FOUNDERS

FAQs

Questions? They're the start of great things.

Eligibility

Does Skalata invest in a particular industry?

The truth is, we don’t want to box ourselves in to a certain industry because we believe growth can come from anywhere. So, whether you’re changing the world with technology or just looking at an old problem in a new way, we’d love to hear from you. We currently have portfolio companies in agriculture, logistics, healthcare, SaaS, construction, blockchain...you name it. There's innovation everywhere and we don't discriminate.

What characteristics does Skalata look for in founders?

We look to partner with founders who are honest, determined, and purpose driven. They also tend to embrace the unknown like it’s a long-lost friend! They’re entrepreneurs who know what they want to accomplish and why they want to do it.  

At Skalata, we champion all different backgrounds, languages and abilities – the more different we are, the fresher our thinking can be.

What is your investment mandate?

We’re looking for companies at the seed stage that have built momentum in their business. You’ll need to be innovative, capital efficient and market ready (see below).

What do you mean by "innovative"?

Innovative means:

  • Your company has a solution, infrastructure or process that is in some way unique to anything else that is on the market.
  • Your company should have invented something by way of a technology solution. This invention should create defensible intellectual property, barriers to entry or a competitive advantage for the company.
  • Another consideration in assessing innovation will be the stage of product development. As detailed above, your company should have a product offering in market or ready to go to market. Many companies begin life as a services or consulting business which can be valuable in gaining an understanding of their customers and market. However, we are best positioned to support companies with a scalable, technology product, rather than a solution which requires significant human capital, labour or manual processes in order to deliver value.
What do you mean by "market ready"?

Market Ready means:

  • Your company must have a product ready to go to market. Ideally the company should already have some form traction (e.g. users or revenue – the more the better with particular focus on recent growth). However, there is no one-size-fits-all assessment of traction for every type of business model or company.
  • For a traditional B2B SaaS company with a recurring transactional or subscription revenue model, we would expect the company to be generating revenue or to demonstrate recent user growth. Similar criteria would be applied to a marketplace business.
  • For a B2C, B2B2C or consumer mobile app business, we would have higher expectations for the number of users/customers using the product. If the business wasn’t generating revenue, we would then look for clear user engagement a clear business model or path to monetisation.
  • Companies focused on large enterprise clients will naturally have longer sales cycles once their product is market ready. In this case, evidence of traction would include pilots or contracts signed, or even LOIs or POCs (with an assessment of their terms). It is also helpful to know if the company is working with any notable or prominent enterprises that gives it a unique growth or partnership opportunity.
  • For companies that require significant time, capital or resources (e.g. hardware businesses that require research, trials or testing) in order to bring their product to market, these activities will need to be completed prior to the program, such that they are ready (or close to ready) to commercialise their product.
What do you mean by "capital efficient"?

Capital efficient means:

  • The funding provided by Skalata Ventures should have a material impact on your company. You should be able to describe how you will hit a milestone or proof point that enables you to get closer to cash flow positive or attract further funding.
  • The funding should meaningfully extend your company's runway.

Investment Terms

How does Skalata’s investment work if we have SAFE (or other convertible) notes?

There are two paths to go forward, keeping in mind that Skalata receives 5-10% equity, on a fully diluted basis, in exchange for providing venture development and financial support ($100k-$200k).

  1. Convert the outstanding notes prior to Skalata’s investment. This is generally by agreement with the noteholders. You would need to agree on a valuation for the company, as Skalata’s entry deal ($100k-$200k + access to venture development support) does not value the business in and of itself.

  2. Leave the notes outstanding. Skalata makes its investment on the basis of the then issued shares. As the outstanding notes form part of the fully diluted shareholding, Skalata would be issued additional shares when those notes convert. This preserves Skalata’s equity holding as if those notes converted at the time of the Skalata’s initial investment.

Either way, Skalata ends up with 5-10% equity effective at the time of its investment and is thereafter diluted alongside all other shareholders.

Is there any flexibility on the equity taken?
  1. Entry deal ($100-200k + Program)
    Sorry, but no. However you feel about the number, we just want to stress that our program adds value that many founders have said is priceless. 
  2. Exit deal (up to $1m total investment cap)
    Yes. If there are reasons that the standard valuation metric isn’t a fair reflection of the value of the company, we can venture away from the valuation table. For example, if your company has an exceptional growth rate, or has recently signed contracts that haven’t hit the revenue line yet.
Do you take board seats?

No. We’re a small but focused team. We’d rather help you appoint independent board members with deep domain expertise to our brilliant portfolio companies, than have us sit on multiple boards and not give you the time and effort you deserve. No one likes that.

