What is a tractor?

There’s something about tractors. 

Maybe it’s the instantly recognisable silhouette over a hill; the chugging engine on a country lane, and the cars winding in its wake; the distant memory of a ride at the farmyard, and the oddly familiar rumble under your bum.

Tractors are powerful, impressive, distinctive machines. They’re staples of storybooks and toy boxes. They’re loud and unapologetic, but functional by definition. They have character and, somehow, charm; they’re versatile; they’re dependable.

In a word… they’re just kind of cool, aren’t they?

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Tractor Ventures harnesses the spirit of practicality with a hint of adventure; hard work with an element of fun; and the sweet spot where tech meets tradition.

The Tractor Ventures roster of companies featured in this article each identify as a ‘tractor’ in their own unique way. Some have been slow and steady since day one, others took the scenic route out of necessity, but looking back, wouldn’t change a thing.

For some, being a tractor means a true focus on bringing value to their customers. For others, it’s a stepping stone on the journey to world domination.

All of them, however, are building their own powerful, impressive and distinctive machines. Because for all their nostalgia, history and age, as any farmer will tell you, modern day tractors are seriously high-tech bits of kit.

Part one: What is a tractor?

When it comes to startups, funding and access to capital, we talk about tractors in contrast to rocket ships. Where rocket ships follow the classic – perhaps cliche – startup trajectory of super-fast growth, tractors focus on sustainability, revenue growth and the path to profitability.

The growth chart may be more rolling hill than hockey stick.

Where rocket ships accelerate fast and fly high, tractors chug along, slow and steady.

Where rocketships burn fuel fast, tractors keep the engines running economically as can be.

Where rocket ships shoot for the stars, tractors stay grounded in what they know.

Of course, rocket ships have been known to explode. Tractors, not so much.

Just like the tractors in your farmyard story books, startup tractors are robust, dependable and built to last. But just like the tractors on modern-day farms, they’re utilising cutting-edge tech to get their job done.

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For Jodie Imam, co-founder and co-CEO of Tractor Ventures, the ideal ‘tractor’ is “a fairly high-growth technology company, and a founder who has decided they want to grow that company on their own terms, in their own timeframe”.

These are not founders that are lacking ambition, or companies without global potential. It’s simply a different way of approaching growth.

Founders building rocket ships are seeking multi-billion dollar valuations in a relatively short space of time, Jodie explains. Those building tractors are still seeking growth, but at a less extreme trajectory, without leaning so heavily on equity investments.

“Rockets are exciting and some of them land on the moon,” she adds.

“They’re also very expensive, and a lot of them blow up along the way. We’ve seen a lot of that carnage over the 10 to 15 years we’ve been in the ecosystem.

"We see in these tractors that they're incredibly durable and dependable for their customers, their users. And if you tell a farmer that you're taking away their tractor, they're going to be very upset with you."

"So we see some long-term, sustainable ways that these tractors can be super dependable for their customers for the long-term, as they grow and grow at a sustainable pace."

“We believe it is incredibly feasible, and ideal, to see many multiple tractors eventually exit as $100+ million companies, with the founders still owning the majority of that company. That's a story we'd like to tell over and over for years to come.”

Cheryl Mack is CEO of Aussie Angels, a platform helping angel investors find opportunities and form syndicates, in a bid to democratise startup investment in Australia. She’s also an investor in the Tractor Ventures business, which is deploying millions of $$ to a massive amount of technology companies.

Needless to say, the vision is something she passionately believes in.

“The debt, for me, was less about being excited to get a return – sure that’s awesome – but I really felt like the ecosystem needed this product, especially when Tractor first started.”

“There were very few options for founders who didn’t fit the VC model. And that sucks, because when you’re an investor and you’re talking to lots of founders, and the majority of them don’t fit the VC model but you have nothing else to point them to, that’s really shitty.

“I really value having diverse options for companies to raise money, and I really thought the ecosystem needed it.”

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The Australian ecosystem is still relatively new, and has been largely built around VC funding. But in reality, VCs only invest in about 1% of new companies, Cheryl explains.

They’re less likely to back businesses with high capital expenditure; that deliver physical goods; that might not have global application; or that aren’t targeting a hockey-stick growth curve.

