TEN13 is a Brisbane-based Australian venture capital syndicate founded in 2019 by Stew Glynn and Steve Baxter. This article is the transcript and companion reference for Flight Club #1 - Venture 101, the first session in TEN13's investor education series, presented by Managing Partner Stew Glynn, Partner An Vo, Manager of Investor Relations Brendan Hill, and Investment Analyst Alexander Barrat. It covers what venture capital is, why it exists, where it sits in a portfolio, and how TEN13 decides which of the 100+ startups it sees each month get funded.

What Is Venture Capital, and Why Does It Exist?

Venture capital is capital invested in early-stage, high-growth technology companies in exchange for equity, typically before those companies are profitable or even revenue-generating. TEN13 invests first cheques of A$300,000 to A$2 million at pre-seed and seed stage in technology companies across Australia, New Zealand and globally.

Stew Glynn, TEN13's Managing Partner, opened the session by framing why venture capital matters beyond returns: startups take on the hardest, most ambitious problems, and the people backing them early are betting on founders who can stretch a small amount of capital further than almost any other kind of company.

There's no investment where money is put to work as intensively as it is inside a tech startup - driven founders, leveraged with code, capital, media and intellect, sweating every dollar spent. An enlightened society educates investors rather than restricting them. - Naval Ravikant, Founder, AngelList (paraphrased from the session's opening quote)

TEN13 frames its own reasons for investing in venture capital around three things:

• Generate returns - venture capital has historically outperformed public equity indices over long time horizons.
• Shape the future - startups solve problems other capital structures won't take on.
• Leverage knowledge to support founders - investors bring operating experience, not just capital.

Venture Capital as an Asset Class: How Do the Returns Compare?

Venture capital has historically outperformed major public equity indices over long holding periods, though these returns are concentrated in top-quartile funds and are not guaranteed. The table below reproduces the Cambridge Associates comparison TEN13 uses in the session, covering periods ended 30 June 2022.

Source: Cambridge Associates. Full 6-month, 3-year and 15-year columns are available in the original Cambridge Associates release. Past performance is not a reliable indicator of future results.

Three features make venture capital structurally different from most asset classes covered in Flight Club sessions:

• Long duration and illiquidity. Investors typically back a company years before any exit event, and can't sell their position on demand.
• A hits-driven return profile. A small number of portfolio companies generate the majority of returns; many others return partial capital or fail entirely. TEN13 describes this as "losers tend to come before winners" - underperforming companies typically become apparent earlier in a portfolio's life than the eventual winners do.
• Skill can shift the odds. Disciplined due diligence and pipeline management don't eliminate risk, but they measurably improve the probability of backing outlier outcomes.

What Is a Startup? (And What Isn't One)

Not every small or early-stage business qualifies as a venture-backable startup. TEN13 defines a startup as a company with three characteristics:

• Early-stage - typically pre-revenue or early-revenue.
• Developing an innovative, highly scalable solution - usually technology-enabled, often software, because software can be sold into new markets and countries without proportional increases in cost.
• High growth potential - the ability to expand into multiple markets quickly once the product is built.

As investor and founder Sahil Lavignia put it in the slide TEN13 uses to frame this: you create and invest in what you think should exist, because no one else recognises it until everyone does - and by then it's too late to get in early.

Case study: Go1 - from a Y Combinator seed round to a US$2 billion valuation

Go1, described internally as "Spotify for corporate education and learning," is one of TEN13's two unicorn outcomes. TEN13 (through Steve Baxter's family office, Transition Level Investments) first invested in 2016, shortly after Go1 completed Y Combinator, when the company had four founders and a small office in Brisbane.

Case study: Mr Yum (now Me&u) - QR-code menus to Australia's largest female-led Series A

TEN13 led Mr Yum's seed round in 2018, with Stew Glynn joining the board. The company began as a QR-code visual restaurant menu with no ordering capability, and pivoted into full order-and-pay infrastructure for hospitality just as COVID-19 accelerated contactless adoption.

Other companies TEN13 or Transition Level Investments have backed at scale-up stage include Picap, Arkose Labs, FloodMapp, Wonde and Linktree (a second unicorn outcome). Exits include Clipchamp (acquired by Microsoft, now shipping alongside Word and PowerPoint in Microsoft 365, with its Brisbane-based founder Alex reporting into Microsoft's Office CEO), DoseMe, Notiv, Forage, Car Next Door (acquired by Uber, relaunched globally as Uber Carshare) and Cohort Go.

