Tractor Ventures started here - LaunchVic

Tractor Ventures started here

Case Studies

30 Mar 2023 by Holly Clark

The cost of capital: Tractor Ventures are helping founders hold onto their equity

Jodie Imam, Tractor Ventures

We hear a lot about unicorns and rocket ships in the startup world, but what about the humble tractor?

According to Jodie Imam, tractors are revenue-generating companies who have already nailed product market fit but are unsure about the traditional VC route.

Instead of targeting billion-dollar status, or a funding headline in the AFR, these companies quietly chug away at building products their customers depend upon to get the job done.

“Rockets are exciting, and some of them land on the moon, but they are also very expensive, and most of them blow up along the way,” she explains.

“But if you said to a farmer “I’m sorry, we are going to take away your tractor now”, she or he would most likely be pretty upset.”

Hence the name Tractor Ventures — Victoria’s first dedicated revenue-based fund, co-founded by Jodie and Matt and Aprill Allen in late 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.

“We’re solving the gap in funding for non-VC backable companies or founders that don’t want to take the VC path,” Jodie says.

“Also, the gap in non-dilutive funding sources. Selling shares in the early stages of your company is very expensive.”

How it works

Under the financing model, Tractor loans money to mid-stage startups who are on a path to profitability, in return for a small monthly slice of their revenue. The team also provides mentoring, strategy, and general advice from their team of entrepreneurs and tech operators.

If the past couple of years are 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.

Two years later, Tractor has grown to 17 people and deployed more than $30 million in funds to more than 90 portfolio companies.

They’ve also recently launched a new financial product Inventory Advance, providing founders (especially Hardware focused ones) with a solution that allows them to borrow immediately and re-align their payments with their projects and milestones.

Their big hairy audacious goal? $1 billion of funds under management in the next five years, and a sector-wide rethink of the cost of raising VC capital.

Jodie Imam with fellow Tractor Ventures co-founders co-founded Matt and Aprill Allen

Coming full circle

Jodie is a familiar face in the Victorian startup ecosystem, having previously headed SBE Australia, a LaunchVic-funded accelerator for women entrepreneurs and co-founded gig work marketplace Occasional Butler, which rival Airtasker acquired in 2014.

She joins a long list of founders now giving back to the ecosystem as an investor, providing the support they would have liked to see in their early years.

“Our founding team have been heavily involved in this ecosystem for the past 12 years and have seen it grow first-hand,” she reflects.

“Back in 2011 it was very small. There were a couple of VCs and early angel groups, a few meetups and a handful of owner operated coworking spaces.”

“We now have a large enough ecosystem for alternative funding options like Tractor to exist! And the exciting thing is, it’s still just the beginning.”