Startmate CEO Michael Batko discusses Community-Building & Portfolio Construction in Early-Stage Investing

First Cheque

Episode Summary:

In this insight-packed episode, Cheryl Mack and Maxine Minter sit down with Michael Batko, the driving force behind Startmate, to explore the intricacies of early stage investing and the power of community in the startup realm. Batko shares his journey, starting from his first investment to steering one of the most active seed stage investing funds in the industry. This episode offers a behind-the-scenes look at how Batko and his world-class team utilize a community-driven approach to identify, select, and uplift transformative business ideas across Australia and New Zealand.

Diving into the Startmate selection process, Batko reveals the operational complexities of coordinating a vast network of mentors and how their personal investment in the fund aligns interests and boosts engagement. The conversation also uncovers the evolution of Startmate's investment thesis, its expansion into diverse industries, and Batko's approach to encouraging non-consensus thinking to unlock extraordinary potential. The episode delves into the significance of carry in VC funds, the strategic role of a continuity fund, and the decision-making framework for follow-on investments, all while reflecting on Batko's philosophy of betting on the hungry rather than the proven.

Michael Batko began his career in corporate finance and consulting before contributing to the growth of two major Australian marketplaces, MadPaws and also played a pivotal role in Expert360's $14 million Series B funding round. After joining as Head of Operations, Batko quickly became CEO of Startmate which is now ANZ’s largest community driven seed fund raising ~$3 million from 100+ investors every 6 months.

Key Takeaways:

• Startmate's success is rooted in a mentor-driven model, where community engagement and personal investment are key to its decision-making process.
• Batko emphasizes the importance of looking beyond what's probable and considering what's possible when evaluating investment opportunities.
• The alignment of mentor incentives with fund performance, through carry, is highlighted as a significant motivational factor.
• A robust debate around investment thesis expansion led to backing diverse ventures, including non-software startups like non-alcoholic beer brand Heaps Normal.
• The establishment of a continuity fund at Startmate allows for continuous support of alumni companies, signaling strong belief in their ongoing success.

Notable Quotes:

• "I remember this entire thread coming up and everybody discussing whether or not we should invest in that non-alcoholic beer company. And it was at that time when I jumped in as start mate CEO and actually had to be like, 'Hey, we can't just rest on our laurels and do things the way we've always done them.'"
• "We've expanded the investment thesis a lot around, essentially always doubling down on people and what they care about."
• "One of my favorite questions is, and I always keep coming back to it whenever I critically assess a company for myself, is rather than what is probable... what is possible?"
• "One thing I love about being a microfund is that we only invest $120,000 into companies, but at that stage, it actually makes such a massive difference."

Resources:

• Startmate website for more insights into their accelerator programs. Startmate
• Michael Batko's professional background and contributions, visit LinkedIn
• Discussion of eucalyptus's ESOP primer and equity importance. Eucalyptus

Encouraging all curious investors and founders to tune in and glean actionable insights from Michael Batko's valuable experiences in this episode, as well as to keep an ear out for more enriching discussions in the upcoming sessions.

Mentioned in this episode:

June 2024 – Vanta First Cheque

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