Based in Sydney and Auckland, Dovetail is a full-service venture capital studio that works closely with founders who have a great idea, but may lack technical knowledge. Dovetail helps them build businesses from scratch, preparing them for growth and more funding. Founded in 2014, Dovetail’s success stories include Afterpay, the Melbourne-based unicorn who’s one of the hottest players in the Buy Now, Play Later space, along with Klarna and Affirm.
“People can think of us as the technical co-founder, responsible for driving and executing product strategy, design and development of scalable products,” said Dovetail co-founder Nick Frandsen, at TechCrunch.
Dovetail is currently raising a fund of A $ 10 million (approximately US $ 7.5 million) that will be used for Series A and B rounds of funding at 15 of the most promising companies that have participated in its studio program of development. As an investor, Dovetail issued checks ranging from $ 150,000 to A $ 1 million.
One of Dovetail’s objectives is to prepare startups to seek funding from other VCs; companies that have invested in Dovetail’s portfolio companies include Blackbird, Qantas, and Wavemaker.
“By the time we have to make an investment decision, we would have worked daily with them for at least three months before a seed round and 12 months for a Series A. This means that we are investing primarily with the ‘informational advantage of a co-founder,’ said Frandsen. “Another trait that makes Dovetail unique is that we share our ownership in our portfolio companies with the whole team. This reinforces the unity, dedication and desire for success of our team. “
Dovetail started working with Afterpay in 2017, when the company had fewer than 40 employees. Frandsen said Afterpay founders Nick Molnar and Anthony Eisen were looking for a digital product development partner to build and evolve their mobile and web apps. Although both had extensive experience in financial services, they came from non-technical backgrounds. This is where Dovetail came in, developing Afterpay’s technology platforms and helping launch its consumer products.
Some other notable startups that have completed its corporate studio program are the Resource Planning SaaS Platform Run; one-click billing tool jam; Choice of supplier, a management platform for providers of the Australian National Disability Insurance Scheme; Identifier of landmarks, a privacy-compliant mobile location intelligence platform for merchants; and The fluidity, a service that helps importers and exporters save money on foreign exchange.
Prior to founding Dovetail, Frandsen and co-founder of startup, ticketing and payment platform Ash Fogelberg 1-Night, were acquired by TicketDirect in 2013.
Dovetail’s venture capital studio is industry independent (although it has a solid background in FinTech, SaaS, and markets) and works with startups that may not yet have a product, but who have founders who “are an area in which they are trying to solve a problem,” Frandsen said.
When deciding which founders to work with, Dovetail takes into account the viability and growth potential of their idea. This includes determining how well the founders are suited to the problem, if there is enough market potential for the startup to grow into a big business, and how much competition there is.
Dovetail has a product agency that primarily serves US companies, but its venture capital studio is currently focused on Australasian startups, with plans to expand into North America in the future.
“We are actively looking for industries that are important but underestimated by the startup community,” said Frandsen. “We are looking for ideas. which require hard-earned experience in the industry and cannot be easily replicated by teams of young budding entrepreneurs.