The Upside

The Upside

The Future of Raising Capital and Venture Capital Investment

 

This is Wholesale Investors vision for the Future of Capital Raising and Venture Investing through CRIISP (Capital Raising Intelligent Investment Secondary Platform).

The power of software, marketplaces, distribution and AI will play a more significant role in expanding the opportunity available in venture capital.

Right now, it is mostly driven by personal networks, email and excel spreadsheets with very little changing over the last few decades. The current model is inefficient, fragmented, manual, lacking sophistication, investor connectivity and utilising isolated solutions.

Our Vision is a software-driven platform, utilising AI for matchmaking, providing digital investment banking tools, enables the ecosystem and provides an end to end solution.

The tools for raising capital, secondary sales, bookbuilds, private placements and debt to be accessible by growth companies on a subscription basis, will be expected.

 

FX Strategy in an Unpredictable World

 

  • The largest contraction and growth the market has ever seen due to Covid-19, and the impacts on global trade
  • The effect that central banks removing stimulus will have on the economy
  • The promising economic forecast, as well as risks including markets, asset prices and interest rates
  • The forecast over the next 12 months for AUD vs USD, and, AUD vs GBP, and what will influence these prices
  • How WUBS work with corporates and investors to hedge risks

 

Q&A With a New Type of VC, John Sharp

Venture Capitalists using data, deep learning, and AI powered insights to analyse early stage startups may seem like the impossible dream. Hatcher+ has made it a proven reality. Partner John Sharp sat down with CRIISP Media today and provided an inside – look into the inner workings of a VC that has analysed 11,000+ deals and completed 105 investments – just in the past year). With investors in his fund such as Coca – Cola Amatil, Midis Group, and Mistletoe Group it’s well worth sparing a moment to hear what he has to say!

Q1. To begin with, Hatcher+ might be a foreign concept to many, you claim to provide predictable returns in the space of early-stage investing, can you give us an overview on how that’s achieved?

Ten years from now, we expect it is traditional VC structures that will appear foreign.  Hatcher+ is based on three simple and easily-proven premises:

  1. If you diversify your risk across industries and geographies, your returns will become more predictable.
  2. In an environment in which failure rates are high and a handful of power curve effects are responsible for the bulk of the returns, you need to dramatically increase the size of your portfolio (INSEAD research recommends increasing your portfolio size to at least 500 companies)
  3. Valuations in earlier stages are much more favorable to investors, even allowing for the much higher risk of failure.

Q2. How did you come across the problem, more importantly, how did you figure out the solution?

We systematically studied the outcomes over 20 years for both individual investments and portfolios, and the results were not ambiguous in the slightest.  Only a handful of outlier small funds generate large multiples – the majority of small funds fail to deliver even Nasdaq-level returns.

We figured out the solution by building over 4 billion simulated portfolios using 600,000 venture transactions spanning 20 years and 40 countries.  The output of those simulations clearly shows that a strategy of building larger, earlier-stage portfolios creates more robust returns.  We also did a survey of investors and discovered that a majority of professional investors select and invest in deals at a rate of roughly 1 in 100, or 1%.  These two findings form the core of our strategy, which is, for every 100000 companies we analyze, we expect to invest in 1000, and have approximately 10 large-scale exits.  This 1 in 10,000 strategies is only possible is you use data science and significant levels of automation in combination with a wide deal origination network.

Q3. Seeing the volume of companies and data you are dealing with, you must have insights others would dream of, such as;

– What characteristics of a founder indicate future success?
– What characteristics of companies indicate future success?

We are continuing to compile massive amounts of data, and are forming some early opinions on what characterizes a good bet when it comes to founders and companies.  However, we don’t yet use these outputs, or our AI, to make decisions – we only use them to provide guidance to the very smart people working within our deal origination network.  We advise people using our advice to see this analysis as just “one voice at the table”, rather than THE voice at the table.

Q4. What is Hatcher+ looking at right now, what sectors excite you?

Hatcher+ is sector and geography-agnostic in large part.  What excites us is seeing a deal back by a great team of founders and accelerator partners that scores highly in a sector that isn’t yet over-bought.

Q5. Being a trailblazer in the space of predictable VC what does the future of VC look like to you?

We recently commissioned a report from Insight Group that we plan to publish in the next few weeks called The Future of Venture Capital.  Without giving too much away, we believe the future of VC will belong to those large-scale entities willing to invest a significant percentage of their annual operating expenses in data and technology.  Right now, most VCs spend less than $100,000 a year on technology, and some spend less than $10,000 a year.  Making blind bets on small portfolios without the benefit of data (and the ability to build a large portfolio) will continue to happen, but on a smaller scale than today.

Most LPs are wising up to the fact that two-thirds of the capital being invested in the venture is currently being invested by forms with over 500 companies in their portfolio.  The future lies in larger-scale, data-driven investments – and a greater reliance on sophisticated data analysis, global levels of cooperation, and business process automation.

