A new breed of venture capitalist is making a statement in startup funding.
Afterwork Ventures wants to be the first investor in the next generation of tech icons in Australia and New Zealand.
It has a community of enthusiastic startup devotees at the heart of its operations and invests in companies early.
Two of its Fund I investments are set for initial public offerings, and six of its Fund II portfolio companies have tripled their annual revenue year on year since time of investment.
That’s a good hit rate for self-proclaimed ‘outsiders’, who say they weren’t privy to a playbook on how to be venture capitalists.
Adrian Petersen, Alex Khor, David Insull and Adam Smith’s side hustle has evolved from weekly Zoom calls into a fully-fledged venture capital fund, after recently closing $10 million for a new fund and building out their team with Jessy Wu and Annabel Acton.
Their vision is unpretentious and approachable, but their seriousness and clear knack for backing good founders and companies is palpable.
Western Australian companies in the AfterWork portfolio include Functionly (for intelligent organisational design), and Vitruvian, creator of the V-Form Trainer (for resistance training).
Community
AfterWork Ventures is a new breed of VC, in more ways than one. It’s doing things differently, starting with its community and iconic Sunday night Zoom calls.
The community of operators, investors, and founders has grown to more than 60 members.
On Sunday nights, they cover AfterWork news, share deal flow and then open it up for discussion on a topic they’re exploring, which ranges from the metaverse to the future of pets, to satellite systems.
Through this community, AfterWork is pioneering a more democratic investing model that brings a true diversity of viewpoints and experiences to the table.
They call this hivemind their bedrock and their edge.
Co-founder Adrian Petersen is from Perth and says its members help AfterWork Ventures punch above its weight when it comes to the quality of its deal flow, the incisiveness of its due diligence and the breadth of support it can provide to its portfolio companies.
“The best deals come from boots on the ground in the early-stage ecosystem,” Mr Petersen told Business News.
Impressive investors
Included among AfterWork’s investors are: Simon Griffiths, founder of Who Gives a Crap; US VC Ryan McIntyre, whose firm Foundry has previously backed companies such as Fitbit; Uber ANZ executive Tim Rossanis; and Canva’s former head of product, Georgia Vidler.
Mr Petersen said AfterWork essentially had a fundraising team of 60-plus people, which created a viral effect.
In addition to this, seven of the 40 companies AfterWork invested in have come full circle and supported the latest fund.
Spotting a winner
AfterWork Ventures recognised the need to plug a gap in the market globally: pre-seed and seed-stage investment has fallen for three consecutive years.
It is sector-agnostic and writes relatively small cheques, but is clear about the type of companies it wants to invest in.
It begins with being capable of returning the entire fund and demonstrating how they plan to deliver more than $100 million in annual revenue.
“Traits of founders we love include: a big, clearly-articulated ambition, an ability to rally people around their vision, organisational discipline, a learn-it-all disposition, and a deep understanding of the customer they’re building for,” Mr Mr Petersen said.
He said while AfterWork didn’t expect perfection, it did respect products that were thoughtfully crafted and prioritised effectively.
In the due diligence process, the team also interviews a company’s customers, wanting to hear glowing reviews.
The goal is to see there is both genuine hunger for the solution and raving support for the product.
One of the most important strengths they look for is momentum – multiple wins, month-on-month growth, active users, an experienced team – anything that indicates the startup is resonating strongly with customers, as well as future hires.
Future of the fund
In the 150 days since AfterWork started building in public, it made nine investments and secured an allocation to invest in two companies from this new fund.
This new fund gives AfterWork the opportunity to amplify the impact of the work it has already been doing for the past four years.
Mr Petersen says this was the start of building a generational investment company.
“We have $20 million more to raise; and the humbling task of deploying this capital to supercharge the next generation of amazing companies being created,” he said.
• Chloe Constantinides is a consultant, adviser, and founder of multiple startups. She works in marketing, technology, and strategy. A 2018 40under40 winner, she also featured on SmartCompany’s 2018 Smart 30 Under 30 list
