Thought waves on seed venture

A new software era is here. It doesn’t just store your data, it does the work for you.

For decades, enterprise software was built around Systems of Record: authoritative databases where structured information lived. Think ERPs, CRMs, or EHRs. These systems were valuable because they democratised access to critical information. For startups, they were hard to displace. They became the default axis of influence in every organisation: inflexible, centralised, and (mostly) passive.

We believe AI is breaking that model.

We’re entering the age of the System of Work: software that doesn’t just manage data, it does the work. These AI-native systems generate the actual deliverables: the compliance document, the diagnosis summary, the customer reply, and the inspection report. They collapse the distance between insight and action.

This isn’t a UX upgrade. It’s a paradigm shift in how work happens.

What is a System of Work?

A System of Work will autonomously perform productive tasks. It’s not a place you go to see what needs doing, it’s the system that actually does it. That might look like:

• An AI agent that resolves a customer ticket end-to-end
• A generated legal contract tailored to a specific jurisdiction
• A clinical platform that drafts summaries and actions from messy encounter notes

Where legacy tools required human intervention to interpret and act, Systems of Work incorporate agentic behaviour: they act on their own, within guardrails. They represent a new kind of software stack: data, model, workflow and output, all in one loop.

These systems are defined by a few key traits.

• Agentic behaviour: They initiate actions rather than waiting for human prompts.
• Embedded actions: They do not just suggest what to do. They complete the task directly within the system.
• Workflow ownership: They become the go-to place where work is created, reviewed, and shipped.
• Outcome-based value: They are priced and evaluated based on the results they deliver, not just on features or access.

Why the record → work shift matters

In a world of Systems of Work, the traditional axis of influence in software is beginning to lose relevance. The classic “source of truth” may still exist somewhere in the stack. However, the source of productivity, the system where outcomes are created, will shift.

Once a system starts producing core business outputs, it becomes exponentially more valuable and much harder to displace. This creates a new kind of competitive advantage. Systems of Work do not only benefit from access to data. They generate new, proprietary data through use. They encode human expertise, automate repeatable decisions, and improve over time. These effects compound, and become self-reinforcing advantages that deepen with every interaction.

This shift also changes the economics of software adoption.

• From insight to execution: No more offline handoffs. Work gets done where the data lives and the value is immediate and obvious.
• From user-as-operator to user-as-editor: Humans go from clicking buttons and entering data to reviewing AI-generated output.
• From seat-based pricing to outcome-based monetisation: Business models shift toward per-task or per-output models, unlocking new budget lines tied to productivity.
• From “jobs to be done” to “roles to be done”: AI systems take over full professional roles, not just isolated tasks enabling full workflow ownership.
• From software tools to workflow axis of influence: These systems become the gravitational centre of daily operations. Frontline teams feel the value directly, not just IT buyers.

How Vertical AI is powering this shift

This transition is most visible in Vertical AI: AI products built specifically for the needs of one industry. These aren’t generic LLM wrappers. They embed into frontline workflows and solve the hard, boring, expensive problems unique to sectors like healthcare, logistics, construction, and financial services.

The most advanced Vertical AI systems:

• Combine deep domain knowledge with powerful models
• Build proprietary data moats by capturing interaction-specific context
• Deliver real-world value through actionable outputs, not just dashboards

And crucially, they don’t just make software smarter, they replace entire layers of human effort.

Industries will not just adopt AI. Industries will be restructured by AI

Systems of Work will drive the biggest changes in industries where work is still manual, complex, or repetitive.

Winning without replacing

Smart AI startups are using over-the-top (OTT) strategies to enter these workflows. Rather than attempting to displace existing systems of record, they adopt a wedge strategy to layer in value → starting with simple value-additive propositions like:

• A co-pilot layered on top of an EHR system
• A transcription layer that starts automating follow-up actions
• A reporting tool that gradually becomes the system of work for compliance

Once embedded, these tools don’t just assist, they absorb the workflow. Once the workflow is absorbed, the product has direct access to the tacit knowledge that the human uses to complete a task end-to-end. Access to this ‘grey’ data area helps feed and improve an autonomous neural network, which becomes an expert on the specific task required.

Final thought

The System of Record defined the last era of enterprise software. The System of Work will define the next. We don’t know what that means for Systems of Record, maybe some of them will be able to participate in the System of Work revolution as well. We are focused on finding the founders who are willing to tackle the ‘work’ problem from scratch. The pathways to achieving a System of Work are complex and multi-layered. The optimal way to build toward a System of Work will vary by use case, user archetype, and industry.

Join us from the leading edge of Vertical AI startups, as we publish our live thinking on building Systems of Work.

Counting my lucky stars

Growing up, I had always envisioned myself being a diplomat and working overseas, so studying Law and International Studies made sense.

However, I chose to start my career in investment banking because I wanted to build a solid foundation in business. I joined Macquarie Capital’s Financial Institutions Group, where I worked on M&A deals across industries like superannuation, life insurance, and funds management. It was a great opportunity—I learned a ton about company valuations and building strategic relationships while working with really smart people.

But I found myself wanting to get closer to the companies we were working with. My time at a startup and venture capital fund had already sparked that desire. I loved the hands-on, scrappy work at the startup, and venture capital showed me the excitement of evaluating founder pitches and making quick decisions. That experience made me realize I wanted something more interactive, and my time at Macquarie confirmed it. So, I decided to make the switch to venture capital, where I could be more involved in helping build businesses from the ground up.