What is Skalata’s investment structure?
  1. Entry Deal
    If a company is selected for investment by Skalata Ventures, they receive:

    i) venture development support and;
    ii) $100k - $200k investment funding.

    In return, Skalata Ventures receives 5-10% equity in that company. Initial investment is determined on a case-by-case basis.
  2. Exit Deal
    Within 18 months from initial investment, Skalata may elect to make further investment up to a $1m total investment cap, provided companies:

    i) successfully complete the program and;
    ii) achieve a traction milestone (like a monthly recurring gross margin)
What if I’ve already raised funding from angels – is it too late to talk to you?

Of course not. While we’re usually the first money in, we’ve worked with a number of teams that have raised a small ‘friends and family’ round before coming to us. That said, if you’ve already raised more than a few million dollars, we’re probably not a fit. Great work, though!

Do you invest outside of Australia?

Australia is where our heart (and wallet) is because that’s where we have the most experience and can be the most valuable partners. Having said that, we’re open to making exceptions for companies headquartered across the ditch in New Zealand and companies whose management is located in Australia but has overseas development teams.

How do you value each company?
  1. Entry Deal ($100k-$200k + Program)
    We want to make it crystal clear that we’re not valuing the business at this stage. We provide $100k in funding and access to the 5-month program in exchange for 5-10% of equity. We do not treat this as a direct valuation.

    Let us explain a little bit more. We believe that companies receive value from our program that can’t be quantified in dollars and cents. From our coaches and operational resources, to our network, we want to add tonnes of value through our hands-on approach and program. Simply handing you funding isn't in the best interest of anyone.

    In the past, we’ve invested in companies who have raised over $1m in funding before coming into the program. We’re more than happy to help founders manage conversations with their existing investors and have even prepared a document that explains this structure in more detail. If you’d like a copy, just ask us.
  1. Exit Deal (up to $1m total investment cap) 
    The valuation at this stage is dependent on the company’s traction milestone (monthly recurring gross margin). See below.
Do I have to take the exit deal?

Not at all. Within the 18-month window from our initial investment, accepting the second tranche of follow-on funding is entirely up to you. 

If your company successfully completes the program and achieves the minimum traction target (see table below), then the second tranche is your call, at the relevant valuation in the table below. In those circumstances, the company just needs to request the money and we will write the check.

If your company does not meet one or both milestones (i.e. does not complete the program and/or has not achieved sufficient traction), then the second tranche is by mutual agreement. Both Skalata Ventures and the company need to agree to the terms for the investment to go ahead. From Skalata Ventures’ perspective, this usually involves the company completing deliverables and/or negotiating on an appropriate valuation given the traction the company so far.

How do I successfully complete the program/achieve the program milestones?

We pack a lot into the 5 months you’re in the program - but to nail every milestone, here are some things to keep in mind.

  • We’re all about independence, so It’s up to you to complete what’s asked of you. This includes the completion of deliverables (like systems that need to be implemented and developing crucial business infrastructure) and program engagement (like your attendance at meetings). 
  • The thing to keep in mind is that these deliverables are in your best interest to complete. Once they’re in place, you’ll be in the driver’s seat to grow into a significant and sustainable company.
  • These deliverables are based on our experience and research, and will help you avoid making mistakes that will come back to bite you down the line.
  • We make every deliverable objective so you know exactly what you have to do to get more funding from us in the future.
Can other investors co-invest with Skalata?

No. You are free to raise capital from other investors – either before or after Skalata invests. But they can’t participate in the same round as Skalata, because there is no “round”. The Skalata investment comes part and parcel of your participation in the seed program. We are not investing at a given valuation for our entry deal ($100k-200k + program). In exchange for providing the financial support and access to our program, we receive equity.

To take a little dip into the support we provide, all selected companies receive hands-on coaching and the resources to develop their business infrastructure. We employ coaches (who work week-in and week-out with the founders) and external experts to support companies.  Time and time again we hear that the biggest benefit to companies actually comes from participating in our program (i.e. if we do our jobs right, the least valuable thing is the capital injection!).

While you are free to raise capital from other investors, if you were to issue a further 10% equity for $100K, you would be undervaluing your business. We would suggest you hold off on that investment, come into the program, and raise any additional funds at a much higher valuation.

Is the valuation pre or post-money?
  1. Entry deal ($100k-200k + Program)
    It is neither pre nor post-money because it isn’t a valuation. We don’t want to sound like a broken record saying that all the time, but it’s something we like to make clear.
  2. Exit deal (up to $1m total investment cap)
    It is pre-money. See table below.
What is the total amount of funding?

