Title: What Investors Look For, with Startmate’s Ben Simai
Session context
- Format: Deep-dive masterclass + live Q&A with real application examples
- Speaker: Ben Simai, leads First Believers (angel program) + accelerator selection at Startmate
- https://www.linkedin.com/in/bensimai/
- Goal: Give founders advantage in applications by revealing exact selection criteria
Why investors care about startups
Macro perspective
- Innovation imperative: World needs innovation; startups are embodiment of innovation
- Impact potential: Big tech companies having biggest global impact
- Australian opportunity: 16/100 companies in “The List” (top Australian companies) went through Startmate
- Economic diversification: Australia too dependent on iron ore/coal exports to China (60% of exports)
- Product complexity: Australia ranks poorly on economic complexity vs. Germany (rainbow of capabilities)
Financial opportunity for investors
The private market shift:
- 1986-1997: Microsoft/Amazon IPO investors got ~3000x returns
- 2000s+: Google 77x, Facebook 15.7x, Uber 2.25x at IPO
- Key insight: Companies stay private longer → returns happen in private markets
- Examples: Peter Thiel (Facebook): $500K → $1.1B; Jason Calacanis (Uber): $25K → $100M
The power law reality
Typical VC portfolio of 100 companies:
- 60% return less than invested amount
- 18% return 1-3x
- 6% return 3-20x
- 2% return 20x+ (these drive all profits)
- Top 1 company often generates more profit than all others combined
Implication: VCs need venture-scalable outcomes (potential $100M+ businesses), not lifestyle businesses
The Startmate selection framework
Core principle: Spikiness over smoothness
- Not tick-box investing (team ✓, market ✓, product ✓)
- Seek super-strengths with acceptable weaknesses
- Evidence: All big companies had major weaknesses (Airbnb trust issues, Uber regulation, Google saturated market)
- Philosophy: Best companies aren’t well-rounded, they’re spiky
The 5 spikes framework
Spike 1: Team (most important)
Core insight: Everything about startup will change except the founder
- #1 predictor: Have they built things before? (constantly building/hacking)
- Key traits: Unbridled ambition, determination, learn-it-all attitude, unique problem connection
- Talent magnet: Can attract exceptional people through storytelling
Technical requirement (critical):
- Someone on founding team must be able to build the product
- Non-technical solo founders face significant headwinds
- Reality check: “I’ve never seen a slow founder succeed. Never.”
- AI/no-code hasn’t closed the gap - technical people became more powerful
What investors scan for:
- Repeat builders (check LinkedIn)
- Startup experience
- LinkedIn audience/thought leadership
- Self-taught skills (high agency)
- NOT: Years of industry experience alone
Spike 2: Progress
Definition: Things happening fast, whatever they are
- Customer interviews, user growth, revenue, technical milestones, brand partnerships
- Mental model: “Lines not dots” - meet founders multiple times to assess speed
- Great founders: Say they’ll do X by Y, then exceed it
- Typical founders: Make excuses why they didn’t hit commitments
Communication tips:
- Numbers, not adjectives (“20% month-over-month” not “great growth”)
- Usage stats over opinions (“2 hours daily usage” not “users love it”)
- Include timeline context (“built in 3 months” not just “we built this”)
Spike 3: Invention
Rarest spike: Literal new technology or significant technological leap
- Example: OpenAI didn’t invent AI but created significant leap
- Investor warning: Watch for slow/complex academic approaches
- Complexity trap: If you can’t explain simply, you don’t understand it well
- Best hardware companies: Work at startup pace, not PhD pace
Spike 4: Unique vision
Definition: Founders see future differently, it’s compelling
- Example: Airbnb - wild idea that people would open homes to strangers
- Creates new markets, very polarizing initially
- Key requirement: Must have practical steps toward lofty vision
- Secret sauce: What do you understand about the world that others don’t?
Spike 5: 10x better
Most common founder trap: Incremental vs. order-of-magnitude improvement
- Can be 10x faster, cheaper, easier, higher quality
- Example: Amazon vs. bookstore (millions vs. hundreds of books, convenience, price)
- AI warning: AI alone is not 10x - it’s new baseline, not differentiator
- Competition insight: “No competition” usually means don’t understand market or not worth solving
The founding hypothesis framework
New addition to accelerator application: “We help [WHO] do [WHAT] by being [DIFFERENTIATOR 1] and [DIFFERENTIATOR 2]”
The L-shaped differentiation:
- Pick 2 dimensions where you’re significantly better
- Puts all competitors in “Loserville”
- Example: Nike vs. Adidas/Converse - gave Michael Jordan signature shoe + all sponsorship budget
- Critical: Must be things customers actually care about
Real Startmate examples (from actual applications)
Team spike - Morse Micro (2017)
“The team includes the original inventors of wifi along with designers of wifi chips that have shipped inside billions of devices.” → Clear team spike (repeat builders at highest level)
Progress spike - Mindset Health (2018)
“Launched app 2 months ago, acquired 12,000 users, #7 on Product Hunt, featured app of day, reached #6 in UK health apps, monthly revenue exceeds expenses, 45% trial-to-paid conversion” → Numbers everywhere, timeline included, clear momentum
Invention spike - Great Wrap (2021)
“Patent protected formula to make home compostable and landfill biodegradable stretch wrap at same price” → Patent = invention signal
Unique vision spike - Aquila (2022)
“Radical vision to transport energy through space using lasers” → Crazy vision with practical milestones (keeping drone airborne 24/7 first)
10x spike - Solar company (2020)
“Deploys up to 10 times faster than conventional solar technologies” → Clear 10x improvement in deployment speed
Key insights for founders
What matters vs. what doesn’t
Matters:
- Building track record over industry experience
- Speed of execution over perfection
- Simple explanations over complexity
- Specific numbers over general claims
- Global potential (especially for software)
Doesn’t matter:
- Industry expertise vs. outsider perspective (statistically equal success rates)
- Having patents (Elon: “patents are for losers”)
- AI as differentiator (it’s table stakes now)
Common pitfalls
- Checkbox mentality: Trying to be good at everything vs. exceptional at something
- Complexity worship: Using jargon instead of simple explanations
- Incremental thinking: 2x improvement vs. 10x paradigm shift
- Speed illusions: Working on something for years while moving slowly
Two-sided marketplace guidance
- Pick primary customer experiencing most pain
- Focus on who’s paying you
- One founding hypothesis can lead to helping multiple parties
- Don’t try to solve for everyone simultaneously
Selection reality
- Thousands of applications → 10-15 selected per cohort
- Multiple applications encouraged and common
- Known quantities (Launch Club) have advantage: 3/13 recent cohort came through Launch Club
- Goal: Get 5+ Launch Club founders into next cohort
Immediate action items
- Identify your spike: Which of the 5 resonates most with your story?
- Craft founding hypothesis: Use the simple framework to clarify differentiation
- Update LinkedIn: Investors will check - highlight building track record
- Measure progress: Track numbers that show momentum, not just vanity metrics
- Simplify explanation: If you can’t explain it simply, you don’t understand it well enough
Bottom line: Startmate looks for spiky founders with super-strengths, not well-rounded teams. Speed of execution trumps perfection. The best companies aren’t balanced - they’re exceptional at 1-2 things that matter most to customers.