Seeking pearls, not just ripples: why I love the seed phase

I’m drawn to seed investing because it taps into my curiosity. The seed phase is all about exploring the unknown, which keeps things exciting. As AI shifts rapidly from general applications to industry-specific solutions, staying curious and up-to-date feels more essential than ever for investors.

I find a lot of joy in working closely with founders to unpack these unknown areas—particularly the product being built, the market addressed and even their execution. For some, this uncertainty can be challenging, but this gives me energy. Combine that with my go-to matcha latte, and you’ll understand why I’m usually on a high throughout the week.

As to why I find excitement in this process, it boils down to two main factors:

1. My core belief that the magic is in the details. I dive deep into any topic that interests me, and this has been best captured through my work with B2B software-as-a-service (SaaS) startups. While many look at the iceberg of these businesses (ie. product-market-fit or revenue), my curiosity for the details has found me needing to understand businesses at their core. I would typically work closely with founders to learn how an industry operates, what macro trends will impact the business, and how buyers are driven to purchase software—which often includes the entire process of getting a budget and involving internal stakeholder buy-in.
2. The opportunity to exercise my strengths. From deal evaluation to assessing industry trends, my M&A experience has been anchored by being able to quickly develop a good grasp of movements in technology and economic models—and this has been seamlessly transferred to early-stage venture capital. Given how the early success of seed-stage businesses is contingent on being agile to respond quickly to technology shifts, I’ve been able to offer founders my ability to quickly see where value accrues in any market.

When you combine these two factors—going deep into the details while picking up new information quickly—this is where I add the most value for our founders.

Going from getting early customers towards building a scalable business you need a good handle on whether what you're doing today is sustainable.
‍
The best way to figure that out is by understanding the numbers—going deep on unit economics, building budgets and forecasts, and operating models. All of which I have been able to hone in on during my time in mergers and acquisitions transactions.

Lessons on lessons on lessons

While the excitement of deal evaluation is a big part of early-stage venture capital, the real value goes well beyond that. The post-investment stage is where the deeper learning happens. Working closely with founders to help grow their businesses provides invaluable insights that shape how we approach future investments. It’s in this hands-on involvement where we truly gather the lessons that make us better investors.

I might only be five feet tall, but I have a complete overview of every moving part of the business—including sales ops, product pivots, go-to-market (GTM) pivots, and a million other changes. Being so close to the ins and outs has really allowed me to lean in on the learnings, which is a process I value as I firmly believe that spending time learning is never a waste of time, regardless of the outcome. Some recent lessons I’ve been able to gather from working closely with our founders from Blakthumb and Bonjoro include:

• The importance of narrowing down your ideal customer profile and how doing so will lead to more sustainable unit economics for each customer that is brought on.
• The concept of price elasticity in the context of pricing and packing SaaS products, and how it can vary across different customer segments.

However, these learnings don’t just come from the companies we invest in. While we often don’t invest in the vast majority of the companies we see, I’ve always found it worthwhile to learn about any given industry or new technology being developed, even if it doesn’t result in an investment. This has definitely taught me the power of learning how to learn.

My investment wish list if I had a time machine

I've long answered Wiz. Wiz is one of the fastest-growing software companies of all time… it's hard to believe that they’ve only been in the market since 2020. Within just four years, they’ve been able to reach $350M ARR. This solidifies the demand for comprehensive cloud and SaaS security solutions and expertise is growing, with 83% of organisations planning to increase their cloud security budget in the next 12 months alone.

Despite top-down pressure to improve cloud security, cybersecurity startups will often be met with apprehension from security teams who are reluctant to provide access to their code base or internal data. Yet, the way Wiz was able to quickly demonstrate their product’s core value to increase their customer base is particularly commendable; and I think it has set the benchmark for the wider cybersecurity industry.

My green flags in founders

By now, you might have noticed I have a thing for anything green (pandan and matcha at the top of that list.)

Aside from founders who hustle by rolling up their sleeves, I typically look for two green flags.

Having customer obsession and the ability to sell.

Both are essential in driving the business forward very early on - whether you’re selling to customers, employees, or investors. Regardless of the stakeholder, they all require someone who has complete conviction on the problem they’re solving and can convince others of the same vision.

At the early stage, being an idealist is important in setting visionary goals, principles, and long-term objectives. However, the caveat is that the best founders can balance this with the pragmatism to change course when something isn’t working. Too often, I find founders being too laser-focused on their visions, preventing them from seeing the bigger picture and making the necessary product and customer pivots.

If you’re a founder ready to make waves, I’d love to hear your vision. Let's talk about your game-changing product and how it's shaping your industry. I can't wait to explore the potential together!

If you’re a visionary founder ready to chat about what problem you’re solving, then we should chat!

My journey to get here

Much like Taylor Swift, I’ll categorise my life in eras. Here’s my professional journey in a nutshell:

• Student era: After completing a Commerce degree in Finance and Accounting at the University of Queensland, I began my career at KPMG in Audit and Transaction Services while getting my Chartered Accountant qualification.
• London era: I relocated to London and worked at Goldman Sachs in Product Control and Finance and at Lloyds Bank in PMO. I started the CFA program and passed Level 1, but I quickly realised it wasn’t for me.
• Sydney era: I got engaged in the Swiss Alps before settling in Sydney and transitioning to Macquarie Bank in project management. Wanting to escape the machine that is a large corporate, I moved over to a small private cloud and managed service provider called VMTech.
• Founder era: I co-founded Hometime, where I assumed various roles, including leading go-to-market teams, serving as CFO, managing acquisitions, and navigating team scaling.
• Investor era: In late 2022, I wanted to find that happy spot where I could put my financial expertise and startup background to good use, partnering with other founders to grow and thrive—that’s when I joined Tidal, and here we are!

