Welcome to the first edition of The Nerd's Monthly Market Insights!
I live and breathe Aussie startup capital raising, so you don’t have to.
Each month, I break down everything founders need to know about funding trends, wins, losses, and investor vibes.
Ask: Reply to this email and tell me what you like and don’t like. I’m experimenting with all of it!
Investors are back, but beware of zombie investors—qualify early.
Interest rate cuts may boost VC activity; DeepTech gains traction.
D-Trump and Saudi influence.
Shoutout to founders navigating tough times—support them!
Tip: Book investor meetings 9am–midday, Tues–Thurs.
Buzzword: Most Favored Nation (MFN)—know it for SAFEs.
Prediction: 2025 will favour ‘safer’ investments amid cautious funding.
The Nerd’s Tip of the Month
Try to book investor meetings when you think they will be most awake and engaged - Usually, I recommend in the mornings from 9am to midday Tuesday to Thursday. You can usually heavily influencing it by only offering and accepting times within these bands. Avoid late afternoons, Friday afternoons and Mondays.
Investors Say the Darndest Things
“We’re high conviction pre-seed investors, we love early!” …. “let us know once you've got a lead investor locked in.”
Observations, Commentary & News
Returning from Holidays: Most investors have returned from their Aussie summer break and are engaging again with founders. Just remember that children are still on school holidays (returning end of Jan and start of Feb 2025 depending on state) so some may still be a bit harder to pin down.
Donald Trump - DT’s 2nd term as U.S. president has begun and is not disappointing… his anti-regulation and pro-free speech stances are seeing major shifts in parts of the U.S tech industry. The question is… how much of that mindset will flow into Australia?! And how many more great Australian technologies and founders will we lose to the pull of the mighty American innovation funding and policies?
Zombie Funds - Some VCs that have or are about to run out of funds are still meeting with unknowing founders. We recommend qualifying investors in the first few minutes of your first meeting by asking three simple questions:
“Are you actively deploying capital from your current fund?”
“When was your last investment, and how many do you plan this quarter?”
“How much capital is left in your current fund and is there reserve for follow-on investments?”
A few months ago, I wrote an article on qualifying questions for first investor meetings
Test the phrasing of these questions, junior staff might get caught off guard and be unsure if they are able to answer these questions.
VC Departures - In 2024, as the funding market continued its downturn, a lot of investors at VC funds departed. Some funds have also downsized their teams.
Interest Rates - Australian interest rates have been stable for sometime and there is more talk of interest rate cuts this year which if true will likely result in increased flows into venture capital (in 2022, I wrote an article on the effect of interests on VC)
DeeeeepTech - More and more investors appear to be wanting to invest in DeepTech but its a big jump from SaaS to DeepTech. I suspect we’ll see a new generation of more technical investors being hired at funds to bridge the gap.
Government Funds - Last year, funding slowed to a trickle from large state and federal government funds but towards the year of last year I started to see that free up and funds started to flow again so there is hope again for DeepTech!
The IPO Markets - They are finally reopening which means big tech companies are listing for the first time in years which is giving early investors the chance to sell which is going to put more funding back into the system and it also gives early investors hope again.
Global - Saudi Influence - Last year, the Saudi Arabian domination in tech that we’ve seen in the U.S for the last few years finally reached Australia. More and more people I know have been getting involved with the oil rich nation.
Global - Nations Want Compute - Nations started directly investing in compute power and infrastructure for AI as the arms race heats up.
Extra Founder Support
Being a founder is fucking tough on the best of days but it’s especially tough when you have to layoff staff or windup operations so spare some time to give a nice kind message of support to these founders and their teams who are doing it tough right now:
George Peppou over at lab-grown meat company Vow just had to layoff 30% of their team
Jax Garrett sadly shut down her gaming influencer marketplace GGWP after almost 7 years of fighting.
Lauren Humphrey closed the doors on The Mintable an HR software play after almost 4 years.
Matt Vitale, the co-founder and CEO of crowd funding investment platform Birchal has bravely stepped down to focus on his mental health. What a healthy and courageous thing to do!
Seer Medical was placed into voluntary admin after a rough year.
My Predictions
Australian tech won’t go as crazy as the U.S. has recently but probably not as conservative as the EU!
I suspect that 2025 is going to be a relatively boring year in the world of Australian startup investment as investors seem to be gravitating more towards what they think are ‘safer’ investments (ie. what they are familiar and feel more comfortable with) as there is less competition from other investors as funds are struggling to raise more money (the competition normally drives them to branch out into more unknown territory). But! My job is to do my best to make sure complex and early companies still get funded regardless of this!
Investor Buzzword of the Month
“Most Favored Nation” (MFN)
Definition: An MFN clause ensures early SAFE note investors automatically get the best terms offered to later investors. If you offer better terms (e.g., a higher discount rate or lower valuation cap), early investors’ agreements upgrade to match.
💡 Why It Matters: MFNs build investor trust but can limit your flexibility in future rounds. It’s common for key players like VCs, super angels and large family offices to request this, but it's not typical for smaller investors. Founders should consider the implications before offering it broadly.
🤔Example: A founder raising a $1M SAFE round agrees to a 10% discount with early investors. Three months later, a larger investor joins and negotiates a 20% discount. With an MFN clause, the original investors' SAFEs automatically upgrade to the new 20% discount.
Capital Conundrum
Scenario: Your cap table is cooked. The terms of your last capital raise weren’t great. Experienced investors have being telling you that you as the founder don’t own enough of your own company and an investor owns way too much (>20%). What do you do?
Solution: Click here for the answer!
AMA (Ask Me Anything)
Submit Your Question Here
Every month, I’ll answer a founder’s capital raising question in this section just submit your questions here for Febuary’s newsletter.
Upcoming Calendar
School Holidays Finish - Tuesday 28th Jan to 6th Feb 2025
“Australia Day” National Holiday - Monday 27th Jan 2025
Key Industry Events:
Cut Through Ventures’ 2024 State of Australian Funding report comes out week of 3rd Febuary
_SOUTHSTART - March 4 - 6
Disclaimer: Excentricity Pty Ltd, trading as CapXcentric (ABN 42 679 978 959, AFS Representative No. 001311296) is a Corporate Authorised Representative of True Oak Investments Pty Ltd (ABN 81 002558 956, AFSL 238184). The information provided in this article is intended for companies and startups and is not directed towards investors. Any statements or representations are general information only and do not take into account your personal objectives, financial situation or needs. Readers are advised to have regard to their own circumstances and consider seeking specific advice from a professional adviser before making any business decisions. No representations are made as to the accuracy, completeness, or reliability of any information provided in this article. Readers use the information provided at their own risk.