen: Yeah, startups have the potential to, to become really big and have a big financial outcome. And we want to see that that financial outcome is to everyone that is part of that journey.

Kim Hansen: You know, obviously the, the employees are often their blood, sweat, and tears every single day. And often startups can't compete with the really high salaries of other. companies. So it can be a really good benefit to use that to drive the motivation. It's a very powerful tool for startups to have the best people which is needed to succeed.

Will Richards: So to save on expensive salaries and help employees basically get ownership of the startup that could potentially increase in value exponentially, they give a little slice of the cake. Is that?

Kim Hansen: Yeah, absolutely. So it's a way you can give ownership without having to pay tax right away. You can delay that to the future.

Kim Hansen: If there's a positive outcome for the, for the startup, often it's, it's a more flexible, simple structure than pure ownership. You're not officially a shareholder. When you have options, which means, uh, you know, the shelter's resolutions and things where you need to, to do a governance and you have to ask, uh, investors to do this and that you don't actually have to, you don't have as much paperwork.

Kim Hansen: So it's much more simple, flexible, uh, structure. You can define the rules. So you can kind of set it up according to like an ongoing investing or milestone based. If you are, if you want to drive with incentives to let's hit this big target. Um, and everybody kind of gets an ownership bonus. Um, so it's quite flexible, uh, to set up.

Will Richards: I think you raised an interesting point there. So you don't get granted the shares instantaneously as you work there. It's, it's an option and a right that, you know, exists over time, which I think is important in the context of this bigger conversation. How long could it potentially take for those shares to actually become real and tangible and the employer actually take advantage of them?

Kim Hansen: Yeah. I mean, every, we see crazy growth sometimes in startups, but ultimately they, they become valuable, uh, once either the employee exercises them, which can have a cost attached to it. And then they become a real, uh, shareholder or, uh, typically when there is an exit, so the company gets acquired or, you know, the, the startup managed to, to become a public traded company.

Kim Hansen: Typically that's the point where the shares are worth more than the exercise price, which is the cost for employees to convert them into shares. And the financial gain can be, can be quite significant, but it's kind of like you have the opportunity to, to buy them, uh, but you don't have to. So if there's a financial, big financial outcome for the startup with the options, you know, all employees can, can participate in getting it a share of the cake, if you will.

Will Richards: Some employees who, let's say, have worked at a business for, for years and it's, you know, they've had a good relationship and they completed their OKRs and the company's doing really well, but they've actually now left the business. Can there be a period where those shares, you know, aren't actually, you know, theirs yet?

Will Richards: They haven't exercised the right, but they're just sort of, you know, in this contract. There can be a state where the person has left the business, but still has the option to exercise their rights in the, in the company.

Kim Hansen: Yep. The devil is in the details, right? So it's how the contracts are formulated.

Will Richards: Yep.

Kim Hansen: We are on a mission to kind of Remove all the complicated jargon and try and make this super simple to understand both for founders, employees, and everyone around, um, because else, you know, a lot of misunderstanding can, can drive, um, misaligned, uh, goals, all of that. But as you're saying, typically one of the things that matter, if you're an employee and you've, you know, you worked at the first five years and then you left and maybe five years after the startup actually becomes really valuable.

Kim Hansen: One of the parameters in the contract is the exercise period. Typically what we see in the U S it's much, much shorter than Australia at cake. We, we want to see very long exercise periods, um, especially for the early stage startups. Um, again, it's, it's up to each startup to figure out if, if we look at startups in, in general, have a general opinion about every startup is unique, but you know, in it's make or break to get the right team, as we know, and, and early employees, um, can, you know, have added so much value.

Kim Hansen: That it actually made it possible for the startup to, to, to continue and become big. And then it's other people that continue the journey, but they, they were there, they made it possible. And I've seen that in Cake as well with some early employees that, that, that left, but they still have ownership. And for those people, I want a very long exercise period.

Kim Hansen: Now, This we're talking also, if you look at a startup, they change a lot over time. So the stage they are, it matters a lot. So in the beginning, you know, you're trying to get product market fit and you can't be slowed down too much. Things need to be ultra simple. And this is where we need really standard contracts, because if you screw up a bit too much there, then later you're going to pay for that.

Kim Hansen: It's going to be difficult to untangle some of that. Now in a later States, uh, company or a startup, Um, you're going to have also a more influx and outflux or, you know, hiring and laying off people. It's, it's more normal. You might have, you know, downturns that, uh, is, is needed to, to lay off bigger portions of people.

Kim Hansen: And, and there, you know, you might need to change the rules according to that stage you're at. So we can't really fully generalize what's right for an early-stage startups and a later-stage startups in general. You know, it is finding that balance between protecting the company. and protecting the employee.

Kim Hansen: There's no perfect

Gemma Clancy: there.

Kim Hansen: I think we want to shift as much as we can towards really making it available for, for the employees, uh, uh, without making, you know, huge friction and making it even harder for the startup to, to succeed.

Will Richards: When you have startups who potentially come to the, the cake equity platform.

Will Richards: So I assume it's, it's, you know, the team's growing. We need, we need a platform to, to manage our, you know, our equity and let's like, let's use your platform, for example, is seeing these sort of, these sort of clawbacks in the contract. Is that something that you see quite common at the moment? Is it a normal thing to say?