Tractors will have a good size market, but it doesn’t have to be global. And, while innovative, they don’t necessarily have to be treading a whole new path.

“Tractors don’t have to be completely new or novel,” Cheryl says.

“They’re companies that could be approaching something in a better way –- offering something that is valuable in the market, but also somewhat proven.

“They often use proven business models, or business models that have been validated in the market already.”

A tractor isn’t better than a rocket ship – they’re different vehicles doing very different jobs. Both evoke a sense of awe, nostalgia and that childlike glee, but the feeling is different, somehow. 

In startups, the rocket ship has historically been the default – or the goal at least. Tractors are here to show that that’s not the only way to get things done.

Part two: What makes a tractor?

In business (perhaps more so than in the field), tractors are incredibly varied. They come in all shapes, sizes and sectors, and each relate to the ethos in their own unique way.

Tractor Ventures’ roster of funded companies reflects that, spanning everything from product-led ecommerce companies to value-driven profit-for-purpose ventures to edtech to cybersecurity, and everything in between.

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SignOnSite

SignOnSite is a construction tech startup founded almost ten years ago, before ‘construction’ and ‘tech’ were two words people were used to hearing together.

It started out as a way for tradies to digitally check into a worksite, saving time and paperwork and – perhaps more importantly – helping workers avoid hefty on-the-spot fines.

Now, as co-founder Alexandria Garlan explains, it has evolved to remove all manner of manual processes, while providing crucial data and information to head offices.

Currently, one in three Australian construction workers and an astounding eight out of 10 New Zealand workers use the platform. The startup is also gearing up for a UK launch.

For Alexandria, it’s a sign of the times; a sign that technology is finally starting to reshape construction at an individual worker level.

“Construction has been a laggard adopter of technology,” she says.

“When we started SignOnSite, mobile phones were actually banned on construction sites.”

Alexandria and co-founder Mitchell Harmer spent a long time convincing the industry’s stalwarts that workers would be willing to download an app onto their personal devices, as long as it added value for them. Today they’ve proven that, and then some.

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SignOnSite was one of the earliest startups backed by Tractor, and it has raised a small amount of equity funding before and since. 

But for Alexandria, the fact it was an early mover in construction tech meant she never felt being a ‘rocket ship’ was an option.

When the co-founders were talking with venture capital firms back in 2015 and 16, investors just weren’t interested in what they were doing. They wanted to see ‘LinkedIn for construction’, she recalls with a grimace.

Having a B2B platform in an ‘unsexy’ category was not a recipe for success at the time.

“I think it’s more difficult to get funding if you’ve created a category in a technologically unattractive market segment. We didn’t have a lot of options,” she says.

“We had to be very sustainable and frugal with the way that we built our business.”

SignOnSite used debt funding from Tractor to hire the people needed to accelerate growth – people to double down on what was working about the product and market offerings.

“When you’re a startup, things are really difficult. You’re hustling for cash and customers, and trying to figure things out, and you don’t have a huge amount of time,” Alexandria says.

“We used the Tractor loan to bring in people that had a lot of expertise and some industry experience, who could codify what was really successful about our sales process and products, so we could take things to the next level.”

On the product side, in particular, the strategy paid off. SignOnSite shipped a record number of feature releases last year, Alexandria says. Without giving much away, she says there is a lot more to come.

“I don’t think we would have been able to do any of that without that hire that Tractor enabled us to make.”

Cynch

In the words of co-founder Susie Jones, Cynch is on a mission to limit cybersecurity incidents for small business owners, and to prevent any incidents from causing “one of the worst days of their working lives”.

Typical cybersecurity products are expensive and tailored towards big businesses with big bucks to spend, Susie explains.

“We knew that to be able to support the 2.4 million small businesses across Australia, let alone the 97% of businesses across the globe that are small businesses, that we weren't going to be able to do this in the traditional way.

“We set out from day one to build a product that was enduring; that would continue to evolve with the cybersecurity landscape and the threat landscape, but also to respond accordingly to the changes within small business segments. 

“While it's one thing to say there are 2.4 million small businesses in Australia, that actually means there are 2.4 million completely different businesses.”