As you can see, I’m a generalist with a foundation in finance. My finance background equips me with solid analytical skills to navigate complex problems. What you can’t surmise from my CV is my love of people. I’m all about understanding, relating to people, and building strong, authentic relationships. This also extends to connecting others—with just the slightest hint of common ground; I can connect with the right people at the right time if I see a mutual benefit. This blend of financial acumen, emotional intelligence, and a genuine love for connecting people makes me, me.

What I love about Seed

My passion for Seed phase technology investing springs from a profound appreciation for this particular phase of company building. There’s an undeniable allure to being part of a company’s early growth, where progress is swift, and the potential for impact is vast.

What truly captivates me is the opportunity to engage with diverse ideas, innovations, and technologies. As an investor, I leverage my expertise to collaborate with different visionaries, having a larger circle of impact and contributing to meaningful change.

Beyond the excitement of innovation and growth lies the human connection inherent in early-stage investing. Witnessing a founder’s triumphs and supporting them through challenges enriches the journey. Sharing in the highs and lows with passionate founders adds a profoundly gratifying dimension to the investment process, transforming it from a mere business endeavour into a deeply personal one.

Something I believe that others don’t

I believe in the profound importance of intuition in decision-making, a belief not everyone shares. In a world dominated by data and rational analysis, the intuitive, ‘gut feel’ is often dismissed. Combining intuition with rational thought leads to more holistic and satisfying outcomes, acknowledging the complexity of human emotions and experiences that data alone can’t capture.

If I really ponder this one, I see intuition as our own internal database—it’s all about recognising patterns. ‘Gut feel’ is our brains picking up on subtle clues and nudging us in the right direction based on things we’ve seen or experienced before.

Going from founder to investor

Well, for one, I deeply empathise with founders because I’ve lived that challenging and rewarding journey myself. I know how hard building a business can be and know the lingering feeling of having a million things to do. At the same time, I understand how profoundly fulfilling it can be and how it offers unparalleled rewards that are sometimes impossible to see at the time.

• I’ve lived the reality of sobering scenarios. I’ve lived losing 80% of revenue in a single month because of COVID-19, necessitating hard and fast strategic decisions that fundamentally changed the business model and our organisation at every level (including minimising headcount by 80 in a matter of weeks)—knowing that without these changes the business would have died in a matter of months.
• I’ve lived the need for optimism. As a founder, you are always optimistic; you need to be; otherwise, you would never have taken on the challenge, but maintaining the same level of optimism throughout the journey can be challenging. I’ve lived the balancing of setbacks with a healthy dose of perspective and pragmatism.
• I’ve lived culture starting with the founders. I know it can take years to build and moments to destroy. A great culture can influence things as important as employee (and ultimately customer) satisfaction, your ability to recruit great talent, that talent’s performance and productivity, and their ability to adapt with resilience.

My battle scars help me see around corners for my portfolio companies. My experiences building, managing, acquiring, and restructuring teams across GTM, Finance, and HR shape the way I partner with our portfolio founders to navigate the complexities of growth.

Characteristics of a top founder

• Resilience is key. More will go wrong than right, so you need the resilience to see it through and roll into the good times.
• Driven by “why”. The founder needs to champion the “why” because it’s ultimately why employees and customers choose to join and stick around. They’re all buying into the vision.
• Being coachable. You have to take on feedback and advice like it’s your job. You won’t know every answer, but if you speak to the right people and listen to those who have been there before, you might just find them.
• Customer focus. Customers pay the bills; you should focus on them. Some founders build what they think customers want but don’t spend enough time truly understanding what they need, what they do, how they do it, and why they do it.

How the world will change in 10 years

Mark my words: quantum computing will revolutionise the world. Quantum computing can process and analyse vast amounts of data more efficiently than classical computers, which can significantly enhance the capabilities of AI and machine learning algorithms. This could lead to advances in natural language processing, image recognition, and predictive modelling. Given the amount of quantum computing investment, advancements, and activity, the industry is set for a dynamic change similar to that caused by AI – increased performance, functionality, and intelligence. This also comes with the same challenges presented by AI, such as security, as outlined in the recent Quantum Safe Cryptography article. But just like AI, quantum computing is coming. You might say that quantum computing is where AI was in 2015, fascinating but not widely utilised. Fast forward five years, and AI has been integrated into almost every platform and application. In just five years, quantum computing could take computing and humanity to a new level of knowledge and understanding.

What keeps me up at night

Aside from my reoccurring nightmare of getting sent a Microsoft Teams meeting link, the widening inequality between those with and without access to technology keeps me up at night. Ensuring equal access and digital literacy is vital to preventing social and economic disparities. Governments must intervene to make technology and education widely available, especially in schools. Starting tech education early is critical to nurturing a world-class technology sector and boosting our economy.

That being said, I stay awake thinking about how technology impacts the generations of tomorrow. Outside of work, my passion lies unequivocally with my family. I am immensely proud to be the parent of two delightful little girls, aged 5 and 3, who are at the very core of my universe. They are not just an integral part of my life; they serve as my anchor, providing a perspective that transcends the daily hustle and bustle. As a parent, I’m deeply concerned about the pervasive influence of technology in our daily lives. I yearn for a future where my children can uphold genuine, meaningful human connections, recognising their importance for our mental well-being. While advancements like VR and AR continue to shape our world, I worry that they may further consume our precious time and divert our attention from what truly matters—cherished moments spent with loved ones.