The Startup Journey: From Idea to Exit

Startups typically move through four broad phases of company development, each associated with a different type of capital and a different point on the cash-flow curve (the "J-curve"): heavy early cash burn, followed by a long climb back to profitability as the company scales.

Accelerators: the earliest formal source of capital

Accelerators typically take 7–10% equity at the earliest stage in exchange for expert access, customer introductions, education and help raising a company's first round. Y Combinator, founded by Paul Graham in 2005, is the best-known globally and has produced Dropbox, Coinbase and Airbnb; TEN13 has backed Go1, Forage and Arintra, all Y Combinator alumni. In Australia, Startmate - Blackbird's accelerator - is the largest; TEN13 has backed Startmate companies including Heaps Normal and Laya.

From pre-seed to Series B+: what changes at each round

Every funding round requires demonstrable progress on traction and milestones, and comes with a different risk profile. TEN13's typical entry point sits in the pre-seed-to-Series-A range.

Which Sectors Get Funded?

TEN13 focuses on four core sectors - software, fintech, health and AI - where its team has the deepest expertise, while the broader Australian venture ecosystem also funds deep tech, energy, hardware and consumer categories through more specialised funds.

TEN13's sector focus, in its own words from the session: Software (typically B2B, sometimes B2C); FinTech (financial infrastructure and consumer apps); Health (healthcare infrastructure and applications); AI (infrastructure, tooling and application layers). TEN13's preferred business models are highly scalable - capable of growing quickly with limited marginal cost, the way software does.

How TEN13 Picks Winners: Inside the Due Diligence Process

TEN13 receives 100–120 pitches a month. Of those, roughly 1–2 result in a completed deal - a conversion rate of 1–2%. The process from first call to funding typically takes six to eight weeks.

Six factors drive TEN13's evaluation, commonly summarised in venture capital as "the four Ts" (team, traction, timing, terms) plus market sizing and defensibility:

Founder quality is weighted most heavily at the earliest stages - initial calls are spent understanding why a specific founder is best positioned to solve the specific problem, rather than scrutinising financial metrics that don't yet exist.

From Funding to Exit: How Long Does It Actually Take?

The gap between a startup's first funding round and an eventual exit is typically five years or more, and often exceeds seven years from pre-seed. Early-stage investors like TEN13 wait the longest for realised returns, since they enter before any later-stage investor.

Source: Ian Hathaway analysis of PitchBook data. Figures cover U.S.-headquartered venture-backed companies at time of exit; Australian timelines directionally track this pattern.

The three ways a venture-backed company exits

Acquisitions outnumber IPOs by a wide margin in raw deal count, but the largest single exit events by dollar value are typically IPOs. Secondary sales - like Canva's - matter because they show that liquidity for early investors doesn't require a company to go public or be acquired.

A Note on Portfolio Construction: Why Losers Tend to Come Before Winners

Because early-stage venture investing carries a high rate of loss, TEN13 builds a wide enough portfolio to diversify that risk - a topic covered in full in Flight Club #2. As Stu Glynn explained in the Q&A: across a portfolio of roughly twenty investments, typically one or two become significant outlier returners, a portion return a middling result, and up to half return less than the capital invested - often because a company can't raise its next round, loses a co-founder, or is affected by external shocks like COVID-19 or a recession. Companies that are going to fail tend to become apparent before the eventual winners emerge, which is why TEN13 says "losers come before winners" - and why the firm continues engaging with struggling portfolio companies rather than writing them off early. One TEN13 portfolio company came close to failure - a legal issue, a founder replaced with a new CEO, a fresh capital raise - before going on to deliver one of the fund's largest-ever returns via acquisition by a listed company roughly two years later.

Who Presented This Session

Flight Club #1 was presented by four members of the TEN13 investment and investor relations team.

As a team, TEN13 has 30+ years of combined venture capital investing experience, has deployed $120m+ in funds under management, has backed 100+ companies, and holds 8 board positions.

Further Resources on Venture Capital Investing

Frequently Asked Questions About Venture Capital Investing