Blackbird’s Startmate accelerator program is increasing startup investment from $50k to $150k
Blackbird partner and Startmate accelerator boss Niki Scevak told Business Insider the early stage funding environment is changing in Australia and startups need more funds and longer to test the viability of ideas.
He said early seed rounds are increasing from a few hundred thousand dollars to several rounds of $1.5-$2 million per startup.
“The bar for a seed round has gone way up… for founders to prove out product/market fit over six or nine months instead of three or four months,” he said.
Driving the larger rounds is a growing venture capital market both in the US and, to a lesser extent, Australia, where green-shoots are starting to appear with the likes of Square Peg, Blackbird and AirTree Ventures investing in the ecosystem.
“There are lots and lots of micro VCs in the US where the rounds need to be larger… that’s driving it on some level,” Scevak said.
Surprisingly for an investor looking for good deals, he argues that many tech startups have been undervalued.
“Startups should be valued higher than they have been in the last five or ten years. It is a global financing market at the seed level.”
Scevak is adamant the growing funding rounds aren’t an indication of a tech bubble. Rather, it shows the tech industry needs to be seen as one that is very much part of the business world, not a separate side segment.
“Technology isn’t [sitting in] the corner of the world, this is the business world,” he said, adding Apple, Microsoft and Google are now among the largest companies in the world.
Startmate’s additional funding will work in a two-part injection. An initial $50,000 will be allocated to each startup in return for 7.5% equity when they join the program. The mentor network will then collectively vote on which startups have made the most progress and invest the additional $100,000. The startup has the decision to accept the investment at a $2 million valuation.
“We help nerds become great CEOs,” Scevak said.
The selection process will be the same and mentors like Atlasssian’s Mike Cannon-Brookes will still be working with them.