What excites me about Australia’s tech scene

The Australian tech landscape is still in its infancy, with substantial growth to come. Despite being a newer market than established tech hubs like the US and Europe, Australian founders and businesses have demonstrated remarkable resilience, often having to punch above our weight to be recognised internationally. As Tidal partner Georgie pointed out in her article in Startup Daily:

The perception that Aussie companies excel in capital efficiency and early monetisation remains unchanged. A slight advantage is that we’ve created a reputation that we can achieve significantly higher annual recurring revenue (ARR) levels at the Seed and Series A stages than our American counterparts raising at similar stages.

Because of the size of the Australian market, founders adopt a global mindset from day one. They know that to reach the scale required, they‘ll need to think beyond Australia. This collective mindset underscores the ongoing evolution of the tech industry in Australia, signalling promising developments on the horizon.

My investment wish list if I had a time machine

I could say Apple because I’m a massive fanboy, and it would have been a very lucrative call if I had invested early on. Or I could say OpenAI because it is so hot right now and is providing some revolutionary products. But I’m going to pick Notion, the platform I use almost every day, and it has truly revolutionised how loads of people work. Notion epitomises coolness with its sleek UI and spot-on UX design.

The advice I live by

Don’t ask, don’t get. You’ll be surprised at what answer you might get.

My first founder question

What problem are you solving, and how are you solving it?

If you’re a visionary founder ready to chat about what problem you’re solving, then we should chat!

Cutting my teeth in transactional law

The first eight years of my career were in corporate law, where I found my niche in M&A and investments. I’m a bit of an adrenaline junkie, so I thrived in the fast-paced and high-risk nature of transactional work. What energised me most was the diverse range of activities in a single day. In the morning, I’d help a client with their ESOP, then find myself drafting a SAFE for another client before jumping into an acquisition negotiation in the afternoon.

Amidst all that excitement, what truly made me tick was the opportunity to form deep relationships with founders during pivotal moments in their lives. However, the transient nature of transactional law was a challenge; after closing a deal, you’d swiftly move on to the next one. This constant shift had me wishing for a more lasting connection, a desire to continue the journey with the folks who I had become so close to. That was my primary motivator to jump out of law into the world of tech (that said, I can still get pretty nerdy about deal structuring and will always appreciate a well-drafted Russian roulette provision 😉).

Seeing technology M&A through to success

Following law, I found myself in the M&A team at Atlassian. M&A gets a pretty bad wrap; reports indicate that 70% and 90% of all deals are deemed “failures,” marked by management dropouts, insufficient value realisation, or even complete divestitures a few years later. I’ve long believed that the lion’s share of these failures can be attributed to a lack of emphasis on the people part of these transactions.

My role at Atlassian was focused on addressing the people experience within transactions. At the outset of each deal, we delved into understanding founder motivations and aspirations, aiming to decipher how they could thrive within the Atlassian environment post-deal. On the backend, we’d act as a founder’s “chief of staff”, helping them integrate into Atlassian’s culture and ways of working and ensuring their teams were set up for success in their new home.

Becoming the G&A whisperer

Though the structure of tech companies varies, I generally categorise them into three distinct organisational units: Governance and Administration (G&A), Research and Development (R&D), and Go-To-Market (GTM).

G&A typically encompasses what some might call the “unsexy” or boring work like people, legal, and financial. But it’s exactly where I like to play (hear me out). In my view, robust G&A is the linchpin that distinguishes a good company from a truly great one. The foundational work of implementing effective governance structures, enhancing productivity, spearheading people programs, and aligning company goals and OKRs serves as the bedrock for scaling companies. These elements empower R&D and GTM teams to do their best work.

At Tidal, where we focus on Seed Phase investments, we seek founders who are already displaying early signs of product-market fit and witnessing the beginnings of a repeatable GTM motion. What they need are the right foundations to supercharge those motions and achieve MMF (model market fit). And that’s precisely where my expertise comes into play!

I get to engage with incredible founders every day, from seed to exit and beyond, while also leveraging my legal, people, and project management skills to provide invaluable support. Whether it’s offering governance insights at the board level, negotiating deal terms, or contributing to workforce planning and people systems, I am deeply passionate about making a meaningful impact.

Pioneering the future of work

Driven by my passion for people programs, productivity, and governance, it should come as no surprise that I have a keen interest in investing in the future of work. I’m convinced that the trajectory of AI will be a game-changer in reshaping the way we work, allowing us to focus on the parts of our roles that actually require deep thinking and genuine human involvement. Rather than machines assisting humans, I expect we’ll see a paradigm shift towards humans assisting machines. Against the backdrop of the slowest productivity growth in 60 years and the unprecedented rate of AI adoption, it looks like a thrilling window of opportunity is emerging for new players to join the race.

With my unique cross-section of legal, governance, and people programs expertise, I’m well-positioned to identify and advocate for companies at the forefront of this transformative wave.

Get ready for my first question

Tell me about you and the journey that got you to this moment.

When I come across a prospective investment, my first question is simple: “Tell me about you and the journey that got you to this moment.” People are at the core of what I do, and starting with the founder’s journey helps create a relaxed atmosphere for a more fruitful conversation.