When Susie and co-founder Adam Selwood formed the business in 2018, they also already knew they were a tractor, not a rocket ship. They were carving out a new path in cybersecurity, and that’s not something that can be rushed.

“We were going to need to continuously gauge customer feedback, continuously react to their feedback and prioritise,” Susie says.

At the same time, there’s a good reason nobody has tried to do this before. Selling cybersecurity solutions to small businesses is difficult.

“I’ve found 1,000 different ways not to sell to small businesses. I’ve managed to find several ways to sell to small businesses, but none of them work on a fast sales cycle.”

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Cynch is about helping businesses build cyber resilience, or what Susie calls ‘cyber fitness’, into their business over time. It’s also about adding value in an area where it’s sorely needed.

“If you’re really conscientious about that, I think the best way to do it is to be a tractor, not a rocket ship.

“It’s not to say we wouldn’t have loved to be a rocket ship if it had happened through the right means. But for us it’s all about making sure we can be around tomorrow.”

Cynch takes part in the Tractor advisory program, and has also raised a small amount of capital.

By the end of 2023, the aim is to be on a strong pathway to profitability. That will open up options to go down either the revenue debt or equity funding route, or another route altogether.

CarbonCrop

CarbonCrop is a tech startup in the sustainability sector, but according to CEO Jo Blundell, it doesn’t necessarily fit into the Tractor-style ‘sustainable’ business model.

The startup pairs satellite imagery with machine learning to assess forest areas on private land, and their carbon sequestration, assessing the carbon credits available to landowners. 

CarbonCrop then manages landowners’ participation in carbon credit schemes, and takes a cut of the credits they earn, which they then sell to generate revenue. 

It means the revenue cycle is annual, Jo explains. And in startups, a lot can happen in a year. 

The business is growing fast, so Jo knew CarbonCrop would have a shortfall in cash reserves before its contracted revenue landed.

So for her, Tractor essentially provided a bridging loan. Where some startups have used loans to hire key staff or stock up on inventory, CarbonCrop's goal was to avoid being insolvent – albeit only briefly.

The debt funding also won’t take the business to sustainability, Jo says. The revenue is going back into growing the business, and instead of looking for another bridging loan for next year, she and the team are raising capital to fuel the next phase of growth.

“We’re not really Tractor Venture's typical customer,” Jo says.

“To raise the next round of money we needed to show revenue, and it was the loan that got us to revenue.”

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Jo sees revenue-focussed debt funding as just another tool in the startup funding toolkit; something that was the right option at the right time, and for the right use case.

As for CarbonCrop, she says it’s neither a tractor nor a rocketship. It banked $2 million in revenue this year, up from $200,000 last year – so it ticks the revenue-based growth box. But Jo isn’t interested in a slow-and-steady approach.

“We’re not a growth-at-all-costs to the point of failure, but we are fairly ambitious,” she says.

“We’re a climate-focused product, and climate change is a big problem. You can’t be slow and steady with climate change.

“We need VC funding to achieve the goals we’ve got to achieve.

“We are growing, and we’re growing fast. But we’re also growing with revenue, not just a lot of deep pockets and dreams.”

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Karista

Karista is another startup with impact at its core, built to help meet the needs of people with disabilities and their non-professional caregivers – typically parents of disabled children and children of elderly parents. 

As founder Danielle Bodinnar explains, changes to the NDIS in 2016 introduced consumer-directed care, meaning individuals were allocated a budget based on their needs, to spend with the providers that best suit them. 

For service users and caregivers, it meant more autonomy and choice around the providers they wanted to work with, and the ability to shop around. For providers, it meant more pressure to reach their target market. 

And on both counts, it meant more admin and time commitments to find the right match between service provider and user.  

Danielle built Karista to bridge that gap, matching individuals with the best providers, without caregivers having to call around and coordinate everything themselves.

“What we’re about is getting the very best care at total lowest cost – not just the cost of the NDIS plan and making sure the funds are allocated – more importantly it’s reducing the cost of time and stress. 

“We do all the onboarding forms, and we onboard users to the range of providers they need. This could otherwise take three months, or even up to nine months in some cases.” 

