Aussie Startups Pulse Check - April 2024 💓

Welcome to the second edition of Pulse Check! 🎉 

A huge welcome to the 119 new subscribers who’ve joined us since last edition - it’s so great to have you here! 🤯 

Pulse Check is an initiative of Overnight Success (OS), powered by an amazing team of volunteer writers (“correspondents”) who have each contributed their own insights to bring you a comprehensive overview of what’s happening in many corners of the Aussie ecosystem.

Get to know each of our correspondents by clicking on their name at the top of each section! Throw them a ‘Follow’ on LinkedIn while you’re there 😉 .

Whether you are a long-time OS supporter or new to our community, we hope this newsletter will serve as a valuable monthly resource to help you keep your finger on the pulse of the ecosystem.

In case you’re new here, you can get a weekly download of startup news from our OG newsletter 👇️.

P.S. If this email gets cut short for you (thanks Gmail!), you can always read the online version here.

🌍 From Oz to Everywhere

Our sister publication, Overnight Success, recently published a piece announcing Sydney-based AI cyber-security startup, Nullify, has raised a $3.4M USD seed round to expand their product offerings into the US.

With US investors like Two Sigma Ventures, Root Ventures, and Conviction Partners this move makes sense.

“That was our priority coming into fundraising, we wanted a US investor as sort of a launchpad with customers,” Nullify Head of Marketing Suzy Ahn told me. “We're really wanting to replicate the community and the awareness that we've built in Sydney, but in New York City and in San Francisco,” she added. 

How will they achieve this? Hosting events, panels and meetups with subject matter experts during Tech Week, iterating on messaging and building online content resources. I’m impressed.

Takeaway: When looking for international investors for expansion, look for a really great founder experience team and lean on them to learn the market. 

San Francisco is not dead

A recent episode of The Economist’s Money Talks: Silicon Rally podcast covers the revival of the Bay. Will AI bring San Francisco back to greatness? Is this a renaissance in name only, or will it change the face of SF for the better? 

My take: Downtown’s a WIP, but emerging tech, AI hacker houses, and the allure of being in person is laying the foundation for SF to be officially “back”.

To get in touch with Lea Rausch, send her a message on LinkedIn.

My favourite tools to find investors

Building an investor funnel is one of the first steps to raise capital. Besides PitchBook and Crunchbase, use these free tools to discover potential investors:

• LaunchVic Dealroom: Database of 1,013 investors

• Shipshape: Database of 15.5K funds, and the 100K individuals who work with them

• Founder Suite: Database of 216,000 investors

• Open VC: 5,000 investors

Square Peg Hits $1B in Returns

Square Peg, a leader in Australia’s venture capital scene, just hit a major milestone: it's returned over $1 billion to investors in 12 years. Now, navigating a tougher market, they're preparing to raise a significant $US550 million for their next fund in late 2024. With dropping startup valuations and demands for more transparency from super funds, Square Peg's bold and strategic move shows how they're adapting and setting ambitious goals, even in challenging times.

The IPO season is open! 

Alta Global, an Aussie company co-founded by Conor McGregor's trainer John Kavanagh, has debuted on NYSE American at $5/share. The firm offers MMA training programs for gyms via a tech platform and raised funds on Birchal in 2019. Despite revenue of AUD $1.54 million in 2023, Alta faces a net loss of AUD $20.6 million. The IPO indicates growth potential amidst financial challenges.

To get in touch with Leila Oliveira, send her a message on LinkedIn.

Breakthrough Victoria under scrutiny

Recent reports have alleged that Victoria’s state-run $2 billion VC fund has spent $22 million of taxpayers’ money on staff expenses (considerably higher than private sector VC’s standard management fees) to invest $74 million in startups in 2023.

Breakthrough Victoria has hit back in an official media release denying the allegations and reiterating the impact that the fund is having on the Victorian economy, having invested upwards of $300 million to date in 22 direct investments.

