Searching

Our primary goal at Folklore is to back great founders building unique companies.

We approach that goal as founders and investors. We have a deep desire to understand each company we meet, to grasp the problems being solved by a product, to come at the opportunity with an open mind, to gauge reality, and to openly discuss how backing you will help you realise your future.

But what do we mean by unique? We mean companies and teams with a breathtaking ability to execute on their plans, even at an early stage. It means unique founder ability, unique product vision, unique competitive advantages, unique approaches to solving customer problems, and grasping a big market opportunity in a unique way.

Your market needs to be big

We are not sector specific, but we are looking for startups that are globally scalable, and preferably with B2B products. We’re looking for companies operating in vast markets (global) that can support their growth. Don’t get us wrong, if you can win big and build a monopoly high-value company in Australia , then do it — we’ll back you. But if you’re in a competitive space (local or global) we want to see a compelling product and vision that is unique and differentiated, and we want to understand how you plan to win in a market big enough to sustain more than one competitor.

Early traction, sustainable metrics

Doing a lot with little? We love companies that can scale from a low base off very little capital. We get growth needs investment… but there’s so much free support, free software and low-cost acquisition channels available that establishment costs should be relatively low while you’re building an early customer base. From there, we want to see sustainable unit economics, short to medium sales cycles, and recoverable returns on customer acquisition within reasonable timeframes.

Unique customer Insight

What do you understand that others don’t? We are searching for founders who truly understand their intended customer. This may come from a unique insight into the problem because the founders had the problem themselves, or they worked in an industry with high-friction problems not evident to existing players. We look to founders for this insight because it's critical to identifying and adapting to new opportunities. Tell us why your product is valuable, why your market is important and what you’re learning reinforces your vision.

Pioneers

We want to see pioneering founding teams, with a real sense of their vision, the skills in place to achieve the vision, and a technical achievability to a product — even if it's going to take time. We are searching for companies building something new, in uncharted environments.

Too broad and abstract? The following criteria dials-in our focus:

Products & Business Models

The big picture principles set out above guide our investment thesis, and work into the following product features and business models we like to see:

• Intelligent Technology and AI - The capacity for intelligent technologies to predict, adapt and then improve the engagement between businesses and customers is a massive opportunity changing industry, and markets with limited adaptation and innovation beyond after Web 2.0. We are looking to invest in two core channels emerging from AI: those building off incumbent machine learning API’s to create mass efficiencies (ie. Amazon AI, iOS, Google Cloud), and smaller companies solving valuable niche opportunities using Ai and machine learning in specific high value markets.
• SaaS - SaaS is not a dirty word. The beauty of SaaS is that customers cashflow finance product development and sales. So we love backing software companies leveraging subscription models for commercialisation. We are not necessarily looking for low-priced products, rather a pricing model that matches your market and the utility value of your product. If you’re demonstrating customer demand in a big market with a rational pricing model (SMB or Enterprise), short/medium sales cycles, and your product is embedded in customer process, customer data or is subject to a network effect, then we’re interested.
• Data - We are specifically focused on startups that simplify the collection, analysis and application of data into networked end-products both from a software and a hardware perspective. This may be achieved by delivering intra-customer efficiency and product gains, hardware and interfaces that capture new data autonomously, or subscription products that unlock, harness and re-format data for the benefit of their current customers, and new customers where network effects are at play.
• Mobile - Products that are natively mobile, or optimised to mobile for downstream users such as Slack, Scout, Figure1
• Marketplaces - “Marketplaces” is an overused term often tied to shitty unit economics and dreams of winner takes all markets. Specifically we are looking to invest in companies that have an intermediary business model between sustainable high value customers and third party suppliers of goods and services. These may mean wholly new services, or wedging existing value chains where supply and demand patterns already exist and new technology will result in customer migration. We like B2B focused marketplaces, but will rarely invest in B2C models, especially where the supply-side (service) of the model doesn’t currently exist.
• Reimagining Assets - We’re not sector specific, but we are exploring how money, property, personal assets and public infrastructure might be owned and managed in the future. This might include re-modelling or replacing static systems outdated by rapid technology change, altering uses and our understanding of ‘real assets’, or introducing new products that wipe the slate clean on old-world practices.

If your business doesn’t fit neatly into these categories, that’s ok. If you can articulate how your business matches our goal of backing great founders building unique companies, we’d love to chat.

Over the last 4 years we applied this investment thesis to our first fund and Fund 2. Over time we will continue to refine and adapt it to complement founder visions, and a rapidly changing tech environment.