Each company that is selected into the Skalata Ventures Seed Investment Program receives up to $1 million in funding, but there are conditions to that. We need you to meet specific criteria before we go all in.

Contacting us & applying

Is it ever too early to approach Skalata? 

It’s never too early to reach out to us. Even if you're only a few people and an idea, we’d still like to get to know you. Maybe we can even help in the meantime, before you’re eligible to apply for our program. Don't hesitate to get in touch.

Will you sign my NDA?

Unfortunately not. We could go into all the ins and outs, but we think Michael Tefula does a great job summing everything up in this blog post.

How do I apply?

Leading up to each program, you’ll be able to submit an Expression of Interest (EOI).

If your company meets our investment mandate and eligibility criteria, we’ll happily invite you to submit a full application.

Do you have any application tips?

Yes – please read this post which describes how to best position your company for selection.

The Program

How often does Skalata make investments?

Skalata invests on a rolling monthly basis, so you can apply at any time. Submit an EOI now.

How much time do I spend on my business?

We treat our founders like adults, as they should be. That means there are no prescribed classes or group sessions and you’re free to manage your own time. The good news is that participating in the program and developing business infrastructure is time spent working on your business, while still allowing you the time to work in your business. The bottom line is, everything we ask you to do is something that you should be doing at this stage if you want to build a significant and sustainable company.

What is an example of a "deliverable"?

Deliverables are the business infrastructure frameworks, processes and procedures that we help founders implement in their business during the program. Here are some example:

Business Area Why we do it Deliverable Examples
Strategy So that founders have:
  • Clarity when it comes to business prioritisation and decision making
  • The ability to focus on (and measure) the metrics that matter
  • An in-depth understanding about their market, customers and competitors
  • A viable business model and plan for long term sustainability
  • The ability to inspire, attract and retain the best board members, advisors, employees and partners.
  • Vision and mission
  • Company strategy
  • Operating plan
  • Market and competitive analysis
Customer Growth So that companies have:
  • A proven model for attracting, engaging, converting and retaining customers
  • Healthy top-line growth and revenue
    Built a high performing sales or marketing team
  • Established attractive unit economics (i.e. CAC vs LTV and payback period), influenced by negotiation ability, customer acquisition competencies and marketing spend.
Marketing
  • Company narrative
  • Marketing strategy
  • Marketing collateral
  • Customer insights & analysis
Sales
  • Sales model
  • Sales system and dashboard (i.e. CRM)
  • Sales collateral
Product So that founders:
  • Have clarity about how they will build an indispensable product with high barriers to entry over time (and what resources/capabilities they will need for this).
  • Have clarity about their product roadmap and the features/systems required to improve over time.
  • Are able to manage their product development cycle effectively and efficiently, along with customer feedback loops.
Product roadmap
  • Technology review, plan and supporting systems
  • Product development framework
Management So that founders:
  • Are decisive, focused and have a strong ability to produce great quality work.
  • Are aware about the skill gaps on their team and anticipate when they will need to add resources /personnel to grow.
  • Have clarity about the key metrics that drive the business (how this flows down to teams and individuals) and are clear in how they communicate their progress.
  • Company and employee goals (OKRs/KPIs) and dashboard
  • Org chart and skill gaps matrix (board and team)
  • Recruitment plan (board and team)
  • Management plan (performance reviews etc.)
Operations So that companies:
  • Are legally compliant and structured appropriately for growth
  • Have the appropriate policies and processes in place
  • Have founders with sufficient financial literacy to ensure they are on top of their company health
  • Accounting and finance systems and documentation
  • HR documentation
  • Legal documentation

How has the program been designed?

We’ve refined and refined and refined our program to get to where we are today - a program we couldn’t be prouder of. Here are the three main ingredients that went into designing it. 

The team

  • The Skalata Ventures team and board have created, built, advised or exited successful companies across Australia and in the US.   
  • We’ve also funded and worked with hundreds of companies at the seed stage both within Skalata Ventures (our portfolio companies) and prior to Skalata Ventures (e.g. Aktana, Allume, Brosa, Carbar, Design Crowd, Mobilkamu, Nitro Software, Nura, Omny, Palette, Parkhound, Relectrify and Venuemob.)
  • For nearly a decade, our team has also been developing programs to support early-stage founders. Our CEO, Rohan Workman, founded the first university-based accelerator (Melbourne Accelerator Program) back in 2012. One of its first employees was Maxine Lee, our incredible COO. 

