Aussie Startup & Venture Capital Summary | 10th Feb 2024

Did someone say startup data!? This week you can bathe in it 🛁.

G’day, and welcome to this week’s edition of Overnight Success! Your weekly download on all the important things that happened in the Aussie startup ecosystem. 🚀 

A very special welcome to the 25 new subscribers who’ve joined us since last edition…! 👋 

Does your OS newsletter get cut off by Gmail’s pesky mobile app? You can read the full version without interruption here.

👀 Headlines 👀 

📈 Cut Through Venture and Folklore Ventures have released the 2023 State of Australian Startup Funding Report

  • In total, 413 deals were closed, down 21% on 2022, with $3.5 billion of capital invested into startups, down 54% on 2022. 2023 numbers were well below the frothy $10.6 billion invested in 2021.

  • There was an increase in both funding and deals for female-only founders (although numbers still remain low) at 2% and 9%, respectively. There was also a 5% increase in the share of investments to 26% for founding teams with at least one female. Those same startups equate to 18% of total capital deployed.

  • Most funded sectors included B2B Software ($505M), FinTech ($331M) and Hardware/Robotics ($301M).

  • Notably, the biggest deal of the year went to Employment Hero at $263 million (slightly under a $2B valuation!

  • Get stuck into the full Cut Through report here.

🍰 Cake Equity also released their State of Aussie Startup Employee Equity report (tis’ the season…!)

  • Check out the full report at the link here and key insights below 👇

    • 💰 The majority of employees (61%) say they value equity when accepting a role, while only half of employees actually know the real value of their equity.

    • 🧗 More than half (56%) of Australian companies apply a 1-year cliff with a 3-year full vesting period

      • This means that an employee doesn’t actually start earning their equity until a year into working at a business.

    • 🌍 Only 36% of Australian startups issue equity to their global teams

🌱 Grok Ventures goes long on Climate Tech

  • Capital Brief got the scoop this week that Atlassian co-founder Mike Cannon-Brooke’s family office, Grok Ventures, is going all-in on Climate Tech. The firm is committing to only making investments in ventures supporting decarbonisation moving forward, calling it “one of the greatest economic opportunities of our time”.

  • Tan Kueh (ex-Macquarie Group, UBS, Black Rock, CreditEase + more!) has been appointed as the office’s new CEO, after being a self-confessed long-time admirer of Grok’s investment ethos.

  • And Grok isn’t alone, with several other family offices also zeroing in on climate and environment-related investments, such as Wedgetail (Cameron Adams), Euphemia (Dom Pym), Trawalla (Carol Schwartz) & SKIP Capital (Scott Farquhar & Kim Jackson).

⚡️Startup Retro⚡️

Preplocal land $200K to help SME Food & Beverage businesses scale their distribution

Founders: Sean Miller & Mathieu Jamet

Preplocal, a Sydney-based Distribution as a Service (DaaS) platform, has raised $200K from Skalata Ventures. The platform aims to revolutionise the food distribution sector by overcoming the challenges small and medium-sized food and beverage businesses face in scaling their distribution. These SMEs can range from bakers and brewers to specialty chefs and meal kit services and are among the fastest-growing in the global food industry.

Prep's DaaS platform offers a scalable, end-to-end solution that eliminates many ‘middleman’ costs by connecting food producers and brands with a network of third-party logistics options. This model is particularly appealing for scaling businesses as it allows for asset-light scaling with no investment into fleets or warehouses.

Already making significant strides, Prep has delivered over 30,000 cartons across regions including NSW, QLD, WA, SA and Singapore and has partnered with notable clients like WHSmith, Canva and Qantas. Trials are underway with Australia's largest grocery retailer. The Prep Partners Program and an AI distribution assistant named Jacky demonstrate the company is ready to disrupt older models with increased efficiency, transparency, and scalability.

Due Diligence: Skalata Investment Notes

"At Skalata we love investing in logistics tech companies. It isn't traditionally "exciting" (which is fine by us) however, it is deeply complex and getting to learn how we move goods around the world is fascinating."