Q6. Being a founder yourself, but also an astute investor, what insights do you believe would be of most use to a founder just beginning their journey?

I get this question all the time, and I always answer it the same way.  The only founders I’m interested in are founders that are passionately interested in solving a problem, and capable of bringing together the skills and the people needed to solve it and scale the solution.  The only founders I *invest* in are founders that can show me, over time, they are capable of reliable, honest communications.  Founders that are capable, that are solving a big problem in a unique and scalable way, that are capable of communicating well and often, will always get investment.

Venture & Capital Interviews | Jordan Green

 

  • Jordan Green is of the most well-known angel investors in Australia and a founder of the Melbourne angels.
  • Being an angel investor, there’s always a level of altruism – you want to be making the world a better place.
  • There is an efficient set process to become involved with the Melbourne Angels.
  • They only invest financial capital if they can also invest in intellectual capital.
  • It’s important to start the process of raising your capital long before the company desperately needs it.

 

 

Animal Tags, Satellites and the Path of an Aussie Agritech Going Global

  • CEO of Agritech startup CERES Tag, David Smith, talks to CRIISP Media about his journey.
  • David talks about getting into the agricultural sector and taking his agritech international. 
  • CERES Tag is utilising Low Earth Orbit Satellites to create efficiencies in the data analysis process. 
  • The technology uses a tag alone to retrieve all the data needed to make crucial decisions in the space of livestock monitoring.

With 3000 prototypes sold across 8 countries, Ceres Tag is the newest and most exciting agritech startup in animal welfare and monitoring. Encompassing livestock, wildlife, and companion animals, the tag acts like a FitBit, collecting data on an animal’s location, performance, and health. It doesn’t end there, the data is then sent to a Low Earth Orbit (nano)-satellite online interface, the ‘Cerescloud’, removing the need for additional infra

Automatic agricultural technology robot arm watering plants tree

structure and allowing farmers to instantly view crucial information regarding their stock.

So why is this important? Due to the current climate, consumers are demanding more cohesive data regarding where their food comes from, biosecurity, and the welfare of animals in general. The Ceres Tag has secured their palace in the industry with perfect timing in alignment with this new consumer trend and the widespread shift from traditional farming practices to a bigger focus on new technolo

gy and big data. We spoke to the founder, David Smith, about the ins and outs of the agritech space, establishing a client base, and raising capital for this newborn technology. 

Getting into Agri-Tech

When asked about entering the Agricultural sector, Smith was quite candid in his advice; “Agri-tech is not very competitive because most of the solutions are quite myopic.” There are no secret solutions around breaking into Agri-Tech, just the need for a strong idea that provides value at many levels of the supply chain and to multiple parties. Hence why the Ceres Tag is a strong initiative. It tackles three major concerns for farmers;

  • Where are my animals?
  • How many are there?
  • What condition are they in?

Yet it also has the capacity to expand on these parameters and apply them to finance, insurance, regulatory reporting, research, and many more fields. Furthermore, it transcends the agriculture industry and can be used on domestic pets and endangered species. Thus diversifying streams of income. 

The client base

Australia’s history of agriculture is established and successful. Despite being home to only 2% of the global cattle heard, Australia is the 3rd largest exporter in beef – just behind Brazil and India. The industry is a major contributor to the national economy, with total revenue of $18b and generating around 77, 000 jobs. Due to the high level of exports, there is a heavy reliance on international markets. Any product launching in the sphere will struggle to succeed if it doesn’t appeal to operators worldwide and align with international standards.

Smart farming, using modern technologies in agriculture. Female agronomist farmer with digital tablet computer in wheat field using apps and internet for crop protection, selective focus

On a more personal level, Smith describes the people involved as very direct – “What you see is what you get and “no” comes easy to say.” This creates a very comfortable environment for feedback so there is less time-wasting and a bigger focus on improving, inspiring, and delivering. Despite being a broad industry, it is deeply interconnected, and “a lot of people know each other”. There also isn’t a monopoly or any dominant players, so it is open to new insights and able to expand without disruption. 

Finding Agritech Capital

Ceres Tag has been incredibly efficient on their journey so far. They have done 3-4 smaller raises, and are now seeking bigger sums of capital before they launch into the global market. Despite receiving generous grants from the government, they, “have delivered everything we said we would and then some.” Smart use of smaller sums of money has allowed Ceres Tag to create a market-ready product that can now be applied globally without change. 

Scaling is their next big challenge, hence why they are currently seeking a US$10m capital raise to further expand their business domestically and globally. The agriculture industry is no exception to the wide-spread changes as a result of COVID-19. However, Smith believes this will work in Ceres Tag’s favour as consumers are, “now more than ever, concerned about biosecurity, where their food comes from, the welfare of animals in general and are becoming more comfortable with technology”.