Wrap 106: Rise & fall
Welcome to our Wrap, where we cut through the noise to bring you our favourite insights from the technology and startup world over the past month.
If you love the Wrap, please spread the word and help it grow:
You win some, you lose some
Canva makes people rich(er). Canva completed its US$2.4bn secondary share sale a valuation of US$26bn ($39.4bn). Some BIG winners from this, specifically its early employees and investors. Blackbird’s 2012 fund reaped a return of around 2,600x! In total Blackbird netted $800m or 31x its average investment across a few early funds, which is incredible considering it still owns a decent chunk of Canva (The AFR reports it sold down just 20% of its early fund holdings, and its later funds did not sell any shares).
Fresh-icorn. Workforce management platform Deputy has achieved unicorn status with a valuation exceeding $1.1bn after receiving a $37m investment from US-based Express Employment Professionals. This is the first private tech unicorn in Australia since early 2022, showcasing Deputy's significant growth and turnaround since Covid.
Surging. ASX-listed NextDC raised $1.3bn to invest in ‘AI factories’ – data centres specifically designed to house the processing units sold by chipmakers like Nvidia.
Write down galore:
Plutora has appointed administrators and will close its Australian operations due to a disagreement over its eligibility for R&D tax rebates. Macquarie Capital sold its shares—originally costing it $46m—for just $1 to co-founder and CEO, Dalibor Siroky, who aims to salvage the company's US-based operations.
The plant-based meat sector is experiencing a reality check as Sunfed, once a rising star with its "chicken-free chicken," had its valuation slashed and products removed from supermarkets. V2food continues despite challenges, highlighting the market's complexity. Long-term adoption may still be years away.
The AFR reports Blackbird marked down its stake in autonomous vehicle LiDAR startup Baraja to $0.
NDIS admin software provider GoodHuman has been forced into liquidation, owing nearly $3m, including unpaid wages and super.
HOla Adiós. Ridesharing platform Ola is pulling out of Australia. Backed by Softbank and Tiger Global, its Indian parent company spent $142m over 6 years trying to win the Australian market. Meanwhile, Uber will pay Aussie taxi drivers $272m in class action settlement and is facing a civil case centring on its efforts to crush another rival called GoCatch in the 2010s.
M&A quickies:
Canva is acquiring Affinity (formerly Serif), a creative tools company based in the U.K. Bloomberg reported that the deal was worth approximately $570m.
NZ-based Sharesies acquired Orchestra - its first acquisition - enabling it to provide registry services and equity ownership management for staff share schemes.
Blackbird-backed job simulations edtech Forage is being acquired by U.S. education firm EAB for an undisclosed sum.
Culture Amp acquired people analytics platform Orgnostic. Culture Amp will feed Orgnostic’s data into a new People Analytics product.
The federal government is proposing changes to merger laws that could impact tech M&A. Under the changes, acquisitions above a certain monetary and market share threshold (yet to be set via consultation proces) must be reported to the ACCC - adding time, cost and risk to these M&A transactions.
ICYMI. Sam Bankman-Fried has been sentenced to 25 years in jail for multibillion-dollar FTX fraud. The judge said SBF lied during his testimony and had shown no remorse for stealing $8 billion from customers of his now-bankrupt FTX cryptocurrency exchange.
VC land
Rock bottom? Just 66 Australian companies raised funds from venture investors in the first quarter of this year, and total funding has dropped 45% YoY.
Move over VC. PitchBook reports that private debt was the second-largest fundraising strategy of the year, overtaking VC. When the final numbers are in, the global value of private debt funds closed in 2023 will likely exceed US$200bn for the fourth consecutive year. Net returns to investors were 8.2% for the 12 months to Q3 2023.
Blackbird clips wings. The AFR wrote a piece highlighting Blackbird’s reinvestment strategy - they “need to see significant progress towards [their] investment thesis to invest more capital.” i.e. great companies are backed with follow on money, while the rest are left to fend for themselves. We can see this play out in the Wrap section above with Sunfed, Baraja, and perhaps Forage. This is the VC game. Know what you’re getting yourself in for when you take venture cash.
Series A bonanza. Home insurance disruptor Honey Insurance raised $108m - the third-largest ever Series A funding round for an Aussie tech company. Bank in a box platform Constantinople raised $50m for its Series A and launched a team in NZ.
New superVC. Woolworths has a new US$125m ($190m) VC fund with Tesco, Woolworths, the Canadian retail conglomerate Empire Company, South Africa’s Shoprite Group and the European-headquartered Ahold Delhaize. The fund will be called W23 Global and run out of the same Sydney office as Woolworths’ domestic VC fund W23, which includes Marley Spoon and Eucalyptus in its portfolio.
Filling the growth gap. Perennial is raising a new evergreen fund for later-stage startups - “domestic, fast-growing, founder-led private business that wish to ‘stay private for longer’.”
People moves. Elaine Stead joined Main Sequence as Partner. VC syndicate TEN13, which has $98m in startup investments, appointed Sophie Robertson and Anthropic's Joel Pobar as Partners. Rampersand promoted Taryn Pieterse to Partner, and hired former UK-based Angular Ventures investor Andrew Poesaste. Blackbird’s Sam Wong is leaving NZ, returning to Sydney.
Returns flex. Square Peg announced it has returned over $1bn to shareholders since its inception 12 years ago. Despite current market challenges, it plans to target a US$550m raise for fund six.
BV’s PR nightmare. Some in the industry (and in politics) are calling for the $2bn government fund Breakthrough Victoria (BV) to be scrapped, claiming it lacks transparency, has an unnecessarily high cost base and isn’t an appropriate government function. Others argue the government isn't doing enough to foster startups…
Advice from the coalface
Last week we hosted a Founder & CEO dinner, along with Partners for Growth, where we had the privilege of hearing insights and war stories from some Ignition Lane clients - Matthew Varley (GM Xplor Education), Agus Echagüe (Cofounder Waverley Studios) and Peter Forbes (Founder Paytools, HROnboard, Navigo).
A few takeaways:
Prioritise values in hiring: Focus intensely on aligning values when bringing new team members on board. Experience from large corporations or renowned tech companies may not always translate to a good fit within your startup environment.
Always talk to your customers: Regardless of your business stage, never underestimate the power of direct engagement with your customers. Their feedback is invaluable. Listen to the words they use to describe pain points. Speak their language in your sales and marketing. Use that insight to develop new product offerings.
B2B marketing = sales enablement: The best B2B marketers, particularly in startup phase, are laser focussed on sales enablement - they help sales nail their messaging and pitch to find and close customers (i.e. don’t automatically think you need paid ads).
VC isn't the only route to growth: Not every business is a rocketship. Understand what investors expect in terms of returns and align yourself to realistic funding options.
On deciding to sell: Once you sell, the business is no longer yours. You have to be prepared for significant organisational change. When negotiating deal documents, be incredibly prescriptive about earn outs. Invest in great lawyers and advisors.
Thanks to everyone who came, and an extra special thanks to our speakers for sharing their wisdom.
That’s a wrap! We hope you enjoyed it.
Bex, Gavin and the team at Ignition Lane
If you aren’t subscribed to the wrap, sign up now:
Seen any interesting startups? Have any tips for the Wrap? Want to indulge our inner-journalists? Drop us a note: tipoff@ignitionlane.com