Banks don’t understand startups, says Paul Little


The current cohort, which will complete the program in December, includes volunteer matching startup Vollie and Choovie, a company that offers demand-based pricing for movie tickets.

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Sophisticated investors have been invited to tip money into a fund designed to back the portfolio of startups, collecting the gains from the companies that make good. Skalata’s board members are also invested in the fund.

Mr Little said Skalata, which is aiming to double its cohort of companies next year, comes at time where young businesses face a credit crunch and get stuck at the point where they can no longer tap those they know for funding.

He said the traditional banks “don’t understand the sector at all”.

“I guess startups in particular are incredibly hard to fund a once they’ve used up their family contacts and their friends for their funding… I think we’re filling a void that we see as one that if we get the model right, it’ll be a great way to help these companies that probably would otherwise not succeed.”

Mr Little co-founded Skalata with its chief executive Rohan Workman, who was previously director of the Melbourne Accelerator Program (MAP) at the University of Melbourne.

Mr Workman said in other countries investors had more of an appetite to invest in a portfolio of startups but that this was not yet common in Australia.

“In Tel Aviv, or London or New York, I think what you find is people are more willing and ready to throw a $50,000 cheque at 20 companies,” he said.

Co-founders Paul Little and Rohan Workman expect Skalata Ventures to become regionally dominant.Credit:

Private investment in Australian startups has been hitting record highs: in the past financial year, close to $7 billion was raised through more than 830 deals, according to Techboard’s 2018/19 annual report.

However, very large capital raises powered those numbers, with raises including Judo Bank’s $400 million deal overshadowing smaller rounds. 

Deals above $10 million continue to grow, though many venture capital firms in Australia don’t make investments of less than $1 million, cutting out many early stage businesses.

Mr Little said he believed the Skalata model, which currently requires participants to be based in Melbourne for the program, has national and international appeal for founders while also giving investors access to early stage businesses.

“It’s an opportunity to invest in a fund, and less sort of pressure on them to pick which one’s going to be the winner,” he said.

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