My two cents is that in a capital-restrained market we shouldn’t be biting the hand that feeds us. Though, as with any use of taxpayers’ money, there should and hopefully now will be, greater transparency.

Uber in a spin

The rideshare giant will pay Aussie taxi drivers $272 million to settle a class action alleging they didn’t have the necessary licences to operate when they launched back in 2012. This is a prime example of how the disruptor’s mantra of “ask for forgiveness rather than permission” only works until YOU become the market leader. Read my long-form piece about this here.

Sophisticated Investor to be discussed in Parliament

After months of advocacy from the innovation community, a Parliamentary Inquiry into the controversial proposed changes to the wholesale investor test is being undertaken. Add your submissions here before May 15th.

To get in touch with Dickie Currer, send him a message on LinkedIn.

⚡️ Spotlight: UNSW Founders launches new ‘Exits for Entrepreneurs’ program

UNSW Founders launched the Mergers, Acquisitions, IPOs & Secondaries (MAIPOS) Program on 22 March. It’s the first-of-its-kind program from an Australian accelerator. 

Why is an accelerator teaching exit strategies?

 “Almost half of all exits happen by Series A, leaving many founders unprepared for successful exits when the moment arrives,” said Beste Onay, Program Lead and UNSW Founders’ Investments and Portfolio Manager. 

“We want to ensure that founders aren’t missing opportunities or leaving capital on the table”.

Program takeaways:

• Prepare for exits, don’t just focus on building

• Organise legal documents and IP agreements in advance so that you’re ready for future conversations around exiting

• Know how your business looks from a prospective buyer or partner’s perspective to negotiate the best deal 

For the full story on why it pays to plan early for exits, check out my interview with Beste Onay.

🔔 Programs Now Open

• Startupbootcamp FoodTech Tasmania - applications close 14 June

• Techstars Tech Central Sydney - applications close 22 May

• I2N Cleantech Accelerator - seeking expressions of interest from NSW Central Coast & Hunter Valley startups

• UNE Pitch2Grow Moree - apply now to get mentoring and pitch your startup idea

Do you have an accelerator program or event we should know about? Get in touch!

To get in touch with Berenice Chong, send her a message on LinkedIn.

Solar panel moonshot

Prime Minister Anthony Albanese has announced Solar SunShot: a $1 billion program that will aim to boost the number of solar panels that are manufactured in Australia.

• One in three Australian households have solar panels — the highest rate in the world. But only 1% of them are manufactured locally, with the cost of importing panels adding ~15% to the price tag.

• The program will consist of production subsidies and grants, as well as the transformation of the decommissioned Liddell coal power station site into a solar panel manufacturing hub.

• AGL and SunDrive are both expected to play major roles in developing the hub.

Want to get involved?

Here are some of this month’s climate & nature tech events:

• 22 - 23 April: The third Impact X Sydney Summit, Australia’s largest global summit for climate and nature, will address the urgent need for short-term action. Location: Sydney. Cost: NGOs/Academics/Startups: $1049.00 (+GST), Corporate & Government $1349.00 (+GST).

• 24 April: Going from Startup to Scaleup - Climate Tech Edition, hosted by EnergyLab, hear from 5 experts in the field who have been on this very journey themselves or who support startups in the space. Location: Sydney. Cost: Free.

To get in touch with Andrew Harding, send him a message on LinkedIn.

• Microsoft and OpenAI are reportedly working on a data centre project called ‘Stargate’, which will contain a supercomputer with millions of specialised computer chips to help power OpenAI’s models. The costs could reach up to $100B, expected to launch in 2028. With more chips and resources, the power of AI and the use cases will continue to grow and spark innovation. 

• OpenAI’s Voice Engine creates realistic voice replications using 15-second audio + text input. The model has been in development since late 2022, and is engaging conversations with key industry stakeholders to explore the challenges and opportunities with the technology. 