If you’re a visionary founder ready to make waves, please hit me up. Let’s chat about your market-shaking, ambitious product that’s changing the world. I’m all ears and excited to explore the possibilities with you! 🚀

Being in the technology space for over 20+ years, I rarely get excited about the latest ‘tech’ cycle—I’ve found that they’re often more ‘novel-hype’ than substance. But the current wave of AI innovation is different.

I can’t overstate how quickly generative AI is materially changing the world around us and the way we interact with hardware and software. For those of us who witnessed the rise of the internet in the late ’90s or the ubiquity of mobile devices in the 2010s, you’ll likely agree that generative AI has accelerated with a much more meteoric ascent.

At Tidal Ventures, we use an ‘AI stack’ framework to structure our thinking and conversations. I’ll explain how we use it to frame our discussions around AI’s far-reaching investment implications, breaking down the layers that define this technology field and exploring their investment opportunities.

The AI stack

To effectively navigate the AI venture capital landscape, it’s crucial to understand the AI stack— which consists of three key layers: AI infrastructure, AI models, and AI applications.

AI infrastructure layer

At the base of the stack, you’ll find the infrastructure layer. This layer encompasses the essential hardware and cloud platforms that serve as the foundational building blocks upon which AI capabilities are constructed. It includes:

• Hardware infrastructure: Specialised accelerator chips optimised for model training and inference workloads.
• Cloud infrastructure: Comprising various cloud platforms that facilitate the large-scale computing required for AI-related operations.

AI models layer

The model layer plays a pivotal role in the AI landscape—these programs analyse datasets to find patterns and make predictions. The model layer encompasses:

1. Foundational models are large, pre-trained models that serve as the base. Technologies like Google’s Bard and Meta’s Llama are crucial in bridging the gap between raw computing power and practical AI applications.
2. Contextual models are trained on narrowed, industry-specific datasets. They are tailored to fulfil particular needs and act as the driving force behind various AI applications. Looks like BloombergGPT plans to do this for the finance world.
3. Local models are trained on localised, often proprietary datasets, further refining AI’s capabilities for specific applications. LifeLenz and PredictHQ are key proprietary data sets within our portfolio.

AI applications layer

The application layer is at the top of the AI stack, where companies develop AI products and services for end-users (think Chat-GPT). These applications utilise local, contextual, and/or foundational models to provide a wide range of AI-powered solutions.

Tidal Ventures’ AI investment mindset

Tidal believes that the expanding and ubiquitous nature of cloud computing has quietly propelled multiple waves of technological innovation. As cloud technology continues to gain widespread adoption and the cost of computing resources continues to decrease, a transformative shift will not only continue but is set to accelerate. This shift will fuel the rapid expansion of artificial intelligence across diverse industries and applications, impacting the products and systems we use today in our everyday lives, both at work and at home.

Our focus, like always, is to find the very best product, engineering and commercial operators who have identified globally significant problems to solve. We look to zero in on these opportunities, which we’ve seen within Australia’s vibrant, innovative environment and beyond.

At Tidal Ventures, we’ve been investing in predictive AI for the past eight years. Our current portfolio includes companies that are revolutionising various sectors through AI, including:

• BuildBetter: Automating and improving efficiency within workflows, providing insightful summaries, and enhancing product and customer operations.
• FrankieOne: Enabling contextual payment processing and real-time fraud monitoring crucial for regulatory compliance.
• Hone: Using their cloud-based Machine Learning and AI to enable farmers to make real-time decisions on grain segregation, optimising quality, and yield values.
• LifeLenz: Using their proprietary AI-powered forecasting model to establish a global benchmark in labour scheduling.
• PredictHQ: Leveraging proprietary data for improving economic value and enhancing services like Uber’s surge pricing.
• Search.io: Enhancing customer conversion through personalisation and transforming the e-commerce landscape.
• TheLoops: Providing SupportOps to improve customer experience and boost revenue, leading to customer delight.

LLMs

Today’s tech conversations seem to centre around large language models (LLMs). It looks like the obvious way an LLM would or wouldn’t win is by nailing their distribution model. Ultimately, we’re seeing the race to which LLM will be used at scale because the more an LLM is used, the more data it accumulates, which propels its self-learning cycle.

When viewing technology in terms of where we should be investing, new LLMs aren’t the clear choice due to their intense capital requirements and competitive environments. The LLM arms race has been underway for nearly a decade, and we don’t see a specific path to investing early-stage capital in this segment. The one area that may be compelling is the open-source LLM category, which, while early, is showing solid traction. In any case, we’re keeping a close eye on the downstream impacts of LLMs and how they may impact the other layers we are keen to invest in.

Contextual and local models

While LLMs seem to be in the spotlight, we’ve been focused on investment opportunities in contextual and local models. These models leverage rich, industry or topic-specific data and create value around that data while layering it on top of core LLMs. As you can imagine, the contextual relevance of these models is incredibly powerful within specific industries (like wealth management). Of course, you have to define the data set and then get the AI to learn from that data set to create a valuable output for an application or system.

When it comes to AI—primary data, while interesting, is just a ‘feed-source’ for the models. What actually matters is the value one creates around the primary data and then applies to specific situations. This can become incredibly valuable economically and productivity-wise for the end users, making it an intriguing investment area. Consider PredictHQ (from our Seed I fund); they own the world’s best predictive data models around how events impact certain businesses’ demand. These insights can then be used to power pricing systems, labour scheduling, stock ordering, etc. Prominent tech players such as Google, Facebook, and Amazon have built their entire organisation’s revenue models on collecting and optimising their systems to meet customers’ desired advertising outcomes. They have benefited enormously from this. These new contextual models have the potential to do that for all businesses, not just the ‘big tech’ platforms. All of a sudden, proprietary data sets are back in vogue.

