Follow[the]Seed, a next generation data-driven venture fund with footprints in Tel-Aviv, Beijing, Silicon Valley and Sydney, will offer US$50 million in funding to back under-resourced start-ups seeking to raise between US$0.5 and US$2 million.
Co-founded by a seasoned Chinese investor and entrepreneur Curt Shi, Follow[the]Seed has already finished raising its Australian fund and made some global investments in companies like Silicon Valley-based WorkSpot and Australia's ClassCover.
The global fund, which will be open for investments in early 2017, has already received over 60% of its US$50 million target in pre-commitments, the company announced yesterday.
"Follow[the]Seed is filling a significant gap in the investment market, where start-ups seeking between US$0.5 million and US$2 million really struggle to find investors. At that stage in their growth, they are too large for angel investors, and too small for Series A investment, but just as start-ups both larger and smaller, they are every bit as much in need of capital," says Shi. "Our unique data-driven approach helps us filter through the noise and pick out the winning horses well before they get on the traditional venture capital's radar."
The data driven approach is made possible using an algorithm that assesses the potential of consumer Internet ventures at a very early stage by identifying habit-forming products and services, such as gaming, messaging, and e-commerce among others, creating "irrational" patterns of behavior leading to obsessive, compulsive or addictive use.
Using a simple SDK and rapid data analysis, it determines how early adopters use and interact with that product, and therefore identify applications and technologies that are likely to become viral hits well before they reach critical mass.
Over the next five years, Follow[the]Seed plans to make between 100 to 120 investments, with a combined total of US$200 million across each of its four global funds. It will focus on innovative consumer technology ventures and enterprise solutions, applying its proprietary data-driven algorithm to its investment decision processes.
Curt Shi is a veteran Chinese investor in the telecom, media and technology space. His investments include Catapult Sports, which was listed on the Australian Stock Exchange in Dec 2014 and achieved 15 times return in 18 months, according to the company's announcement.
"Our global reach will provide investors with unique access to diversified quality deal flow from Israel, the Silicon Valley and Australia and will make it possible for the ventures to expand to the U.S. and Asia (especially China) and benefit from each of the partner's unique expertise, wealth of experience and networks," Shi added.
The fund was established in partnership with three other investors based in Australia, San Fransisco and Tel-Aviv, Israel, namely Andrey Shirben, Ajoy Mallik and Eliav Alaluf.