• The founder of FTX, Sam Bankman-Fried (SBF), has been sentenced to 25 years in prison after orchestrating one of the largest finance frauds in history. The court found that investors lost $1.7 billion, lenders lost $1.3 billion and customers lost $8 billion. SBF was also ordered to pay $11 billion in forfeiture.

• Amazon has invested a further $2.75 billion in OpenAI competitor Anthropic. This follows a $1.25 billion investment in September 2023. Last month, Microsoft singled out Google Cloud’s competitive edge in Generative AI. “Today, only one company - Google - is vertically integrated in a manner that provides it with strength and independence at every AI layer, from chips to a thriving mobile app store. Everyone else must rely on partnerships to innovate and compete”, Microsoft said in its report to the EU Commission.

To get in touch with Erin Howell, send her a message on LinkedIn.

The State of Aussie AgTech Funding

Agriculture contributes significantly to the Australian economy, with the value of agriculture production set to reach $85 billion by the end of next year.

Investment in the AgriTech sector seems pretty misaligned, though.  

Agritech was the ninth most funded sector last year, with Aussie Ag founders raising $170 million (Cut Through Venture). 

Keep in mind that total includes a $105 million Series B from Loam Bio, leaving $65 million for the rest of the sector to share in—not a lot compared to the $505 million pumped into business and enterprise software. 

Early stage ventures in Ag are often working in hardware and deep tech, where the early stages of growth can be much more capital intensive, making them a riskier bet for generalist angel and seed investors. 

But we do have some great agtech-specific VC firms ready to invest. Here are three to take a look at this month:

• Mandalay VC 

• Tenacious Ventures

• The Hugh Victor McKay Fund

Startup to Watch: Rumin8

Perth-based Rumin8 are building a biomanufacturing platform for bromoform, a substance in red seaweed shown to reduce methane emissions in livestock. Key backers include Jeff Bezos, Jack Ma and Bill Gates, who led their US$12 million ($17.2 million) seed round via his investment firm Breakthrough Energy Ventures.

To get in touch with Holly Clark, send her a message on LinkedIn.

Funding the Balance: Q1 Retro

Let’s take a quick look at the capital-raising stories published in the first quarter of 2024 (long-form discussion here).

Overall, there was a good representation of stories about gender minority and mixed gender founders raising capital (37% of stories published in OS). When we look at the reported amounts raised in these stories, we see a familiar trend: men-only teams have larger raises, therefore winning a greater share of the total funding (81.3% of funding reported).

We went one step further and disaggregated the funding to mixed gender teams, reallocating it to either men or gender minority based on the gender breakdown within each mixed gender team. The net result of this analysis was that 85.4% of funding went to men.

Interestingly, while several mixed gender teams this quarter had multiple men founders, there were no mixed gender teams with multiple gender minority founders. The overall founder gender demographics represented in the published stories was 20% gender minority and 80% men.

Note: This analysis considers only published stories and therefore is incomplete, as many founders delay or don’t announce their raises. The State of Australian Startup Funding report for this quarter by Cut Through Venture will provide a more accurate reflection of the total number of deals completed. Read more about why published stories matter here.

To get in touch with Preethi Mohan or Kirstin Hunter, send them a message on LinkedIn.

Three exciting bootstrapping founders I met this month that you need to know about...

• Edtech Lindsey’s VCE Tutoring is proving that bootstrapping startups can outperform, with 6-figure revenue and YoY growth nearly doubling since founder Lindsey Dang went full time with the business a few months back. She recently won the 7NEWS Young Achiever Award and Strategic Alliance Network Small Business Award and has 20 of the top 1% tutors specialising in VCE English and Literature and partnerships in over 50 schools in Victoria. “Having ownership over how I work has been pivotal to our sustainable growth,” Lindsey said. “We've looked at investment before, but this means reducing our tutors’ pay, replacing some aspects with technology, and expanding to other subjects which don't align with my values.”