Built-for-purpose applications

In the current landscape, the application layer of AI technology is a hotbed of activity. Many individuals and organisations are fervently exploring strategies to capture the attention of particular audiences and entice them to adopt applications that leverage the immense power of AI.

While there will always be a place for general-purpose applications like ChatGPT, StabilityAI, or Midjourney, the prevailing trajectory in the AI landscape is towards specialised solutions tailored to distinct sectors, categories, or teams. As such, we’re keeping a close eye on the emerging built-for-purpose products that utilise foundational models, potentially layer on their local or contextual data, and make them accessible through various applications.

AI in Australia

I recently sat down with Ryan Black, Head of Policy and Research at the Tech Council of Australia, to frame the local opportunity.

Ryan and I both agree that Australia’s power in the global AI ecosystem will undoubtedly lie in the application layer, particularly in generative AI. While it may not be at the forefront of developing foundational AI models or semiconductors, the country’s strengths in product and software development, cloud computing, and software as a service (SaaS) make it well-suited to harness AI’s potential for innovation and job creation—this emphasis on software-driven innovation positions Australia for success in the AI industry.

Companies like Atlassian and Canva have already begun leveraging AI, and Australia’s strengths in specific industries (like agriculture and hospitality) provide fertile ground for AI innovation. Australia’s journey in AI has the potential to entirely reshape the nation’s technology landscape and economy. The companies that are AI-first in their approach are particularly exciting, ushering in a promising era of innovation and growth in the Australian tech sector.

So whether you are a technology founder developing a product or an investor seeking to allocate capital, it’s imperative to consider how AI can substantially enhance products, services, and customer experience. Drawing on an impressive track record of investing in AI-based venture opportunities, Tidal Ventures is well-positioned to consistently identify and champion innovative ventures at the forefront of the AI revolution. Our unwavering confidence in the burgeoning technology landscape means we’re continually uncovering compelling opportunities within both the model and application layers.

We love nothing more than engaging on these topics within the broader business, investment, and technology communities. We believe that these discussions, debates and collaborations lead to some of the most exciting opportunities, so if there is something you’d like to discuss, please don’t be shy and reach out.

Get to know Tidal's Grant McCarthy

Which experiences have shaped you as a venture capital investor today?

I think working in the technology and product-led operating teams at Yahoo really opened my eyes to how digital businesses could be built, scaled and developed into profitable businesses. There was such big target audience we needed to attract, engage and retain, and that was a key challenge. The technology sector might have changed since the early 2000s, but the principles for growing core customer segments remains the same. I think having a broad set of experiences and accumulating knowledge in different technology market conditions has shaped my approach to venture capital investment significantly. It not just about identifying opportunities and allocating capital, it’s about building audiences into products, and that’s how we think when we invest in companies at Tidal.

What do you know now that you wish you knew when you first started as an investor?

I now have over 20 years of experience investing in and advising early-stage companies, and one of my earliest learnings was to take extra time in making decisions around thematic investments. We know that the venture capital market is about velocity and 'fast decisions', but to get real conviction at an early stage it takes research, patience, and time. There’s not always much information available to you as an early stage investor, so during interactions with a founder you have to form assumptions.

And even if what you learn is very appealing, you need to keep acquiring more information. Waiting for a clearer picture to emerge about a sector, founders, products and customers means our investment decisions and formed from strong convictions rather than just enthusiastic assumptions.

A great example is one of our Tidal portfolio companies Upflowy. Their ability to find product-market-fit is what was initially appealing, but by also seeing how they built their low-code product and gained early validation with customers, gave us both enormous confidence in their team and more certainty in our investment decision. Read Upflowy Investment Notes - here.

As a ‘seed stage' investor you have to be willing to wait for signals that prospective companies are finding market-fit and growing product proof points. In saying this, sometimes it is also purely about the founder and the vision in the right segment, but that’s the exception to the rule.

What was your most memorable first meeting with a founder?

In my first meeting with PredictHQ's Campbell Brown, he was pitching his new company to me while simultaneously sending a fax to sell his current business. Great founders never wait to solve a problem they truly care about and Campbell was a perfect example of this in action. His passion and drive was right on his sleeve, and this kind of energy and hustle is something we really look for in our Tidal Wavemakers. It was also quite memorable to see him using an actual fax machine to do business - surely one of the most important innovations in human communication (at the time)!

Advice to live by

While there’s much wisdom in the world, my top piece of advice is don’t use the past as a point of reference for the future.

What are you interested in that might surprise other people?

I’m an avid reader of European history, from the late 1800s to 20th century events like WWI and WWII. The geopolitical dynamics that led to these turning points in history are fascinating to learn about. For example, the end of the Czar dynasty in Russia might have been precipitated by successive defeats to Germany during WWI, but underneath it was also a nation desperate for change. The build-up of war with Japan, constitutional reforms that were not delivered on, and systemic poverty, ended up pushing Russia over the edge in 1917.

What new technology do you wish you could experience again for the first time?

Oh that’s easy: Bose noise cancelling headphones. They’re essential for getting through long flights and noisy commutes. There are a variety of noise cancelling options on the market nowadays but I have found the Bose to be the most effective for my sanity.

What advice do you live by?

While there’s much wisdom in the world, my top piece of advice is don’t use the past as a point of reference for the future. If Steve Jobs had just replicated the functions of a traditional phone, we would not have the iPhone. At the time, a handheld device with internet, apps, photos and video capability was revolutionary. The first car was not invented by thinking about how to make “faster horses”. Innovation is always forward-looking.

