The Victorian government has invested another $1.8 million into Startmate to fund a Victorian-specific accelerator program, four years after the venture capital-backed accelerator expanded to Melbourne.
The investment coincides with Startmate going out to the market to raise two new funds, both aimed at increasing the diversity in the entrepreneur and investor ecosystems.Startmate chief executive Michael Batko told The Australian Financial Review that Startmate first expanded to Melbourne thanks in a large part to the support it received from state government-backed program LaunchVic.
“It was our biggest source of funding and this is the extension of that,” Mr Batko said.
“With this funding, we can go ever faster and spread our wings even further.
“About 65 per cent of start-ups go on to raise [venture capital funding] after coming through Startmate, normally in the $1 million to $4 million range.”
Since inception, Startmate has invested in 52 Victorian start-ups, out of a portfolio of more than 150 companies.
At the end of the 2020 financial year, the fund’s net multiple was 2.92 times, putting it in the top quartile of VC funds.
Companies that have gone through the Startmate program include notable names such as Amber Electric, Swoop Aero and UpGuard.
The 150-plus portfolio companies have a combined valuation of more than $1 billion and have created more than 1400 jobs.
Usually companies that make it into the Startmate program have a valuation of about $1 million, but occasionally they are earlier stage, Mr Batko said. But recently it had one company participate that had already reached a $20 million valuation, he said.
Recently, Startmate has had returns flow through from the likes of Propeller, in which it sold a small portion of its stake to secondary fund SecondQuarter Ventures, and the acquisition of customer support software company Elevio, which yielded a 19-times return.
Victorian Minister for Innovation, Medical Research and the Digital Economy Jaala Pulford said Startmate was “invaluable” for local start-ups.
“Entrepreneurship will play a vital role in driving economic growth and creating high-value jobs, and this funding aims to fast-track creation and growth across the state,” she said.
Small bets and angel funds
Of the $1.8 million being invested, $580,000 will be dedicated to delivering a local accelerator program for 30 Victorian start-ups over the next three years, while $1.25 million will come from LaunchVic and will go towards supporting Startmate’s new investor fund.
To date, Startmate has raised a total of $10 million, but this year alone it is hoping to raise another $5 million for two new funds: a “small bets” fund and one to run a program for new angel investors from a range of backgrounds, called First Believers.
The small bets fund, of which 15 per cent of its capital is already deployed, will support would-be founders before they have even launched their companies.
Mr Batko said both funds were designed to encourage more diversity in the ecosystem.
The fund being raised as part of the First Believers program will provide these new angel investors with capital to invest, although final investment decisions will be made by Startmate.
“It’ll give power to the people who have never had that power before and enable investors with diverse backgrounds to make investment decisions,” he said.
“There is so much work to be done, this only scratches the surface, but it’s going in the right direction.”