Favourite Aussie VC deals of 2019

I’ve spent most of 2019 as a passive observer of early-stage fundraising in Australia. A high level assessment of the top-line numbers suggests that the “heat” of 2017 and 2018 may have continued, but stripping away some larger, later stage (Series B+) financing rounds (e.g. Judo, Canva, Culture Amp, Athena) results in a more muted 2019. In fact, those 4 companies alone accounted for ~A$800M in funding alone (we had A$1.25B in total funding in 2018).

Interestingly, at the Seed stage, StartupAus’ recent Crossroads report shows a complete cliff dive in volume at the really early stage (angel, seed and accelerator rounds).

Nevertheless, I still believe there’s enough quality founders / companies coming through and enough capital floating around for really interesting investments to be made. Here are my favourites from each month this year (minus December as we’re still halfway through – though Harrison.ai looks to be an early winner).

January: Sendle’s Series B Round

Details: Raised $20M from the likes of Rampersand (Aus), Giant Leap Fund (Aus), Full Circle Venture Capital (Aus) and Federation Asset Management (Aus)

Founders: Craig Davis, James Chin-Moody, Kohei Nishiyama, Sean Geoghegan

What they do: Sendle is a courier delivery platform.

Background: Sendle was founded in 2014 to provide small businesses with a cheaper and easier alternative to Australia Post. The platform handles the logistics of the delivery but also encompasses a range of tools and value adds that aim to “level the playing field by giving small business owners access to big business delivery infrastructure” according to founder James Chin-Moody. The Series B round funding has enabled Sendle to grow locally and as recent as November 2019, tackle new geographies like the US. Interestingly, their US proposition has a strong social impact angle; being 100% carbon-neutral — undoubtedly something that has Giant Leap’s fingerprints all over it. 

Why I like it: I like a David vs. Goliath story. For ~200 years Australia Post has had an effective monopoly over parcel delivery and that makes Sendle a genuine disrupter. 

Interesting: In 2015, Sendle won a lawsuit against Australia Post to use the slogan “Post without the office”.

February: Curious Things’ Seed Round

Details: Raised $1.5M round led by Reinventure (Aus) and Qualgro VC (Singapore)

Founders: Sam Zheng, David McKeague, Dr Han Xu

What they do: Curious Thing has created a job interviewing AI bot.

Background: First round job interviews suck. Most of the time, they are run by HR reps who know little about the role they’re hiring for, spending an hour asking a list of preset questions. As an interviewee, you tend to question how much rapport could or should be built with this HR rep, or whether they actually understand what you are saying in response to the last “tell me about the time you…” question they just asked. Given where we are with machine learning and natural language processing, there’s no reason why this process can’t be run by AI in the future. Curious Thing is looking to go further than what Alexa or Siri does in terms of responding to questions within a set scope, but rather leading conversations and shaping questions based on what it has learnt. Recruiting is phase 1, but it’ll be interesting to see what other use cases come to be in the future.

Why I like it: Recruiting is use case #1 for natural language processing. I think where this gets lucrative is in other areas like ecommerce.

Interesting: Co-founder Sam Zheng was previously a co-founder in Hyper Anna which is also backed by Reinventure.

March: TRIBE’s Series A Round

Details: Raised US$7.5M round from the likes of Burch Creative Capital (US) and Gresham House Ventures (UK)

Founder: Jules Lund

What they do: TRIBE is a marketplace for influencer marketing.

Background: One only has to look at the recent Logan Paul and KSI boxing matches to see the impact that influencers have on the young people of today. Influencers are engaging a generation like never before and advancements in technology has allowed them to do this 24 hours a day. Additionally, influencers with sticky audiences are increasingly able to monetise / commercialise their content and make a living from it. On the flip side, brands are struggling to keep up with the rapid shifts of modern day marketing. Traditional content creation via agencies can be expensive, slow and increasingly out of touch. TRIBE connects brands longing for quality, relevant content with influencers that are looking to monetise their reach. They’ve opened up their US HQ and have offices in countries like the UK and the Philippines (country where people spend the most time on the internet).

Why I like it: Platforms like TRIBE are helping shift the balance of power from old school content creators (like agencies) to people (i.e. the influencers) who truly engage and understand the motivations of their audience. 

Interesting: You’ll know founder Jules Lund from his time on TV and radio (Fifi and Jules was big on TodayFM and prior to that he was a presenter on 400+ episodes of Channel Nine’s Getaway).

April: Cluey‘s Series A Round

Details: $20M round led by Allectus Capital (Aus) and Thorney Investments (Aus)

Founders: Mark Rohald, Michael Allara

What they do: Cluey is a platform for AI-driven, personalised online tutoring.