Market sentiment has officially changed.

Use your microscope and your telescope simultaneously in times of market uncertainty!

This will be the fourth 'tech cycle' for the Partner team at Tidal. We have invested during the Dotcom era, the Global Financial Crisis, and the short downturn in 2012. This cycle will no doubt be different for a variety of reasons including Covid, the great talent reshuffle, global supply chain issues, and a US inflation rate at a forty-year high.

The underlying message from the various investor notes issued to founders in the past few weeks is clear: for a time, capital has been abundant and cheap. Now it will become expensive, and harder to get.

It is important to note that for Australian start-ups looking to raise a Seed to Series A round in the current market, there is still an abundance of capital that has been committed from LPs to Venture Capital funds in the past twelve months. However, we expect that these funds will be deployed more slowly and carefully than the past three years.

This is a good thing, for founders and for investors. Founders that take the time to get to know their investors will benefit in the long term. It will also focus the funds across Australia into pragmatic and visionary founders that build products for true customer problems, in sectors ripe for disruption.

Insights from the US market

I have just returned from a two week US trip, where I visited both the East and West Coast, meeting with founders and investors. Here are my expectations and insights from the trip:

• The current revaluing of multi billion dollar technology assets will flow down from public markets and later stage startups to the Seed-Stage investment space. This will impact valuations and capital allocation across the venture capital sector at some point during this next cycle
• Entry valuations for Seed investments will likely be revised downwards. Founders may need to adjust the amount of capital they raise in order to retain acceptable levels of dilution for their Seed round
• Companies may need to raise their Seed capital over a series of investment rounds in order to prove product market fit, reach solid levels of revenue traction and demonstrate unit economic profitability before raising a Series A.

Leadership and culture is always important, but in times of market uncertainty it gets put under the microscope.

Takeaways for Seed Stage founders

• Live your values. Leadership and culture is always important, but in times of market uncertainty it gets put under the microscope. Your team is the lifeblood of your business. Lead with authenticity and empathy, hear the voice of your organisation and communicate effectively with your team. The mission and ethos of your product-building organisation lives on regardless of the ‘noise’ in the market.
• Get scrappy to fund growth. You can fund your business growth with capital or you can fund it with revenue. The cost of capital is going up, so act accordingly. In times like these, over-index on the growth drivers that generate cash in your business (pricing, packaging, growth hacks, product features).
• Unit Economics are key. One day, the value that your company creates for shareholders and your ability to fund further innovation will depend on your profit margin. The choices that you make today in the way you build your team, your product and your customer acquisition methods, will shape this future. Profitability is not a can to be kicked down the road, it is a key driver for startup success and now is the time to nail it. Hint: this is not about pinching costs, it’s about stealing market share from your competitors by building the best product and then cracking a low cost path to customer acquisition.
• Build the best product. Talk to your customers. They will tell you what they will or won’t spend money on. Make sure your product is a must-have for their business to thrive in a downturn. Make it easy for them to try your product, to integrate it into their daily usage, to share it with their colleagues. Create the feature that they can’t live without and entice them to upgrade. Stay true to your core and build with empathy for the user.
• Know your investors. Whether you are a venture backed startup already or are seeking your first round of funding - the quality of the relationship you have with your investors during this current market, and the collaboration you can share both ways - is critical. Don’t assume the next round of funding is just around the corner, be master of your own destiny.

Tidal looks through the lens of a telescope

Tidal is a Seed-Stage venture fund with long investment horizons. We remain excited about the opportunity to back founders that are in the earliest stages of building their product for global markets, with a view to profitable, sustainable growth.

We can’t profess to have a crystal ball and know what the next cycle will entail, but we do know that the greatest companies in history were created during a market downturn. Capital-constrained environments can produce the most innovative and transformative companies. Our investment team is actively seeking Australia’s best founders and we have ready capital to deploy from our Seed Fund II to support your Seed Phase.

If you're a visionary founder who is ready to make waves, please reach out via our website.

Get to know Tidal's Max Kausman

What drew you to Seed investing and in particular, the Tidal Team?

I have always been interested in startups and technology. I love great products and I’m fascinated by the way tech businesses and business models re-shape markets. I thought deeply about why I wanted to be in venture, not only about why I would find it interesting and purposeful, but also about whether the role would match my attributes, capabilities, and personality. I don’t think it’s for everyone, but I get energy from the role - it’s hugely people-centric, there’s a lot of autonomy, and a lot of intellectual breadth. There are new learnings - business models, technologies, sectors - every day. It requires curiosity, comfort in ambiguity, and a long-term perspective.

The Seed Phase in particular is an extension of that. It’s people-centric, but still with real analysis and deep thinking involved in understanding markets, products, and business models. It’s such a formative stage that the impact we can have is enormous, and I relish the opportunity to work very directly with founders in this stage as they build out their teams and find product-market fit.

When I joined, I felt (and continue to feel) like I could learn an enormous amount from the Tidal team. I was drawn to the diverse backgrounds and unique skills and capabilities of the team, and I spoke to a number of founders who raved about Tidal as investors. I liked our portfolio, our investment mandate and philosophy, and how we have the conviction to lead Seed rounds and are genuinely active operational partners to our founders.

What’s a day like in the role?

It’s enormously varied. Broadly, my time is split across deal-flow, supporting our portfolio companies, and helping to build Tidal itself as a funds business. Within each of those, there are lots of different jobs that need to be done. It’s fast-paced, and there’s lots of context switching.

