Galileo Investment Terms

All you need to know about Galileo investment terms.

What stage do you invest?

We like to be the first VC to invest, and ideally the first equity investor (that is, excluding any grant money you might have previously received). Investing very early is the rule, not the exception.

Our Standard Investment Terms

Our typical investment is A$240,000-$300,000 for a approx 8-12% equity stake in your company. In terms of round costs, we charge for Galileo Membership which a one-off  $40,000 fee (see here) which covers round legals, post-investment support and other activities.

Valuations are flexible based on your stage. For example a $240,000 investment for 12% ownership equates to a $1.76m pre-money (before the investor money is put in) and $2 million post-money valuation. We wire you the money as soon as you accept our offer and we complete our due diligence process. This can be as fast as 10 days but is usually dependant on other investors.

Valuation ranges are typically between $2-6m post-money but really depends on your stage, any co-investors and what we think is appropriate. Remember, you don't want to blow your valuation out of the water just because you can. Aim for sensible dilution and read out guide to raising your seed round here.

Ideally we want you to have 12-18 months runway but that can be less if your strategy is to raise faster post investment.

What is runway?

Runway is the amount of time that your startup has (assuming your expenses and income are about what you are expecting) before you run out of money. At an early stage, this is usually something like:

(Dollars in your bank account + our investment $ + any income you expect in the next 12 months) / (monthly salary of your team members (fully loaded annual salary divided by 12) + any other monthly expenses).

As a quick example, if you receive at $200,000 investment and have $25,000 in the bank and expect around $20,000 in revenue this year, and you have 4 team members each with $65,000p.a. salaries (fully loaded - do not forget tax and superannuation), with no other expenses (you're using the free AWS tier or credits etc):

(25,000 + 200,000 + 20,000) / (65,000*4/12) = 11.3 months of runway

What we expect your startup to have post-investment

We aim to ensure that the amount of money we invest (that is, the amount of dollars in your account already, plus our investment, plus any other expected income (whether from customers or grants)) ends up supplying you with 12 months of runway.

You may need to hire 1-5 contractors/casuals or even full time team members post-investment, and this must be factored in as well.

We aren't looking for a cent-by-cent budget, but you should not have 6 months of runway post-investment (and more than 18 months usually means you aren't scaling up your team at the right pace!). Your startup (and budget) will change a lot over that time, but tracking runway is an important metric to make sure that you don't run out of money.

For some businesses (hardware, biotech etc) you may have very significant 'other expenses'. We use this simplified example as most software companies have 'people' as their greatest expense in the early days.

If your business has much higher capital requirements, we may need to work with co-investors to get you up to 12-18 months runway. We can speak to you about this after you complete your Quick Application.

What instrument do you use to invest?

We prefer an equity investment over convertible note or SAFE, so you know your dilution, but we are flexible. 

We find that for an early stage Australian company, "priced rounds" (equity investments at a specific valuation) are much simpler for founders so that you can easily manage dilution (how much of your startup you "own" after the investment). It's about the same amount of effort for us to do priced or convertible/SAFEs.

At an early stage, you don't want to spend your time dealing with investment mechanics and legal/finance issues like conversion events on debt-like instruments – you should focus on operating your startup. A priced round is the simplest and easiest option, which is why we prefer it.

Can you join existing investors?

Yes! We can match or co-invest alongside existing investors if you have them. However we are very happy being alone – you do not need to have other investors.

Unless you have different funding requirements (ie you are at a later stage or the business has higher expenses like biotech companies), we expect Galileo to write the largest/only cheque in your round and to represent > 80% of the funds raised though.

Do you invest more (or less) than $200k?

Yes!

Can you be flexible on valuation?

Yes!

What about later-stage investment and companies? 

We can invest up to a Series A, but this is very much the exception and not the rule. Our focus is on early stage companies and writing the first cheque, and so our processes and systems are designed primarily for these types of investments.

Please get in touch if you would like us to form part of your later stage round.

We have access to a large follow-on fund and institutional investors too.

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