Karista is a tech startup, using its platform to automatically connect service users and providers, based on things like location, availability and services offered. But behind every pairing there is also a human with domain expertise, ensuring matches make sense in the real world. 

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To date, Karista has fielded about 50,000 requests for care. It has raised capital in the past and has since met the revenue milestone required to raise again. In the meantime, however, debt funding from Tractor allowed Danielle to hire some key people to ramp up operations. 

She hopes that will mean a better valuation for the next raise. But ultimately this is a business that will grow off the back of its revenue, supported by equity funding. 

“Our mission is to impact 1 million people by the end of 2025, and our vision is to improve care at total lowest cost. That drives everything that we do. 

“When we cascade that down to our goals, revenue is our number one goal. 

“We get that through our second goal, which is making sure that our operations and value proposition are as they should be – there are some critical success factors to that. 

“The third goal is to get that team alignment. Because we are so high-touch, the team is essential to us. Finally, we handle a lot of data, so data security is one of our top-line goals. 

“But when I summarise it all, the two key things for us are getting that top-line revenue and impacting 1 million people by 2025.” 

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Nectar Brands

Nectar Brands co-founder Grace Tan never really intended to follow the business trajectory of a tractor. But having launched mere months before the COVID-19 pandemic struck she found she didn’t have much choice. 

And looking back, she’s glad things worked out the way they did.

Nectar Brands is a digital healthcare company that builds brands offering healthcare services in niche or stigmatised areas, with a strong focus on care for underserved patient communities.

Currently, the Nectar banner spans brands in the medicinal cannabis space: Cultiva, which partners cultivators with patients and care providers, to streamline access to products; and Polln, a fully online clinic covering video consults, prescription delivery and follow-up care.

A third brand, Hazel, has also recently launched – a digital clinic dedicated to women’s health and alleviating pain. And Grace says this is just the beginning.

“Anything that’s got a bit of stigma attached, this is where we want to play our role in healthcare,” she says.

Grace's background is in finance, where she’s held roles ranging from investment manager to CFO.

“But numbers really never got me out of bed in the morning.”

Through her own experiences as a patient, navigating the barriers and gaps in traditional healthcare, and through witnessing the obstacles facing those with chronic conditions, she found herself drawn towards the sector.

“I realised patients weren’t in the driver's seat of their most important vehicle – their health – and there were millions of Australians who have chronic conditions that are difficult to manage via the standard medical system. We wanted to bridge that gap.”

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Grace and co-founder Chris Nasr found themselves trying to raise capital in the early days of COVID-19, when “everyone’s pockets seemed to be sewn shut”.

It also didn’t help that the business was pre-revenue, and operating in the emerging therapies space.

“We essentially self-funded," Grace says.

"We rolled up our sleeves on a mission to prove the idea could be scalable and sustainable.”

Fast forward a couple of years, and Nectar Brands had two brands live and was generating revenue. The founders raised a late seed round, mainly securing private equity from individuals in their circle.

The Tractor debt financing allowed them to move to the next phase of growth at their own pace and without panicking about their very survival, Grace explains.

“As we scaled, so did our inventory needs. And while we were really close to profitability, we just didn’t have the cash to forward the inventory at that time.

“We knew we didn’t want to give more equity away – there were just a few more crucial milestones to hit before going for the next funding round.

“So the solution to bridge us until that next raise was Tractor. It’s really helped us to not give away equity.”

That growth has continued since, with Grace anticipating a 600% revenue increase for FY 2023, compared to the previous 12 months.

“We did originally go out to the VCs early, to raise capital. Had that been successful – perhaps if COVID hadn’t been around – we potentially could have taken on a bigger investment, given away more equity, and been able to scale a lot more quickly than we have.

“But in hindsight, I’m quite happy that we were forced to grow steadily. 

“If you’d have asked me three years ago how many brands we would have launched by now, I would have said definitely more than we actually have.

“But I’m learning that sometimes slow and steady – picking and choosing where to put your money, where not to put your money, and where to grow – has made us really understand and know where we’re profitable in our business.

“It’s led us to make really good decisions along the way, and reach a point of profitability now, which I don’t think we would have if we’d had abundant cash to begin with.” -Grace Tan, Nectar Brands

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Part three: Cultivating a diverse ecosystem

According to Cheryl Mack, the very fact debt funding is available for Australian businesses – and that it’s generating interest – shows a maturing of the local startup ecosystem.