Background: Every child learns differently at varying speeds but yet schools still run a standardised curriculum for all students. Subject to an entire overhaul of our education system (which I’m supportive of…), tutoring can play a role in supporting the learning experience of each student in a personalised way. None of this is new, but technology can really enhance and optimise the tutoring industry. Scheduling, digital content, integrated audio / video, and virtual whiteboards are all examples offered by Cluey, but what could really take this to the next level (in theory at least) is how technology can personalise each component part. For example, altering the difficulty of algebra in practice questions seamlessly as an individual student progresses through said questions, targeting individual areas of weakness and reinforcing areas of strength. $20M is a big chunk of change that should help Cluey get closer to that.

Why I like it: If overhauling our education system is too aggressive, I’ll settle in being supportive of technology-enabled personalised learning.

Interesting: Cluey was founded by the investment firm Quartet Ventures, led by Sam Linz (who invested and developed iconic Aussie companies including Barbeques Galore and Rebel Sport), Mark Rohald (ex-CEO of Think: Education Group and Open Colleges) and Robert Gavshon (partner of Sam Linz for 35+ years. I’m not sure who the last person in the Quartet is…

May: Canva’s Series D Round

Details: US$70M (A$101M) raised from the likes of Felicis Ventures (US), Blackbird Capital (Aus), General Catalyst (US) and Bond (US), Mary Meeker’s debut fund

Founders: Melanie Perkins, Cameron Adams, Cliff Obrecht

What they do: Canva provides graphic design software solutions.

Background: Aussie Hall of Famer for sure! Mary Meeker said herself that Canva is now at a stage where their platform is built / scaled up enough to support three key factors that underpin the world’s fastest growing companies — content, community and commerce. Already profitable, I suspect the funds raised will be used for growth purposes and their new enterprise product which will further cement Canva’s position as a global leader in graphic design. 

Why I like it: I like that Melanie Perkins is shooting for the stars, publicly saying she hopes Canva will hit Microsoft Office adoption levels.

Interesting: Canva’s $3M seed round originated in Bill Tai’s MaiTai kiteboarding and entrepreneur conference in Hawaii back in 2012/13. Yes, Bill Tai invested in the round as an angel and rumour is that Melanie Perkins learnt to kiteboard just so she could attend!

June: July’s Seed Round

Haha, if only they announced their round in July?

Details: $1M raised in a round led by Monolith Capital (US)

Founders: Richard Li, Athan Didaskalou

What they do: July is a D2C luggage brand. 

Background: I’m a sucker for anything D2C. Not from an investment perspective (i.e. “is this a long-term sustainable business” ) but from a consumer perspective (i.e. “this is the best luggage / mattress / socks / sunglasses my money can buy”). Like Away in the US, July’s luggage is purpose-built from the ground up and its supply chain is vertically integrated. Being D2C, retailer and wholesaler margins are theoretically reinvested into improving the product and customer experience. 

Why I like it: I like that both founders are repeat founders, with Richard Li previously starting up D2C furniture retailer Brosa (venture funded from the likes of Bailador and Airtree Ventures).

Note: July raised another $10.5M in Series A funding in October, led by Strandbags.

Interesting: July offers a “Try for 100 days” refund.

July: EatClub’s Series A Round

Details: $1.5M raised in a round led by Equity Venture Partners (Aus)

Founders: Marco Pierre White, Pan Koutlakis, Ben Tyler and Matt Cantelo.

What they do: EatClub is a platform that enables restaurants to fill excess table capacity by offering real-time, last minute deals.

Background: In a world increasingly dominated by food delivery companies, running a restaurant is a tough business. Margins are tight and everything needs to be optimised to ensure these margins can be realised. The ability to get rid of excess table capacity helps restaurants immensely, particularly around the fringe opening / closing hours. From a consumer perspective, we know from the historical success of deals and coupon businesses that discounts are attractive — at times enough to sway consumers to try new restaurants or dishes. 

Why I like it: Many consumers struggle to have the conviction to pick lunch / dinner spots (me included — “um I’m easy”, “happy to do whatever”) so real time discounts may end up being the game changer.

Interesting: Founder Marco Pierre White has been dubbed the first celebrity chef in the UK. He was the youngest chef and the first British chef to be awarded 3 Michelin stars.

August: Circle In’s Seed Round

Details: $1.5M raised in a round led by Our Innovation Fund (Aus)

Founders: Jodi Geddes, Kate Pollard

What they do: Circle In is a platform that provides support and engagement for working parents and those on parental leave.