Will Richards: And do you sort of suggest, Oh, maybe don't include those or do whatever you like? Like, where do you guys weigh into that conversation?

Kim Hansen: Yeah, I would definitely say again, for, if we look at the stages, For the early stage startups, we, there's less of that because it's, you know, in the end, the, the contracts are there so that you don't need to use them.

Kim Hansen: Right. It's more like. You know, that things are going to have a, have a way of being solved, but ultimately I think it's company culture and all of those things that, that really matter now. Um, so for early stage startups, this is not something that is really needed a lot for later-stage startups. I think we are seeing some trends towards maybe more us.

Kim Hansen: Standards, uh, the U S is a more mature market than, than Australia. Um, and, uh, it's quite, um, efficient in, in, um, in suing each other, suing companies and employees and all of that, you know, so people are quite scared there, um, and in Australia, we see with later stage companies, probably pushing a bit more for more governance and more kind of control structures.

Kim Hansen: Um, but I, I do think that Again, it comes back to how you treat people ultimately and, and, you know, good communication, transparency, uh, all of those things.

Will Richards: Awesome. So it sounds like when you're at the early stage, it's all about making sure you sort of trust the people around you, which I think is, is what it has to be because you're moving so fast.

Will Richards: And when it gets to the later stage, that's when you can be a bit more litigious, um, when you're expanding to the U S. Make sure you're protected and those sorts of things. So I think that's kind of reflected in, in the actual reporting we're seeing as well, coming out of companies like, like Canva, for example.

Will Richards: Um, they're obviously at that stage where they need to be like this. Well, really appreciate your comments, Kim, and your expertise. That's been fantastic. So Kim from Keg Equity, really appreciate it.

Kim Hansen: Thank you so much for having me. I really enjoyed it.

Gemma Clancy: So each episode, we're going to leave you in the same way that we actually wrap up our weekly newsletter, which is with a section that we call CAS, which is of course knowledge as a service. I think Will coined that term, uh, when he first launched the newsletter a couple of years ago and knowledge as a service is where we share our favourite startup relevant read, listen, or watch of the week.

Gemma Clancy: So this week, Will and I both landed on a similar CAS. Uh, we usually have to fight it out to pick our favourite one. Often then we ended up picking the same one and this week it's actually one from our friends at Rampersand covering how Rampersand invests. Will, what did you find interesting out of the article?

Will Richards: Yeah, I thought it was, it was really transparent actually. So it kind of goes into the way, uh, They sort of think about their investments and, and basically how they assess startups, not in the sense of what are the metrics that the startup's hitting, but more from a fund perspective. So this is, this is a venture fund who, who does pre-seed and seed investment sort of talking about.

Will Richards: What do they need to believe for the investment in your startup to actually make sense for their fund to return? And it's quite interesting because they invest so early and you know, relatively small check sizes as well But they can turn that into good returns, which is good to see So what I found most interesting about this article is they really Go into the, to the weeds of what it's like to be a VC and, and, and get sent, you know, 2000 pitch decks a year and how it fits their investment mandate.

Will Richards: It's interesting to sort of see, you know, a fund like this sort of open up their marketing funnel and be really transparent about it.

Gemma Clancy: Yeah. Love a marketing funnel. As a marketer myself, I saw that, that funnel graphic that they've got in there and they've got about five different stages that kind of break down that funnel, right?

Gemma Clancy: And this, what do you need to believe component is actually. The fourth stage of this overall funnel. So it's just one component, but yeah, I found it really interesting. It's not necessarily talking about you need to hit this certain metric or, or anything. It's, it's more about their overall way that they think about filtering down from that 2000 startups that they receive pictures from each year, right down to about five that they might invest in.

Will Richards: Yeah, exactly. For a startup founder who's. Submitting a pitch deck or, or wanting to speak to one of their investors about, you know, potentially getting investment. It's a great resource to sort of look through and sort of say, you know, where would my, you know, investment or where would my business fit into, into this funnel?

Will Richards: And I think everyone submits a pitch deck to a, to investor thinking, yeah, I'm going to get an investment here or, you know. You know, I hope to get an investment here, but it's really important to think about. Okay, at the top, you know, do I actually fit the mandate of the fund? Am I at the right stage? Am I in the right location?

Will Richards: Am I, you know, similar or close to investments that they've done previously when I keep going down that funnel? Um, does my pitch deck, you know, Okay. Once I pass that phase, then when I have a meeting with their investors, am I, you know, answering the right questions the right way? Is it what they want to hear?

Will Richards: Those sorts of things. And then, it's quite interesting to see that 50 percent of startups they reckon don't pass through diligence. Um, once they get to conviction that it's, that's going to fit their mandate and their belief patterns.

Gemma Clancy: Yeah, it's a really great resource for founders to check out and potentially other investors to maybe compare how their approach to investing compares to the Rampersand teams.

Gemma Clancy: So you can check out that resource in the show notes.

Gemma Clancy: Thanks for joining us for this episode of the Startup Retro. We would love to hear what you thought of the show. So feel free to reach out to us directly on LinkedIn with your feedback. That's Will Richards and Gemma Clancy.

Will Richards: And if you've enjoyed this episode, we would love if you could follow us on your favourite podcast player.

Will Richards: Thanks for listening. And leave us a review so more people can find us.

Gemma Clancy: Catch you next week.