Thought Waves

Get ready to make waves

We see an enormous opportunity to support founders through their Seed Phase. Here's why we started Tidal Ventures, and what we're looking for.

Andrea Kowalski

10 Jul 2020 · 4 min read

Why we started Tidal

The Australian startup ecosystem has developed in leaps and bounds over the past ten years. As it matured, a gap in funding at Seed has widened, with many of the Tier 1 funds focused predominantly on later stage investment. There are limited options for Aussie and Kiwi founders to work with professional venture investors in the early years of their startup, resulting in a lack of access to the product testing, GTM frameworks, white-boarding sessions, talent & customer introductions, investor networks and other non-capital resources so readily available to their US counterparts.

We think the Seed Phase is critical to positioning a startup for success – it requires founders to prioritize capital, separate the "must dos" from the "nice to dos" and get to market as quickly and efficiently as possible to learn, iterate, rinse and repeat. Seed is where we play and where we see the most opportunity for Australian technology over the next ten years.

Australian founders need access to venture fund that focuses purely on the Seed phase. We exist to back the best Founders with early capital and a platform of resources that accelerates a path to hyper-growth.

We dive deep

The investment team at Tidal brings together diverse perspectives and professional experience that can help Founders navigate the many challenges of building an early stage company. We have broad coverage of the functions within a start-up due to our varied backgrounds and aren't afraid to dive in deep where we can help. Our investing team has:

  • Founded and exited their own technology startups;
  • Led the product function for both small and large corporations;
  • Launched and established companies in new markets;
  • Invested strategic capital on behalf of large technology companies;
  • Managed tech "tuck-ins" within these platforms; and
  • Worked alongside Founders through the good times and the bad for many years as investors, directors and friends.

You can check out our profiles here.

What ultimately unites us is our entrepreneurial spirit – we have either founded companies from the ground up or have launched existing companies into new markets, each of us facing the exciting parallels and challenges of building something new.

Our founders are trying to nail down product-market fit, hack together a scalable path to market and attract an A-grade team. These are areas where we specialise, and we've built playbooks and muscle memory to help Founders avoid the pitfalls of those that came before them, positioning their companies for the highest level of success at every turn.

What does a Tidal Seed investment look like

Products that change the game
. For a product to be truly disruptive, it needs to change the game. Maybe this means it has the ability to really increase revenue for the customer, or provide a signfiicant competitive advantage. It could mean the product is mission-critical, and so sticky that the customer can't live without it. It almost always means that the produce user is in love with the product and they can really tie their use of that product back to meaningful value creation for them personally, for for their business. At Tidal we want to back the products that aren't just incremental, they are changing the game entirely.

Markets with tailwinds. Not all markets are created equal. Some are more ripe for disruption than others, depending on where the market is up to with its adoption of technology and what the tailwinds are that are changing the flows of value creation in that industry. We look for a really clear problem space that needs to be solved for, or a market expansion opportunity that no one has though of yet. We are industry-agnostic and some of the verticals we have invested behind that demonstrate strong tailwinds include logistics, e-commerce, agriculture, workflow productivity and finance. Current areas of specific interest include: cybersecurity, food technology and education.

Founders that hustle. Our founders have a unique insight or experience with the problem space they are trying to solve. They show outstanding technical competence across product and technology. We like to see a scrappy, data-driven approach to user acquisition and an ingrained culture of test, iterate and learn to get to the answer. Our founders understand that 'it takes a village' to build a business and they have the humility to draw on the strengths of those around them. They can inspire investors, customers and employees to unite around their vision and they show grit when they need to ride the hard times. They are decisive, when they need to make pragmatic decision and have a 'do what it takes' attitude to getting things done.

Compelling business model. We look for B2B or B2B2C models, and business types include Software-as-a-Service, Marketplace/Network and consumption-based models like API businesses. We believe the best way to create shareholder value is to nail down a low-cost acquisition method during the Seed phase and our founders understand that there are ways to acquire customers and show real product value without having to hire sales staff.

The Seed Phase. We invest during the Seed 'phase'. Usually this means there is an initial product in market and the business is generating revenue or user growth within its target customer segment. During this phase, the founder may seek capital to further develop their product, test a range of user acquisition methods or hire a gun growth expert. Our initial investment sizes are typically A$500k to $750k, depending on the maturity of your product, though we can write up to A$1.5 million upfront. We also have the ability to lead or follow in your first Seed round. Because Seed is a phase, it's often that we participate in several rounds over the period that spans an initial Seed cheque through to a Series A round.

We believe there is an unprecedented opportunity for Australian founders to make waves on the global stage. Tidal Fund II is currently live and we are actively investing in founders that are building products that change the game. If this sounds liks you, get in touch with us directly or submit your pitch through our website.

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