Just three years ago, she could have named just one or two debt funding options, she notes. Today, she would at least need two hands. 

“Our ecosystem is getting there, and it will continue to grow and continue to scale, and we will see a further maturity of it,” she says.

“I’m excited about it, and it needs to continue.”

Kate Cornick is CEO of LaunchVic, the Victorian government’s startup agency, which invested $300,000 in Tractor Ventures to help establish its first revenue-based debt fund.

She points to revenue-based debt funding as a valuable option for bootstrapped startups that aren’t interested in giving away equity, as well as a means to support venture-backed startups between rounds.

Ultimately, she says there is value in having more funding options. It’s something she welcomes for Victorian startups.

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“As the number of startups in an ecosystem grows it is important that access to capital grows,” Kate says.

“This does not just mean an increase in the amount of capital, but a maturing of the ecosystem will see different sorts of capital made available to startups.

“LaunchVic proudly supported Tractor Ventures to establish Victoria’s first revenue-based debt funding for startups and we are thrilled to see their progress and impact on the Victorian startup ecosystem.”

Equally, however, it’s not all about the monetary value of the funding. Almost all the founders we spoke to noted the benefit of peer support and community that comes with being part of the Tractor Ventures roster.

Sometimes the value of expertise, and even shared experiences, is just as important to growth as capital.

“To us, being a tractor is about consistent, steady, sustainable business growth."

“You can’t just heap a bunch of money into your business and suddenly be successful. It’s about having time, resources and expertise around you, to help you figure out what the mechanisms of growth are, so that you can invest heavily in those mechanisms once you’re fully confident in it."

"Tractor is really good in that they have a big network for you to access – advisors and things like that – to reduce your execution risk.

If you have extremely ambitious growth plans, you want to be confident you can do that. Tractor’s funding can help you with experimentation in different ways to achieve that, so you can go out and get larger pieces of investment because you’re confident in that experiment.

Or you can pay for it with cash flow, because you’ve got a strong set of advisors, and some funding."

• Alex, SignOnSite

Debt funding isn’t the be-all and end-all. It’s not here to replace equity funding or to solve every challenge startups will ever face. 

But no form of funding can be all things to all businesses, and the more options available, the better.

As a finance mind, Nectar Brands founder Grace says the very ethos of the ‘tractor’ analogy resonates strongly with her.

“Gone are the days of growth at all costs,” she says.

“I’m personally really happy to see the focus be put back on the bottom line and the need for investors to see a strong, scalable and sustainable traction, controlled spending and really just considering profitability as a key metric.”

After struggling to secure VC funding during the COVID-19 pandemic, Grace's eyes were opened to other alternatives. When Nectar Brands did raise capital, it was through private equity, securing investment from people who understood the business and its mission.

“The people we ended up raising money from were actually people somewhat in our circle – pharmacy partners that had seen our trajectory and our growth, or surgeons that have seen what we’re doing in this space and how we would try to change healthcare.

“They were all people who had an interest in what we were doing in healthcare.

“I think when they can see behind the books as well, it definitely helps.”

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Part four: Reliability over risk

On a farm, a tractor is a pretty crucial piece of kit – something that is absolutely relied upon, day-in, day-out.

The tech-enabled tractors being funded are here to provide that same level of service to their customers. Their customers rely on them, so no matter how high they’re aiming, blowing up is not an option.

That is something that resonates with Cynch’s Susie Jones.

Cybercrime is a real threat to small businesses, and it’s not something they can solve, tick off and move on from. Cybercriminals are constantly finding new tricks, schemes and technologies, so cybersecurity requires constant maintenance.

If a small business is a supplier to a large business, or to a business in a heavily regulated sector, obligations are passed down the supply chain. Taking those obligations seriously can be crucial to maintaining contracts.

At the same time, in the wake of some very public leaks of personal information, individuals are demanding to know how businesses keep their data safe. Businesses of all sizes must be ready to reassure them.

“We help every business to tackle and prioritise what’s important to them.”

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Simply being there to support its customers is something that’s ingrained into Cynch, Susie says.