International best practice

  • The program we’ve developed incorporates insights from people who run the world’s leading accelerators, seed funds, universities and venture capital firms. These include Y-Combinator, StartX Stanford, Accel Partners, Kleiner Perkins, Techstars, Oxford, Cambridge and Right Side Capital Management amongst others. 
  • This knowledge has played a large part in the development of the program. 

Extensive local research

Prior to launching the program in 2019, we conducted five intensive months of customer discovery in Australia. We interviewed 50+ people including:

  • Founders we thought were at the right stage for our program.
  • Founders at a later stage than our program.
  • People who invest in or work with early-stage companies.

Through these interviews, we uncovered:

  • What early-stage founders need (and know they need) help with.
  • What later-stage founders wish they had done earlier to prevent obstacles down the line (but either didn’t know or didn’t realise was important at the time).
  • What investors need to see in companies in order to invest in them.
Is the program a one-size fits all for companies?

No and that’s how we like it. After all, you’re not generic so why should our program be? Of course there are business infrastructure fundamentals (i.e. deliverables) which all companies need to implement to become significant and sustainable. But, we recognise that each company has a unique set of goals and challenges.

How do you help companies during the program?

Program Coaching
Founders get access to dedicated, full-time coaches with deep domain expertise. Some of them are founders themselves. During the 5-month program, they have a clear focus on helping you execute all of your deliverables.

Growth Funding
When you join the Skalata family, you’ll receive $100k-$200k of initial funding for approximately 5-10% equity in your business. When our portfolio companies complete the program and show real progress, we’ll invest up to $1 million (including the initial funding provided) based on the potential we see.

Advisory
Each company gets the enviable support of our helpful network. This includes access to our experienced board members, corporate partners like PwC and our large external advisory network.

How is the program delivered?

We make sure objectives are achieved with the following mechanisms:

Business Infrastructure We support companies to develop the business frameworks, processes and procedures that every company needs to scale into significant and sustainable organisations. Each piece of infrastructure that needs to be developed has been structured as a “deliverable” that we help founders implement in their business during the program. These deliverables cover areas such as customer growth, product, strategy, management and operations.
Coaching Our coaches are paid employees and work week-in and week-out with our portfolio. Our coaches are also eligible to carry in our investment fund, which ensures that their incentives are aligned with the founders’.
Access to experts In addition to our program coaches, we also engage independent domain experts to support your company on your behalf.

e.g. sales training, financial modellers, lawyers, product experts and recruiters.
Cohort effect Lovely office space in Melbourne is available to all program participants. Founders benefit from the cohort effect of working alongside other people at a similar stage for advice, moral support, introductions and expertise.

How much support do I get?

Each company is assigned a lead coach (and a broader team of coaches) and will also have access to the rest of the Skalata Ventures team. This includes experts and the broader Skalata Ventures network of advisors, prospective investors and customers. You can call us anytime. We might not pick up at 3am but we’ll definitely get back to you.

Our coaches will help you work on the business but they won’t work in your business.  Their sole purpose is to help you with the deliverables that help your company get to the next level. 

The program coaches on our team are very reachable and work week-in and week-out to help you:

  • achieve your goals as a business
  • understand your strengths and weaknesses as a founder
  • work through any specific challenges, issues or risks 
  • develop and maintain a powerful operational cadence in your business
  • build and improve your business infrastructure (through deliverables)
  • wherever you need additional support (i.e. hiring, negotiating a major contract, going through a business pivot, helping you with a sales call)

An ace up our sleeve is that our coaches are paid employees at Skalata Ventures (not volunteers) and are incentivised by carry (a performance bonus) in our investment fund. So the better you do, the better they do.

How do we help companies after the program?

We hold regular alumni events, have an alumni Slack channel and give you continued access to our network – get in touch and we’ll help you with what you’re going through. We also make connections between new companies going through our program and alumni when we think it will be beneficial.

What are the objectives of the program?

There’s no better feeling than seeing our founders succeed. Because of that, we’ve set clear program objectives that lead to great things. These include:

Develop a growth engine Helping founders to achieve (and in some cases, exceed) their growth targets and build the team, systems and business infrastructure required to scale customers.
Achieve product-market fit Helping founders measure where they stand in respect of product-market fit and what actions are required to obtain it.
Build a sustainable business model Helping founders develop a viable business model with healthy margins and unit economics to ensure consistent growth.

Do you have experts with vertical expertise?

We sure do. In addition to our program coaches, we will also engage experts as required for specific business functions (i.e. financial modelling, sales training, HR etc.).

We want you under our wing.

By deploying maximum resources, we create an unfair winning advantage for every company in our portfolio.

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