What's the first question you ask when you come across a prospective investment?

I generally start with the origin story of the business. I love unpacking how a founder realised there was a problem, and why they then decided that they cared enough to dedicate their time and energy, over what could be decades, to solving it.

What is something you believe that others don't?

I believe that ‘weird’ is a compliment. There’s a lot of social and societal pull to conform and be normal - but I have a lot of time for people who are authentic enough to let their weirdness emerge. Those who make the greatest entrepreneurial strides are often eccentric, unconventional, and willing to be wrong.

What is one thing that inspires you every day at Tidal?

I think all venture investors have a healthy scepticism. We say no a lot, and there is always a reason why a business idea won’t work. What gets underplayed is the underlying optimism that goes into figuring out why a business idea could work, and how exciting and inspiring it can be to then do the deep thinking and get to the point we ultimately say yes. When that happens, we get to partner with some incredible founders and work closely with them to realise their vision for the future of the world.

At a macro level I’m also excited by the amazing compounding momentum we’re now seeing in the start up ecosystem in Australia, and its potential to create jobs and reshape our economy.

What do you think is the most important qualities or characteristics a business founder should aspire to have and never lose?

A great founder should have binary qualities. What I mean by this is that founders should deeply understand the problem they are solving, but also be able to zoom out and see the bigger picture. Founders should have humility and be open-minded, but ultimately be decisive, relentlessly believe in themselves, and be willing to create buzz and draw others to their mission. When those binaries interweave, and there is a clear sense of hustle, I feel we have found a great founder.

What are you passionate about outside of work?

I have a broad range of interests and I love trying new things. I’m an avid traveller. I love sport, especially Basketball, AFL, and Cricket, and I’m a good skier and a wannabe surfer. I enjoy music and live gigs, good food, getting outdoors, and being social. I’m a voracious reader, particularly on tech, psychology, geopolitics, and macroeconomics. I’m both self-aware and shameless enough to use the word ‘voracious’ unironically.

What advice do you live by?

Advice is easy to give and much harder to receive.

How do you think the world would change in 10 years?

The rate of change - in technology, and in society, is enormous, and I believe it will only continue to accelerate. There’s a convergence of amazing forces going on - in AI, Robotics, Clean Energy, Biotech, Blockchain, Space, Remote Work - the list goes on. I’m optimistic about what this means for the world in terms of better living standards, and I hope this ultimately results in vastly more people doing creative things and working for themselves. I would temper my techno-optimism with a bit of macro-pessimism though. There are some big societal problems to be solved - a big economic deleveraging, Western populism, decarbonisation, the risk of great-power conflict. It's going to be an interesting decade!

How do you measure success?

I measure success by the quantity, calibre, and depth of relationships I have. Success to me is in having people for whom I’d go the extra mile, and feeling confident knowing they’d do the same for me.

Get to know Tidal's Georgie Turner

What gets you excited about Seed phase?

It's the most challenging part and therefore the most rewarding. When a founder has experienced a problem and describes a clear vision of how technology can solve that problem, that optimistic feeling is infectious. Being involved at Seed means I get to experience the beginning of a serendipitous journey.

But the Seed phase is also the most difficult part to crack. Founders need to reach product market fit, find a scalable path to market and convince early team members and investors to take a chance on their vision. It can be tough and tiring, but it's never boring.

You also bring an operator lens to the team, how has that experience shaped you as an investor today?

In 2012 I was part of the early team at Rackspace Australia, selling the early version of cloud computing infrastructure into Australian corporates and startups. This was around the time that AWS launched in Australia, so I had direct experience selling in a fast growing market with some tight competition on every deal.

During that time I was deep in the weeds of our local go-to-market strategy, including digital and brand marketing, product localisation, partner and channel selling, direct enterprise and SMB selling and what we called 'fanatical customer support'. Through that time I gained a great appreciation for the challenges around unlocking rapid growth and how to accelerate in a new market. Rackspace had a strong sales and support culture and took its values extremely seriously, a quality that I actively look for in a founder when I invest.

What's something you wish you could go back to tell your less experienced self?

Figure out what makes you happy and then just optimise for that. Don't compare yourself to other people. When you tell the stories of your accomplishments, the things that you will remember the most will be (1) the way you felt and (2) the people you were with. Surround yourself with people that are smarter than you.

Is there a type of technology that you don't use?

I have never really been a user of social media, it's not a tool that appeals to me at all. Despite being a technology investor I actually don't use a lot of technology outside of the standard tech for work. I still use my iPhone for making traditional phone calls more so than anything else.

What is your niche, your passion outside of work?

I am an avid reader and I devour fictional stories like other people binge-watch netflix. Pre-covid I would go to the library and take out 5 books every 4 weeks. Post-covid I use a Kindle but I still miss the real thing. The last book I read was Klara and the Sun by Kazuo Ishiguro. It is centred around an "artificial friend" to a lonely child and is narrated by the machine - Klara. I have always been more interested in fiction as a commentary on human nature than autobiographies or business books.

How do you think the world would change in 10 years?

When my baby was born last year on Christmas Eve, it occurred to me that 'Gen Alpha' may be one of the last to be conceived and born with no optional genetic editing offered to the parents as standard medical practice. The field of genetics has great implications for innovation in the preventative health market, which I believe will come to dominate the healthcare space in the next 10 years.

If you're a visionary founder who is ready to make waves, please reach out via our website.