May 16, 2022

Botu Linum

The Car & Automotive Devotees

Start-up accelerator Startmate cashes out of HappyCo, kicks off raise

3 min read

“We had been chatting to Jindou and getting a sense of what their next chapter looked like and whether we’d keep adding value. They are based in the US now and for a bunch of reasons it made sense for them to keep looking forward.

“We also have mentors and investors from the 2012 fund that are looking to redeploy capital now … and it’s a meaningful exit.”

While HappyCo was Startmate’s first exit from its 2012 batch of start-ups, its 2011 cohort had a quick return when e-commerce start-up Grabble was snapped up by Walmart in less than a year.

It has also reduced its stakes in some of its other portfolio companies via secondary rounds and one portfolio company, which is profitable and has not taken on any other external capital, has paid it sufficient dividends to return an entire fund.

Startmate’s $380,000 2012 fund was only the second in the accelerator’s history. Other companies in this cohort included marketing start-up Vero, home automation system Ninja Blocks (which has since collapsed) and cybersecurity success story UpGuard.

Investors in the fund include Atlassian’s Mike Cannon-Brookes, Scott Farquhar, angel investor Alan Jones and co-founder of the now-defunct pioneering local start-up incubator Pollenizer, Mick Liubinskas.

Startmate CEO Michael Batko says he wants the accelerator to support start-ups through all phases. 

The accelerator has evolved dramatically in the last decade and now also operates four fellowship programs specific to engineering, founders, women, students and, most recently, media. It also has a “first believers” program for would-be early stage investors, and a “small bets” fund for good ideas.

The next chapter in its evolution will be the introduction of the planned continuity fund, which Startmate CEO Michael Batko said represented its “next step toward becoming the epicentre of start-up ambition”.

Capital raising for the new fund has already kicked off, and Mr Batko said about 40 investors were already committed, with cheque sizes of up to $1 million.

“It’s great to have so many successful alumni, but currently we can only back them in the accelerator, but we want to be able to back them afterwards,” Mr Batko said.

“With this new fund … if a round is led by a VC, or a Startmate alumni, we’ll automatically follow on with our pro-rata rights to top up. If the company has room for us to do more, we could invest up to $1 million per company.

“This is like the second cheque on your first round.

“We want to support founders all the way from the beginning to the end.”

In October last year Startmate increased its standard investment amount in each start-up coming into its program from $75,000 to $120,000, as well as upping the standard valuation from $1 million to $1.5 million.

If a company that has already raised VC funding joins the accelerator, it will match those terms.

As well as the continuity fund, Startmate is preparing to launch a “growth stage” program for start-ups ready for Series A rounds and beyond, and a talent acquisition fellowship this year.

While the accelerator has come a long way from its first cohort, which had only 25 investors supporting it, many of the original investors, including Mr Cannon-Brookes and Mr Farquhar, are still actively involved today as investors, but most not as mentors.

“That’s almost by design” Ms Capelin said. “The most value companies get are when their mentors are only two, three or four steps ahead, not 10 or 20.”