• Since launching 24 weeks ago, customers have purchased the equivalent of nearly $6M in gift cards through bootstrapping startup Mentwell. These digital health and wellness gift cards can be redeemed at any health or wellness service provider (think GPs and dentists as well as alternative therapies and yoga studios). Mentwell’s next focus is partnerships with insurance companies and charities. Founder Nikki Williams is jumping from strength to strength; “We have a Birchal crowdfunding campaign going live in May 2024!”.

• Andrew Rowe is the founder of Tuesday Cellar Co, an end-to-end wine-collecting service, which sees industry experts select bottles for customers which are stored at optimal cellar conditions until they wish to have the wine delivered. Customers can grow their wine collection over time and manage their cellar virtually. Tuesday Cellar Co also hosts community meet-ups featuring one of Sydney’s top sommeliers Benjamin Moechtar. “Go after the biggest segment you can find and try and lock in some guaranteed recurring revenue,” said Andrew. 

To get in touch with Georgina Healy, send her a message on LinkedIn.

Promoting yourself and your work is hard, but it’s a mission-critical skill founders have to master. Done well, self-promotion is a superpower, because when you talk about yourself authentically it opens doors, displays confidence and demonstrates competence. But, if you struggle with self-promotion (like so many of us do) here are three fresh ideas you might want to try.

1. Share ideas, not accolades.

This one comes from Organisational Psychologist Adam Grant who makes a distinction between promoting yourself and promoting your ideas. He says:

“So many people limit themselves by saying ‘I don’t want to self-promote’. But there’s a huge difference between self promotion and idea promotion. Promoting yourself is saying ‘look at me, look at how great I am’, promoting your ideas is saying ‘I made something I’m proud of, I hope it’s valuable to you.’”

2. Share stories, not facts.

You can tell people your laundry list of achievements but they’ll likely tune out. Instead, try crafting some stories that demonstrate your capability. For example, rather than telling people your business generated $1M in revenue last year, tell a story full of colour about how you were able to get there.

3. Engage in dual promotion.

New research published in the American Psychological Association shared the secret to bragging: dual promotion. This is where you compliment a colleague or peer while also talking about your own achievements. It was found to:

“Consistently boost overall impressions. Audiences learned about your abilities, and saw you demonstrate concern for others. By talking positively about other people, you signal that you aren’t self-centered — you’re a well-intentioned, warm colleague.”

To learn more about how you can self-promote authentically and graciously, keep reading.

To get in touch with Anna Mackenzie, send her a message on LinkedIn.

April Munchies

Splendour in the Grass 2024 has joined the list of festival casualties, with the cancellation sending shockwaves through the industry.

Festivals have enjoyed a phenomenal run since the golden age of Big Day Out, Stereo Sonic and Future Music. However, how much has the traditional festival experience truly evolved?  The formula of a main stage with massive LED screens, lighting and pyrotechnics, paired with long lines for restrooms and overpriced drinks may not be sufficient anymore.

Around the grounds

1. Music investment platform JKBX launched this month, allowing fans to invest in their favourite songs from some of the biggest artists in the world including Beyonce and Taylor Swift. 

2. Disney’s logo changed to teal. Did you notice?

3. Fred Again's record-breaking Sydney Opera House show drew 135k hopefuls for 2,200 tickets. His tour announcement on Feb 28th sparked a million fans to switch to Ticketek, selling out 100k+ tickets in hours.

April MVP 

Wirely is designed to help the hospitality industry manage their many different transactions and cash movements. Wirely ensures there are tight controls and clear visibility for all transactions processed, streamlining the cash-up process, saving valuable labour costs and minimising the risk of theft and poor practice. This is good news, because streamlined business management means more time to focus on the customer experience.

To get in touch with Gav Parry, send him a message on LinkedIn.

If you have feedback on what you liked and didn’t like about this edition of Pulse Check, we’d love to hear from you! Just reply to this email 😃 .

‘Til next time,

The Pulse Check Team 💗