The Little Tokyo Two Ventures Model

The Opportunity

Little Tokyo Two (LT2) already has vast deal-flow of early-stage business talent -  handles their advisory, growth strategies and helps them achieve a revenue target or investment-ready stage.

Through Little Tokyo Two Ventures (LT2V) we will be investing heavily in the short-term through professional services in order to benefit from the long-term upside that these businesses are creating once they graduate from the plans delivered by LT2.


The Model.

LT2 will be used to find and support the growth of top end early-stage businesses in Queensland as a pipeline for LT2V.

LT2V will support hand-picked talent through their initial capital problems and knowledge deficits via an equity stake in the form of:

1. Convertible Note options in return for a combination of Information Memorandum Preparation, Business Transformation and Capital Raising Support.

or

2. Subsidised membership in return for a convertible note. 

 

The problem we are addressing.

The Growth stage ‘Valley of Death’; (AKA the gap between Seed (initial launch) and Series A (Revenue / or Capital Raising).

The current market of Co-working spaces, Business programs, Incubators and Accelerators have not addressed the “growth” stage of the early stage business journey for two key reasons:

  1. They have not successfully ventured that journey themselves - thus have no experience to offer
  2. The Growth journey requires a very customised and face-to-face approach for success - which is IP uniquely developed at LT2

 

Why We Need To Do It.

Our team, advisors, operations, frameworks and networks are world-class and highly sophisticated.

LT2 has the IP and proof to make things work that no-one else has - we can identify legitimate high-potential businesses in the early stage better than anyone else and mitigate the investment risk through business development opportunities and being on the front-foot of each of our teams' key metrics and decision making.

 

Investment Mandate.

The Little Tokyo Two Venture Vehicle (LT2V) accounts collectively for 100% of the $5,000,000 AUD investment options through pooling professional services and subsidising memberships over 5 years to invest in high-quality early-stage ventures with highly talented teams.

LT2V will be subsidising a variety of industries based on timing and quality of deal-flow. In our experience the diversity of the community and teams invested in - only adds to the speed and innovation that is built.

 

Key investment principles.

(an extension of the LT2 culture code)

Smart People Who Can Get Things Done

Startups are viewed as “small companies” (opposed to a technology product) a great founder with an average idea will deliver better value with average founder with a great idea.

There is clear evidence that the founder has the smarts and resilience to remain at the business to make it a success (i.e. should not be purely focused on “just getting to an exit").

The individuals have the knowledge and expertise on the target market they are focusing on, the founder has demonstrated they have taken the time to understand their target audience, competition and unique selling proposition to the market.

Clear Understanding

The start-up has a working business model that we understand and contains enough information to make an informed decision on current and projected performance.
The founder has an idea on how they will generate value and deliver a return.

Substantial Return

The business will contribute substantial growth to LT2V within 24+ months, LT2V should be able to have an idea on the timeline to revenue.

Continuous Momentum

The business has good unit economics (a unit of measure generally relating to its monetisation/value) that points to month on month growth, demonstrating gaining momentum and constant acquisition (e.g. active users, sales volume etc).

Cultural Alignment

The business' culture aligns with the main staples of LT2’s culture code: Everyone uses a broom, Open, Honest and Transparent Communication, Commitment to Growth and Business for Good.

Quick Wins

The startup has an alignment to our Business Development resources and connections to develop fast distribution and growth potential.

Frequently Asked Questions

Starting Stage Plan.

Looking to achieve $100,000 in revenue/pa or Capital Raise

Perfect for Regional companies looking to digitize, lonely startup founders and first-time founders leaving the Corporate life.

Early Stage Plan.

Looking to achieve $500,000 in revenue/pa or Capital Raise

Perfect for regional companies looking to expand, Serious founding teams and High-level corporate employees spinning off.

Growth Stage Plan.

Looking to achieve $1,500,000 in revenue/pa or Capital Raise

Perfect for regional companies building teams nationally, growing businesses and consolidated enterprise innovation teams.

Scale Stage Plan.

Looking to achieve $3,000,000 in revenue/pa or Capital Raise

Perfect for regional companies ready to scale nationally, scaling businesses, enterprise teams looking to commercialize.

Please see our Membership Inclusions Matrix HERE

On average the value that we offer beyond a per square meter charge is +$1940 per person per month.

The larger the membership you take, the more value we deliver.

Over the last 10 years, our founding team has started, grown and sold their own businesses. That means that we have made all of the mistakes that you might have and already learned the best practices for executing everything that you will.

