Solid and dependable: Tractor Ventures’ alternative funding breaks new ground - LaunchVic

Solid and dependable: Tractor Ventures’ alternative funding breaks new ground

Case Studies

18 Dec 2021 by Holly Clark

“There’s a lot to love about tractors,” says Matt Allen. “They’re robust. They’re reliable. They make a real difference.”

“They may not inspire awe like a rocket ship, or transport people to some brave new world. But they help real businesses move forward and generally stay profitable. They work reliably and they get the job done.”

Hence the name Tractor Ventures — Victoria’s first dedicated revenue-based fund, co-founded by Matt and Aprill Allen and Jodie Imam in 2020 after a $300,000 investment from LaunchVic, Victoria’s startup agency.

The company grew out of one simple notion: people who start up tech companies generally want to control them. That’s why Tractor’s alternative financing option is so appealing to founders, because they can hold onto their equity for longer. Under the financing model, Tractor loans money to mid-stage startups who already turn a profit, in return for a small monthly slice of their revenue. The team also provide mentoring, strategy, and general advice from their team of entrepreneurs and tech operators.

“When you accept venture capital, you tend to lose a big chunk of your company for not all that much money,” explains Jodie. “We’re here to help founders keep as much of their company as they can, for as long as they want to.”

“By the same token, a number of our investors have been on the venture capital journey and know that it can be challenging and punishing. That’s why they fund us and help these other founders, because there’s so clearly a better way to do it.”

If the past year is any of a guide, Tractor’s concept is popular.

In December 2020, the trio had about $4 million in shareholder capital to work with — and every intention of seeing it last for a year.

The money was loaned out in a little under three months.

“I reckon I’ve probably taken about 300 calls from founders,” Aprill said. “This is much bigger than we thought it was — so we quickly realised we should go faster, and we should aim higher.”

Another $10 million from a second capital raise in July enabled the trio to support another 24 startups. They expect to be helping about 100 by this time next year.

Featuring names like Age Up Health, which helps families manage aged care at home, and online education tool HEX, most of the companies tend to develop technology — and already make at least $50,000 a month.

“Our founders tend to be a bit older, they’ve already got a few customers, and they’ve gotten to this stage where now they’re ready to do something that needs extra funding,” says Jodie.

“They’ll take Tractor money to fund a critical hire or something like that.”

Scaling Up

And as Tractor supports the expansion of companies all over the country, it is also scaling up itself.

“We now have a growing team of finance experts, credit and risk analysts — and all the people you need when you’re a grown-up finance company.”

“The choices a founder now has as to who they invite into their company’s story has never been better. As we expand, we’re excited by the possibility of helping more businesses grow in the years ahead.”