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New VC Follow[the]Seed Features Data-Driven Investing
March 16, 2017
A new VC Fund from Australia, Follow[the]Seed, calls itself a "next generation data-driven VC fund". It invests based on "The RavingFans® behavioural psychology model, designed to identify successful habit forming products and services at early stages."
The fund plans to offer US$50 million in second-stage funding to startups, following its global fund opening to investors in Q1 2017. With a global footprint across the Tel-Aviv, Beijing, Silicon Valley and Sydney, Follow[the]Seed will cater to the growing, but under-resourced market of startups seeking to raise between US$0.5 and US$2 million.
Co-founded by a seasoned local investor and entrepreneur, Curt Shi, in partnership with three other high profile investors - Andrey Shirben, Ajoy Mallik & Eliav Alaluf, Follow[the]Seed has already finished raising its Australian fund and made some global investments in companies like Silicon Valley based WorkSpot and Australian ClassCover. The global fund, which will be open for investments early 2017, has already received over 60% of its US$50 million target in pre-commitments
"Follow[the]Seed is filling a significant gap in the investment market, where startups seeking between US$0.5 million and US$2 million really struggle to find investors. At that stage in their growth, they are too large for angel investors, and too small for Series A investment, but just as startups both larger and smaller, they are every bit as much in need of capital." says Mr Shi. "Our unique data-driven approach helps us filter through the noise and pick out the winning horses well before they get on the traditional VC's radar."
The data driven approach is made possible using the RavingFans® algorithm. The Algorithm assesses the potential of consumer internet ventures at a very early stage by identifying habit-forming products and services, such as gaming, messaging, and e-commerce among others, creating "irrational" patterns of behavior leading to obsessive, compulsive or addictive use. Using a simple SDK and rapid data analysis, it determines how early adopters use and interact with that product. The RavingFans® can identify applications and technologies that are likely to become viral hits well before they reach critical mass, with only a few thousands of users.
Where traditional investment firms need to see millions of users before being able to make Series A investment decision, Follow[the]Seed, through RavingFans®, is able to flag the startup as an investment opportunity based on a sample of just a few thousand users and well before VC's would traditionally step in. Follow[the]Seed welcomes cooperation and partnerships with local professional investors and venture capital firms.
In addition to RavingFans®, Follow[the]Seed applies a Reverse Problem Solving (RPS) - A unique methodology to assess enterprise ventures that allows it to identify early trends, issues and 'pain' points by working closely with large enterprises and fortune 500 companies. This information allows Follow[the]Seed to invest in the right technologies that provide solutions to these identified problems. In other words, it's identifying the buyers and their problems first and only then investing in startups that are solving these problems. Cyber Security for example is one of today's biggest challenge for enterprises. Knowing first-hand of the exact problems they're facing, helps us to identify the right Cyber Security solutions to invest in.
Follow[the]Seed is the only fund that operates on the ground, across four different continents. The global fund comprises a highly experienced team with the founding partners boasting a track record of over US$300 million raised by their portfolio companies, Over US$2.5 billion in combined companies capitalization and with over US$450 million total value of combined exits. The fund's four founders are:
- Curt Shi (Beijing, China) -- A veteran in the Telecom, Media and Technology space, as well as in the action sports sector, Curt is an experienced early stage investor and VC fund manager in the complex, but massive opportunity in China. With more cross-border private placement practice in the past few years, one of his latest successful investments was Catapult Sports that was listed on the ASX (CAT) Dec 2014 (15X in 18 months). Curt is a winner of "CPA Australia - Australia China Alumni Award for Banking and Finance" by Australia China Alumni Association for 2016.
- Andrey Shirben (Australia) -- Originally from Israel, and based in Sydney for the last five years, Andrey has been investing in innovative companies for the last decade, including over two dozen Australians startups (such as Catapult Sports, Jayride, Cymmetria, StorReduce and many more). His other notable investments have included Kenshoo, Storwize (which was sold to IBM for US$140 million) and Face.com (which was sold to Facebook for a rumoured US$100 million).
- Ajoy Mallik (San Francisco, US) -- Ajoy has a wealth of expertise in the enterprise market. He was part of the original founding team of Odesk (known today as Upwork [pre-IPO]) as well as a senior executive at TATA and Cognizant, in charge of their venture investments and innovation ecosystems. He is an investor in several companies under the Skyblaze LLC brand, as well as other direct investment in the US such as 123signup (acquired), Webaroo (pre-IPO), and EzHome (2X in 22 months).
- Eliav Alaluf (Tel-Aviv, Israel) -- Located in one of Israel's leading startup hubs in Rothschild avenue in Tel Aviv, Eliav is well positioned to find the next Israeli Waze, Outbrain, Wix, and Taboola. He is the creator of the RavingFans® methodology, and specialises in using behavioural analysis and consumer psychology to "pick" winners to invest in.
"Our global reach will provide investors with unique access to diversified quality deal flow from Israel, the Silicon Valley and Australia and will make it possible for the ventures to expand to the US and Asia (especially China) and benefit from each of the partner's unique expertise, wealth of experience and networks." Mr Shi added. "When a company like WorkSpot, which is based in the Silicon Valley and already has access to top tier VCs, chooses us to join their growth journey it proves our team and network offers a real added value to everyone involved."
Over the next five years, Follow[the]Seed will make between 100-120 investments -- with a combined total of US$200 million -- across each of its four global funds, and will focus on innovative consumer technology ventures and enterprise solutions, applying its proprietary data-driven algorithm RavingFans® and RPS to its investment decision processes.