“We want and aspire to be essential to our customers’ success, but we also want to complement it. 

“We never want to be the be-all and end-all of their success, but we do want to do everything in our power to enable it. And I think that’s exactly what tractors do.”

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In a similar way, for Karista founder Danielle, reliability is a non-negotiable. When a startup is built around making a positive impact, failure is simply not an option.

She says Karista is on the cusp of significant growth and scale, but it’s been a very measured journey to get to this point. 

Firstly, many of its shareholders are friends and family – people Danielle doesn’t want to let down. 

But also, the target users here are vulnerable people, and it’s important to her to put their needs – current and future – first. 

“We want to take care of people,” Danielle says. 

“Our main purpose at our core is to have a positive impact.” 

A wrong match, an interaction with a rude employee, or even a clunky process could have the opposite effect, she adds. 

“So we have to be careful and cautious. We can’t muck about with this target audience.

“I’ve never once thought for a single moment that we would lose this business, even going through COVID … I knew we would survive and we would continue to grow, because we’ve got such a solid business plan in place, linked to our vision and our mission, and we’re also supported by great stakeholders."

“We’ve been cautiously getting that traction, but also getting the growth that we needed to scale the business.” 

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Part five: Exploring funding options

In the almost three years Tractor Ventures has been operating (as at Oct 2023), Jodie Imam says her vision of what makes a ‘tractor’ has changed slightly.

Initially she saw debt funding mainly as a solution for bootstrapped startups, she explains. 

“We’ve learnt that founders are really looking at multiple sources of capital at multiple different points in their journey.

“We are part of their total weighted average cost of capital. That’s exciting.”

Founders and other ecosystem players are becoming more and more educated on the costs and use cases of different capital sources.

For example: “Selling shares to hire a salesperson is madness,” Jodie says.

“If you take some debt, that salesperson is going to return some revenue very quickly, and you save on dilution.”

Revenue-based debt funding is just one route for a founder to consider, and as shown in many of our founder stories, it’s not mutually exclusive to equity funding, or any other route to accessing capital.

Clearly there is nuance here. There’s no one correct route for every business. The key point is that any funding should work for the founder and the business – it should be a considered decision, not something done out of desperation.

Equity and debt

As Cheryl Mack explains, equity funding tends to be expensive, in the long run. In an ideal world, founders should seek VC backing not because they need the money, but because it’s the best strategy to reach their next phase of growth.

For her, that’s where Tractor backing can be invaluable.

It’s about finding the right balance, and maintaining control – control over the funding method, and literal control over the company, Cheryl says.

“If you have the ability to grow your company without giving away equity, and get it to a VC scale stage, then you’re going to have a better outcome as a founder.

“The reality is that’s not possible for a lot of founders, because either the company is not making money or they don’t have the money to put into it. Then, giving away equity is the best option, because there are no other options.”

“If you are in a position to use your revenue in exchange for growth funding, in the long run that’s a better deal.” - Cheryl Mack

Alternatives to the VC universe

On the other hand, there are some businesses that don’t fit the VC mould, and some founders that just don’t feel that the space is for them.

Karista’s Danielle has done the rounds of pitching to venture capital firms, but says she realised pretty quickly that it wasn't going to work for her. 

“We’re not deep tech, and as a female founder I wasn’t really a good fit for a VC fund,” she says. 

According to Cut Through Venture’s recent State of Australian Startup Funding report, 10% of all capital invested in 2022 went to businesses with a woman founder. Just 3% went to businesses with all-women founding teams.

The stats are not only disappointing, they’re disheartening, Danielle says.  

“When you see that, you think ‘well, why would I bother?’

“And given the Tractor analogy, and the fact that we’re very aligned to that – I don’t think the VCs really want to hear that we’ve got to be cautious and we’ve got to take care of people. They want rocket ships.” 

For the most part, Karista’s funding journey has been fuelled by strong relationships, she says. 

It was an existing relationship with Tractor's co-CEO Jodie Imam that cemented Tractor as the right choice to complement Karista’s equity funding. And that equity funding has mostly come from people Danielle knows personally, and who deeply understand her mission. 

“I haven’t really gone and asked people for money ever. I’ve just been lucky enough to have conversations with people and they’ve said they would like to invest money. 