The Internal LT2 business success rate is 164% higher than Australia's average so we know that if you are with us, you will generally achieve your 5-year growth plans within 2 years.

Milestone agreement - If you believe you need the support offered through one of our more substantial membership options but cannot afford it for the time-being, we are willing to negotiate milestones for future upgrades while providing full support today.

To be applicable you will need to show how dedicated you are to making your business growth goals come true and apply through our general channel.

You may ask us if you are applicable, however it may take some time to get back to you as we will be completing a full analysis before we chat.

Most of the time, it's better to start small with us and together we will recognise when you are ready.

If you believe you are applicable for service up-front, we can discuss off-line.

Total money raised VS total valuation of LT2 success stories (as of July 2018).

  • Raised + $38,409,000 (AUD)
  • Valuation / Exit + $273,100,000 (AUD)
  • Value increase - 7x

Little Tokyo Two has more than 30 Advisors who give up their time to provide free advice to our members. We ensure that we have mentors in our spaces regularly throughout the week. We set up a time for our mentors to pop in, let you know who will be in and when and leave the rest to you. We think it's best to make a personal connection with our mentors and then the rest will flow from there.

Furthermore, if you feel like you need assistance in any particular area, just talk to the Community Manager and we'll arrange to introduce you to the right mentor!

Through our small business incubator, over 600 businesses have launched, 80 businesses have grown past teams of 10, and 2 IPOs have joined the mix. 

Some of the successful companies you may have heard of:

Lawcadia

The most awarded legal innovation platform in Australia.
Valuation after 2 years: $20m+*

TUD

The world’s largest online architectural and development journal.

Valuation after 3 years: $10m+*

Citrus

An online bidding solution for multi-brand retailers such as Woolworths.

Valuation after 2 years: $40m*+


An example scope of works:

Business transformation -

Governance
- Review of BDM agreement for risk and check compliance with employment law legislation
- Review/create BDM policies and code of conduct (inc review of work practices)
- Review of referral agreement for risk and protective provisions
- Review current practices with builders for risk
- Create a builder agreement/alternative binding mechanism
- Review remuneration structure for each employee classification
- Review current ownership vehicle and relevant documents
- Advise on future structuring and ownership options
- Contingencies and provisionally, PEF Capital on Governance

Business
- Review referrer remuneration structures, referrer relationships and related workflows
- Identify and qualify current operation (business model canvas) and set various workstream
- Business model adaptation
- Training and development of adapted business model
- Create/review KPIs and timeframes for completing each work stream in adapted model
- On-site visit (BDM, Building, Sales)
- Contingencies and provisionally, PEF Capital on Business

Financial
- Review/optimize current accounting and recordkeeping and reporting practices
- Historical and current cash flow and profit analysis (due diligence)
- Create organizational development flowchart (focused on training/recruitment)
- Financial modeling
- Contingencies and provisionally, PEF Capital on Financial

Investment memorandum or pitch deck:

Full build, templates and review, full weighting matrix, executive summary and risk/ opportunities.

Capital raise:

Outbound email and call campaign to support the introduction of investment opportunities throughout the LT2(V) extended network.

If you are just looking for an office with some business support, then we are happy to accomodate.

Little Tokyo Two has a number of offices available across all sites however these are always in high demand. If you have specific requirements, our team would be happy to chat with you about availabilities.

If there is nothing available at the time, we can put you on our waiting list and let you know once an office becomes available.

Our offices range from 3 to 15 people, so there's room for your business to grow.

No, Little Tokyo Two is home to more than 800 people - each of which are working on unique projects. We have startups alongside well-established organizations, we have freelancers alongside small teams - you're sure to find people that you can collaborate with for your business.

Each and every member is valued at Little Tokyo Two and we don’t discriminate against anyone who wants to call Little Tokyo Two home.

55% of members businesses at LT2 are between 0 - 3 years old, so there's a diverse range of young and small businesses!

So far we have helped over 600 businesses start and over 70 of them have outgrown us!

We are proud that we have had some amazing success stories for our members. We have had many alumni go on to receive investment and a handful who have been able to sell their business for a small fortune. To date, we have never had a business fail whilst they've been a member of LT2. If you're encountering tough times, we'll do everything possible to help you back on your feet!

You might be familiar with Taj Pabari who has built 56 Creations that is now being sold across the globe. Another one of our alumni is Sarah Pearce who started her business Travel Shoot right here at Little Tokyo Two.

Little Tokyo Two Ventures has great visibility of the talent being developed across South East Queensland and we have a proven track record of finding high-end talent for our growing teams.

We generally offer this for 5% of the first year salary with a full money back guarantee if the hire doesn't work out over this period.

