Wrap 107: Money makers
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.
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Money makers
Bootstrapped brilliance. Cyan and Collis Ta’eed have sold Envato to New York-listed Shutterstock for US$245m ($375.5m) cash, marking the end of an 18-year journey.
The deal will add 650,000 subscribers to Shutterstock, more than doubling its existing subscriber base to 1.15 million, with Envato adding 20% to annual revenues and 15% to annual adjusted EBITDA.
The Ta’eeds are now focused on philanthropic work and impact investing in startups.
Back in the black. Xero swung to a net profit of NZ$174m ($160m) over the past 12 months - a dramatic improvement on last year’s NZ$113.5m loss. It also announced an investment into and partnership with Aussie unicorn Deputy that will see it deeply integrate its workforce management capability into Xero.
Solid innings. Scott Farquhar is stepping down as co-CEO after an incredible 23 years building Atlassian into a US$45bn behemoth.
“Please explain.” A Kogan.com share options sale by its CEO and CFO is under the spotlight. The company bought back the execs’ options, pricing the deal on a then-rising share price. A few weeks later, the company released a poor trading update to the market and the share price crashed nearly 30%.
Growth benchmark. San Francisco-based Emergence Capital released a benchmark report compiling data from 664 B2B software startups. Useful insight on ARR growth rates summarised by SaaStr’s Jason Lemkin:
From US$1m-US$5m ARR, top quartile startups are growing 100% YoY. The median for all startups was 53%, so that’s a huge gap.
From US$5m-US$20m ARR, top quartile startups are growing 58%. The median is 29%. Not fundable, but still a growth rate that can compound to something awesome over time.
Things get tough from US$20m-US$50m. Top quartile still are growing 38% - but the bottom are shrinking at -7%. This is the wall many in SaaS hit if they don’t push through it - when new entrants and change pass them by.
The report is full of other useful data too. Including that it takes, on average, a whopping 22 months to raise a Series A, and 25 months to raise a Series B.
Hi-Tech Winners. NZ held its Hi-Tech awards last night - the most prestigious awards in the kiwiland. The big winner (company of the year) was Rocket Lab. Brand tracking startup Tracksuit was awarded emerging company of the year. Starboard Maritime Intelligence took out startup company of the year and most innovative software solution.
Budget chops. LaunchVic has been allocated $40m over four years, while the State’s $2bn fund Breakthrough Victoria has been cut $360m.
Meanwhile, the federal and Queensland governments will invest $940m in PsiQuantum. The company was founded by two Australians in California, and will now base its Asia-Pacific headquarters in Brisbane and attempt to build a fault-tolerant quantum computer by 2027. The government will also spend more than $2.5m per year to manage the investment.
Weight Cash cow loss. The federal government will ban compounded versions of Ozempic and Mounjaro. That’s bad news for two of the largest prescribers, telehealth startup Eucalyptus and NIB's Midnight Health, who currently make millions off Ozempic replicas.
Birth, quits & marriages
Catch founders Gabby and Hezi Leibovich have partnered with other co-founders to launch Fingertip, a new player in the landing page industry. This news comes as their CBA-backed product price comparison startup Little Birdie “paused operations.”
Airwallex Australia GM Luke Latham has quit. The AFR:
Gossip on the ground is thin on the reason behind his exit, but Latham only joined last June, so the move has understandably raised eyebrows. His role was generally understood to help reform the internal culture, with a series of reports in this newspaper exploring the company’s troubled relationship with its local workforce over the years.
Hospitality tech platforms HungryHungry and MOBI announced a merger ahead of an expansion into new markets, with a focus on the US.
INSIDE recruitment has acquired Weirdly - an NZ-based fully automated screening applicant tracking system specifically designed for high volume recruitment.
Bugcrowd made its first acquisition - Informer, a bootstrapped startup that assesses and maintains attack surface management (ASM).
Great Wrap has partnered with Opal ANZ (one of Australia’s leading packaging and recycling companies) to distribute its fully compostable pallet wrap, which is made with compostable biopolymers and plant-based oils. The startup also raised a further $5m.
Australian-owned green tech company Sircel has become the largest eWaste processor in Australia after acquiring of Scipher Technologies. In 2022 Scipher raised $15m from the government’s Clean Energy Finance Corporation and the Australian Business Growth Fund, but went into administration earlier this year.
Venture land
Tough time. TechCrunch reports that big name US VCs are, not surprisingly, struggling to raise funds at the same levels as 2021/2022. For example Valar Ventures (which was founded by Peter Thiel and originally included an NZ-specific fund that invested in Xero and Vend) raised $300m, which is just half the amount of its 2022 fund. It’ll be interesting to see how this plays out for the big VCs raising in Australia over the next year.
Skalata has been granted $900k from LaunchVic for its management company, which it says will double the number of local startups in the Skalata portfolio. It also announced a $300k pre-Seed investment in product development startup SupplyScope and a startup that’s bringing mystery shopping to online, Humii.
Square Peg-backed Israeli AI startup Deci is being acquired by Nvidia for US$300m ($447m).
Investors, including angels Cheryl Mack, Alan Jones and VC Giant Leap, have pushed back on proposed changes to the sophisticated investor test, arguing the threshold should be based on knowledge, not money. This aligns with startup community sentiment - a majority of people surveyed (in research conducted by DemosAU with M8 Ventures) supported replacing the current financial tests with an accessible education program that ensures investors understand the essentials of startup investing and the risks involved.
Tech investment and advisory firm Scalare is planning a reverse takeover that will see it list on the ASX, providing retail investors a workaround for the sophisticated investor threshold and opening up shorter term liquidity. Scalare makes 8-10 early-stage investments each year. This year it has invested in Circadian Health Innovation, Brauz and Roi-AI.
Hysata raised a $172m Series B - a record for clean tech in Australia. Hysata’s green hydrogen tech has the potential to transform sectors such as steel, chemicals, high-grade heat and heavy transport. The round was co-led by BP’s CVC and Hong Kong-based Templewater (Investec).
Some surgeons launched SoHi Partners, a new (all-male) MedTech VC fund aiming to raise $50m.
Alium Capital is launching the Alium Innovation Fund, investing in mid-late stage growth tech companies.
Quickies around the world
Exponential everything. Nvidia is now one of the most valuable and profitable companies in the world, making $14.9bn of net income on revenue of $26bn last quarter. Its net income in the final quarter of 2022 was a measly (all relative) $0.7bn.
Data labelling startup Scale raised a $1bn Series F led by Accel, nearly doubling its valuation to $13.8bn. It was launched in 2016 to label images used to develop autonomous driving systems and now helps OpenAI, Meta, Microsoft and others improve the data used to build their AI products.
Privatisation. Squarespace is being taken private in an all-cash deal that gives the company an enterprise valuation of US$6.9bn. It IPO’d in 2021, raising $300m at a $10bn valuation in 2021.
To the slammer. Changpeng Zhao, also known as “CZ,” the founder and CEO of crypto exchange Binance, has been sentenced to four months in prison.
The (not so new) Twitter/X rival? TechCrunch reports that as of March, LinkedIn’s web traffic was up 10.6% YoY, compared with a decline of 15.2% for X.
That’s a wrap! We hope you enjoyed it.
Bex, Gavin and the team at Ignition Lane
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