One of Australia’s most prominent startup accelerators BlueChilli has signed off on a $162 million funding deal that’s been 18 months in the making.
Singaporean-based but globally focused venture capital firm Hatcher+ is behind the new funding, which will see the two organisations work together for three years to build and co-invest in over 240 global startups, in a partnership of unprecedented scale for the local ecosystem.
BlueChilli will be given part of the $US125 million ($162 million) the VC fund is putting into the deal, meaning startups through the BlueChilli program will soon have access to not only the $25,000 of initial funding the accelerator already provides startups, but a further $500,000 of follow-on funding when the startup raises capital after the completion of the program. The initial $25,000 is given in exchange for 5% equity, plus a further 10% for the support provided by the accelerator.
Of that follow-on funding, a fixed $US200,000 ($259,000) will come from Hatcher+, and an additional $250,000 from BlueChilli itself, although founder Sebastien Eckersley-Maslin tells StartupSmart the amount the accelerator contributes will be flexible.
Eckersley-Maslin is chuffed to have finalised the deal with Hatcher+, which has been brewing since mid-2016, but says he’s “pinching” himself over the number of startups this funding will mean the accelerator can start processing.
“We’re doing 240 companies in three years [with Hatcher+], and right now we’re processing about thirty startups a year. So we’re increasing our capacity about two or three times,” Eckersley-Maslin says.
“So effectively, for us, that means we need to find about 12,000 ideas a year to potentially invest in, as we get about 2% of companies pass through our application process.”
Due to this need to capture more startups, BlueChilli will be officially embarking internationally, with the accelerator currently scoping out three other countries with thriving startup scenes to launch into. While the company’s design team will stay local, Eckersley-Maslin says the accelerator already has teams on the ground in two of the three planned countries, ensuring BlueChilli isn’t “going in blind”.
And though he’s tight-lipped on exactly where the launches will be, he says to expect a launch in April, and then “hopefully” one in May. He also says it’s no secret that BlueChilli has plans for the US.
“We’re deliberately addressing the massive cultural change going on with regards to empowering women entrepreneurs and entrepreneurship by bringing our SheStarts model to the US,” he says.
Selecting potential startups aided by AI
Hatcher+, co-founded in 2013 by investor and entrepreneur John Sharp, is a unique venture capital firm because it uses artificial intelligence and machine learning in its processes. The platform taps into accelerators across the globe to receive data on early-stage companies, and uses a set of algorithms to determine the best potential investments.
To date, the firm has invested $US128 million in more than 2000 startups.
Despite these snappy systems, the partnership went through a year of due diligence, says Eckersley-Maslin, observing the accelerator’s last two cohorts — CityConnect and SheStarts.
“We seek to partner with the best accelerators around the world — the sector champions and geographic champions. We are looking forward to working with BlueChilli as we believe their approach is the best in the region and can help us achieve our vision of investing $US125million into top startups over the next three years,” John Sharp said in a statement.
Eckersley-Maslin views the deal with Hatcher+ as a significant mark of validation for both him and BlueChilli, saying the team was “over the moon” with the finalisation of the deal.
“[Hatcher+] did a global search for accelerators and [went] thorough due diligence on many other Australian accelerators, so to select us and give us a thumbs up is one of the best things in personal achievement and BlueChilli’s achievement,” he says.
Additionally, BlueChilli was recently given Early Stage Innovation Company eligibility via a ruling from the Australian Taxation Office, meaning startups who have gone through the accelerator may find it easier to raise angel or seed rounds thanks to the available tax breaks.