“We’ve been drip-fed money along the way.” 

“We’re much better off having investors who understand our target audience. Our largest cash investor is a woman who has her own business in the disability startup space, and most of my investors are women who either have kids with disabilities or have been involved in the market."

They’re really smart women who don’t ask so many questions about the financials – they ask about the value that we’re offering the target audience. 

The reason they ask that is because they care, but also because they know the financial will come when we add value. They’re just more strategic and empathetic investors. I’ve got a lot of trust with them. 

It seems more transactional and rocket-shippy with the VCs.” - Danielle Bodinnar, Karista 

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A place for the banks?

On the very low end of the risk appetite spectrum are the banks – institutions that typically shy away (far away) from funding startups.

However, before reaching out to Tractor, CarbonCrop CEO Jo was in conversation with one of New Zealand’s major banks, applying for a more traditional bridging loan.

The bank loan application was ultimately approved, she says – something that’s actually hugely validating for a tech startup. But the negotiations, deliberations and bureaucracy stretched on for close to six months – a lifetime in startupland.

“A bank has never approved a loan based on a contract with a customer to say they’re due a percentage share of credits they will earn on their land,” Jo says.

“We don’t own the land or the trees, we just have a contract to say we’re delivering a service that would give us a fee that we’re entitled to, that we could then trade to realise revenue.”

When considering a business loan, banks have to dissect the model and consider whether they believe in it. Ultimately, the answer was yes – but it was too little too late.

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“One of the things that banks, frustratingly, don’t appreciate is how fucking hard it is to just do our jobs.

“The hoops they make you jump through – the red tape, the filling out manual forms, and ID checks. Are you willing to sell your soul for the small amount of money they can give you as a bridging loan?

“It was six months of negotiating, sending them our contracts to show them the validity of the contracts we had, and going through risk committee after risk committee after risk committee, to try and get something across the line.

“Ultimately they delivered. But they were only willing to lend us not quite enough to bridge the revenue gap.”

• Jo Blundell, CarbonCrop

It was a frustratingly long process for what would have been a negligible payoff. But for a busy CEO of a fast-growing startup, it also felt like a monumental waste of precious time.

“It’s an opportunity cost,” Jo says.

“You’ve only got so many hours in the day, and a thousand things to do. You could be raising VC funding, or growing the business, or actually signing the contracts that deliver real money. 

“Or, I could be speaking to the bank to try and get a small loan to cover us for a small period of time. It was very painful.

“With Tractor, it was two weeks from me reaching out to them to basically having money in the bank account.”

Part six: Staying grounded, looking to the skies

For all the benefits of running your business as a tractor, it comes with challenges too.

It can be difficult riding a tractor when others around you are riding rocket ships. Staying grounded might be best for your business, but it’s tempting to look to the stars.

“To be honest, it can definitely sometimes be hard to watch other players in the startup space, whether they’re receiving funding with no traction, or further funding when they aren’t profitable.

“It can be a little bit deflating to hear. But I honestly wouldn’t change a thing, because we’ve had our blinkers on. I know that as long as we continue our strong sense of scalable growth, we are doing what’s right for the company and our investors.

“We’ve spent the last three years building a really solid foundation. Although that’s meant our journey has been a little slower compared to others, we do have that solid launchpad now.” - Grace Tan, Nectar Brands

SignOnSite’s Alexandria says it can be hard to watch other businesses raising “crazy amounts with crazy valuations”.

Over the ten years she’s been in business, she has questioned whether she’s doing a good job. She’s also had investors compare SignOnSite against other wildly successful businesses that play in a completely different part of construction.

“I don’t think there has been a lot of nuance in the industry up until now, about different types of growth and different types of funding.”

The path of building a business never did run smooth. Tractors arguably spend a little longer on the bumpy bits. It’s exhausting and long, but our founders know they’ll reap the long-term benefits. 

These businesses are made of study stuff – they’re tractors, after all.

Alexandria likens revenue-based financing to revenue-focused businesses. Both are coming into their own, becoming more mainstream and finding their place in the local startup ecosystem.

“Now, there’s room for us in the market. People are excited about us and they appreciate us.”