Kate Morris and Alex Zaccaria among Aussie entrepreneurs clubbing together to invest in early-stage startups

Elicia McDonald (left) and Georgia Vidler (middle) with The Fund team members Adrian Petersen, Ed Taylor and Todd Deacon. Source: supplied.

A group of local startup founders, leaders and investors have banded together to create the Australian arm of The Fund, an angel group investing in early-stage ventures.

First launched in New York in 2018, The Fund sees participants in the local startup ecosystem pooling their resources to back the next generation, filling a funding gap at the seed and pre-seed stage.

In Australia, participants include the likes of Adore Beauty founder Kate Morris, Culture Amp co-founder Rod Hamilton and Linktree co-founder Alex Zaccaria.

The Fund is headed up by an investment committee composed of Elicia McDonald, principal at Aussie VC AirTree; Georgia Vidler, former head of product at Canva; Todd Deacon, managing director of accelerator Techstars; and Adrian Peterson, co-founder of Afterwork Ventures.

Previously, The Fund has rolled out in LA, The Rockies and London. Earlier this year, having seen similar trends underway in Australia, the original founders set about bringing the model Down Under, McDonald tells SmartCompany.

The team isn’t able to share specifics around how much each investor will contribute to the group. But, the aim is to raise a total of about US$3.5 million ($4.6 million) to invest back into the ecosystem.

This is “community-driven venture capital”, McDonald explains.

The idea is that founders and operators — people who are intimately involved in the startup ecosystem — make some of the best investors. They’ve been through it all themsleves.

“In this kind of model, they’ve also got some skin in the game.”

An evolution

For Vidler, the very existence of The Fund in Australia shows the tech scene is maturing and growing. In the early days of Canva, there weren’t many startups that stuck around locally, she tells SmartCompany.

“Back then, you would just go to the US if you had any kind of inkling of success,” she says,

Now, there are reams of startups proving that you can grow “a truly global, world-class company here in Australia”, she adds.

And, as we so often hear, innovation breeds more innovation.

We are starting to see successful founders re-investing their wealth as angels. Early employees are also branching out to start their own ventures or, as in Vidler’s case, investing themselves.

These are all people with incredible skills, experience and wisdom to offer. But they’re often also people who are “incredibly time poor”, McDonald notes.

And while people want to give back to the ecosystem, finding great angel deals that are also a good fit takes time and effort.

“We can take the heavy lifting.”

Getting across the line

The Fund is focused on seed and pre-seed stage investments, and is sector agnostic. But, the overall goal is to find and fund “world-positive startups”, McDonald says.

The investment committee will also be striving to create a diverse portfolio, investing 50% in women-founded businesses.

Part of The Fund’s model globally has been to have its committees made up of at least 50% women.

“That simple fact alone has meant they’ve invested in about 43% female founders,” Vidler explains.

Ultimately, the team will be looking for “interesting teams tackling interesting problems,” she adds.

And, while the strength of the product will play a part in their decision making — it will have to be scalable and ultimately bring returns — what’s more important at such an early stage is the people behind the business.

Pinpointing exactly what makes the dream early-stage startup founder is, however, not an exact science.

“Great founders come in all different shapes and sizes and we want to have a diverse portfolio,” McDonald says.

But, there are a couple of traits that could help hopefuls get over the line.

First, it comes down to resilience, grit and self-awareness — all of which are particularly important at the very early stages.

“It’s a rollercoaster,” she says.

And there’s also power in a founder’s ability to evangelise; to get other people excited about their mission and their vision. That’s important for getting investors on board, but also for getting early employees in the door.

“If they can inspire people to come on that journey with them, that’s going to be a massive drawcard,” McDonald says.

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