Background: My daughter was born in June and that changed my life in many ways. From a work / career perspective, I had to reflect and adjust on how I thought about my career and how I managed my day-to-day life. I know my wife’s going through the same process now as she re-enters into the workforce. Despite being employed by one of Australia’s largest employers (~200k employees), my workplace had minimal engagement with me around managing being a new parent and navigating related challenges. I’m fortunate that I have a great boss and I think I’ve handled the transition well, but I can really see how things can turn south very quickly. I haven’t dug out the stats but I’m sure employee retention in and around childbirth isn’t great and Circle In could be the solution for this. 

Why I like it: From the company themselves, ~82% of parents using the Circle In product claim it has made them feel more positive towards their organisation and ~73% would be more inclined to recommend their company as a result of the support shown towards working parents. Numbers speak for themselves?

Interesting: Prior to the seed round Kate Pollard sold her house to free up capital for the business.

September: Q-CTRL’s Series A Round

Details: US$15M (A$22M) raised from the likes of Square Peg Capital (Aus), Sierra Ventures (US), Sequoia (China), Horizons Ventures (Hong Kong) and Main Sequence Ventures (Aus)

Founder: Michael Biercuk

What they do: Q-CTRL’s utilises its software to address stabilisation issues with quantum hardware and infrastructure (in particular, noise and de-coherence).

Background: Quantum computing is set to fundamentally change the way computers analyse and process information. The resulting use cases and outcomes are endless. For whatever reason (a lot do with our academic / research geniuses like these guys and these guys), Australia is at the forefront of the quantum revolution and Q-CTRL is another Aussie company that looks set to play a big supporting role. It’s a little sad that our policymakers may end up hampering this, rightly or wrongly I’m not sure (e.g. Australian Government considering new export controls on quantum technology).

Why I like it: I think this is a genuine opportunity for an Aussie company to play a leading role in shaping an emerging industry.

Interesting: The combination of Main Sequence, Horizons and Sequoia China would later in the year back V2 Foods (see November).

October: Valiant Finance’s Series B Round

Details: $12.5M raised from the likes of ANZi (Aus), Salesforce Ventures (Aus), Reinventure (Aus), Carthona Capital (Aus) and Full Circle Venture Capital (Aus)

Founders: Alex Molloy and Ritchie Cotton

What they do: Valiant Finance is a marketplace for SME business finance.

Background: Scandals aside (ahem Westpac), traditional bank financing is broken, particularly for SMBs. The paperwork, useless meetings, slow turnaround and complex terms and conditions make it extremely hard for businesses (who deserve to be financed) from getting financing efficiently without detracting them from actually working on their business. Valiant streamlines this process, handling everything from product recommendation, initial inquiry to settlement — all on its platform. This means the full digitisation of the lending process, democratising the user experience for any lender that uses the platform to sell their products (there are 70+ today).

Why I like it: 4.9 out of 5 from 850+ reviews solidifies Valiant as a genuine disrupter that customers love in the SMB lending space.

Interesting: Valiant is a great example of brilliant banker / consultant types turning their minds to founding businesses and solving big problems. Or rather, two brilliant Brisbane lads?

November: V2 Food’s Series A Round

Details: $35M raised from the likes of Main Sequence Ventures (Aus), Sequoia (China), Horizons Ventures (Hong Kong) and Marinya Capital (Aus — JB Fairfax’s family office)

Founder: Nick Hazell

What they do: V2 Foods’ mission is to lead the Aussie charge in the plant-based meat revolution.

Background: Food manufacturing is very, very hard. The multitude of hurdles that need to be crossed are all difficult in their own right — formulating an amazing product, manufacturing at scale, optimising distribution and getting marketing right. Overlay the very different processes required for scientifically-engineered plant proteins and it becomes that much harder. V2 addresses these challenges by putting together the right foundation partners who each bring different things to the table: CSIRO, Competitive Foods and Main Sequence Ventures. Scientifically-engineered food development (tick!), distribution network (tick!), ability to raise a massive round to give the company a strong head-start (tick!). 

Why I like it: The $35M raised also enables V2 to construct a purpose-built plant-based meat facility which will put V2 ahead of many competitors throughout the APAC region.

Interesting: 100g of V2’s mince has ~6X the sodium levels of standard beef mince. Everything else is roughly on par. Will be interesting to see how V2 tackle consumer perception around this.

All views expressed are my own. Thanks to Emily Close, Marcus Poniewierski, Stella Xu and Lishien Ng for reviewing early drafts of this post and providing invaluable feedback.

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