All Tangible Value calculations have been made based on cost-price delivery of staffing and are excluding GST and cost per square meter. 

There are three key things we look for in investments:

1. Analysis - Does the business truly have a competitive advantage.

We liaise with our business analyst team, advisors and people we know within your industry to ensure that what you pitch has validity. We then use our unique weighting matrix to see where you fit in our model (1. Incubator 2. Venture 3. Investment)

2. Management - Does the team behind it have the experience or skillsets to execute their growth targets.

We do this via a unique set of questions and interviews that we have developed over the past 10 years to gauge your team's true potential.

3. Reducing downside risk - How can LT2V make sure that we are able to get our money back.

We do this via 1. ensuring that you become part of the LT2 community so that we can stay on the front-foot with support and decision making and 2. using our contacts to try and close a low-hanging-fruit deal for you right away.

LT2 Spring Hill: All day metered parking is available in the adjoining streets. We are happy to refer you to car parks in the area if you are looking to secure a long term lease.

LT2 Petrie Terrace: Limited free parking is available in the adjoining streets. Paid parking available at The Barracks across the road. All day free parking is also a mere minutes walk away from Little Tokyo Two.

LT2 Queen St: Central station is a two minute walk from the precinct and there is a car park nearby in Winter Garden

LT2 Springfield: 15 minute drop off available at front. All day car park a two minute walk away.

A core and already established business of serviced /open planned office space (LT2) will be used to find and support the growth of top end early-stage businesses in Queensland.

At 60% capacity, the core business upside will produce enough margin to subsidise hand-picked talent through their initial capital problems via an equity stake in the form of:

1. Convertible Note options in return for a combination of Information memorandum preparation, business transformation and capital raising.

or

2. Subsidised membership in return for a convertible note.

We support all businesses from ideation through to raising up to $5,000,000 AUD.

However, the key space that we specialise in is:

The Growth stage ‘Valley of Death’; (the gap between seed (initial launch) and series A (revenue/breakeven and team growth).

The current market of Co-working spaces, Business programs, Incubators and Accelerators have not addressed the “growth” stage of the early stage business journey for two key reasons:

They have not successfully ventured that journey themselves - thus have no experience to offer
The Growth journey requires a very customized and face-to-face approach for success - which is IP uniquely developed at LT2

A major consolidation across our 4 sites (400 businesses) will create a cluster of top-end talent in one space, collaborating and working with each other to achieve success.

No other Incubator space in Queensland specialises in the “growth” segment of an early stage businesses journey, providing a first mover advantage for LT2.

Our team, advisors, operations and networks are world-class and highly sophisticated.

LT2 has the IP and proof already to make things work - that no one else has - we can identify legitimate high-potential businesses in the early stage better than anyone else.

The Little Tokyo Two Venture Vehicle (LT2V) accounts collectively for 100% of the $5,000,000 AUD investment options through pooling surplus cash flow and subsidising memberships over 5 years to invest in high-quality early-stage ventures with highly talented teams.

LT2V will be subsidising a variety of industries based on timing and quality of deal-flow. In our experience the diversity of the community and teams invested in - only adds to the speed and innovation that is built.

(an extension of the LT2 culture code)

Smart People Who Can Get Things Done

Startups are viewed as “small companies” (opposed to a technology product) a great founder with an average idea will deliver better value with average founder with a great idea.

There is clear evidence that the founder has the smarts and resilience to remain at the business to make it a success (i.e. should not be purely focused on “just getting to an exit").

The individuals have the knowledge and expertise on the target market they are focusing on, the founder has demonstrated they have taken the time to understand their target audience, competition and unique selling proposition to the market.

Clear Understanding

The start-up has a working business model that we understand and contains enough information to make an informed decision on current and projected performance.
The founder has an idea on how they will generate value and deliver a return.

Substantial Return

The business will contribute substantial growth to LT2V within 24+ months, LT2V should be able to have an idea on the timeline to revenue.

Continuous Momentum

The business has good unit economics (a unit of measure generally relating to its monetisation/value) that points to month on month growth, demonstrating gaining momentum and constant acquisition (e.g. active users, sales volume etc).

Cultural alignment

The business' culture aligns with the main staples of LT2’s culture code: Everyone uses a broom, Open, Honest and Transparent Communication, Commitment to Growth and Business for Good.

Quick Wins

The startup has an alignment to our Business Development resources and connections to develop fast distribution and growth potential.

Where to from here

Have a quick 15 minute chat with your local manager
Jock Fairweather
Spring Hill