Zenn closes a Seed round of $1M to leverage AI in brand creation

Founders: Steve Reid

Sydney-based branding platform Zenn has landed $1 million in a Seed round led by Singapore's DQventures, as well as two unnamed angel investors. This is the second investment DQventures has made in Australia, naming it one of their key markets.

Founded off the back of the explosive rise of Canva and the ever-growing demand for graphic design, Zenn Software seeks to fill the gap in the market between the likes of Canva and comprehensive design services provided by freelancers and agencies. Despite there being several major platforms for creating graphics online, 90% of design is still done by professionals.

Zenn wants to eliminate time pressure and the need for creativity as barriers to entry in the design process. Zenn is a user-friendly online tool that helps to create and refine a logo. The tool can then seamlessly and automatically extend the design across up to 30 different assets, including business cards, invoices, brochures, and corporate gifts.

The funding will provide 18 months of runway, allowing the company to concentrate on enhancing the user experience as it continues to expand its user base among busy professionals who lack the time or expertise to utilise current software options.

Due Diligence: Exclusive tip-off! 😉

CarbonHQ has landed $600k in pre-Seed funding to improve the $3B voluntary carbon market

Founders: Allen Fan and Eugene Datsky

Sydney-based Climate startup CarbonHQ, has successfully raised $600,000 in pre-Seed funding from leading early-stage Australian VC funds Galileo Ventures and Investible.

CarbonHQ is an all-in-one digital platform co-founded in 2022 by a former Canva engineer and carbon project expert, aiming to help ease the management of carbon projects across both internal and external teams. The platform will process on-ground data, automate issuance workflows and establish a direct link between credits and their underlying data. By streamlining these processes, carbon credit projects will be able to play a much greater role in the fight against climate change. The fresh funds will be used for market expansion and team growth.

Currently valued $3 billion, the voluntary carbon market (VCM) has seen 30% annual growth since 2015, with expectations of further acceleration following recent COP28 developments suggesting VCM could be harnessed to meet future SBTi (Science Based Targets initiative) targets.

Carbon project development still relies on outdated digital tools like Excel, PDFs, and email. Developers can spend up to three years on project setup and credit issuance, complicating the assessment of credit quality for buyers and increasing the risk of purchasing scam credits. Since releasing its beta platform in mid-2023, CarbonHQ has run trial projects with leading carbon project developers globally and won a UN carbon market Digital Innovation Challenge.

Due Diligence: Startup Daily

Circadian Health Innovations (CHI) lands investment as they pave the way for healthier light consumption

Founders: Sean Cain and Andrew Phillips

Melbourne-based MedTech, Circadian Health Innovations (CHI), has landed investment from Scalare Partners as they develop groundbreaking medical technology to illuminate the path to healthier light consumption.

Unbeknownst to many, unhealthy light consumption can have an astounding impact on human health, and through a lack of awareness and the rise of artificial lights, many are unknowingly disrupting their sleep, health and wellbeing with light. CHI's signature product, the Melanopic Eye or 'MiEye', is a wearable device that uses advanced light-sensing technology to monitor the light users are exposed to.

The device then goes on to learn their circadian rhythm and guide them towards healthier light patterns. These patterns could help users improve sleep, adjust to jet lag, increase productivity, enhance workplace safety and boost overall performance.

As the world is waking up to the power and complexity of light, CHI has determined that being able to measure these unconscious ill effects of light may have many commercial applications. Starting with research, CHI is planning to tap into an estimated total addressable market of at least USD$70 million, a serviceable obtainable market of USD$18 million per year and robust annual growth of 4-8% annually.

Growth potential is extensive in B2B markets, such as optimisation of sports performance and shift work management. CHI will supply these markets with much-needed, real-time recommendations based on meaningful data insights. Have a listen here as the co-founders discuss the intersection of mental health and light on The Huberman Lab Podcast.

Due Diligence: Scalare Investment Notes

Startmate Accelerator Cohort S24

The new Startmate cohort has been announced and includes these happy campers who have also received $120k in funding each (under the program’s investment terms):

🌋 Carbonaught - Converting rocks into fertile soils that permanently remove CO2 from the air, delivering profitable low-emission agriculture at scale.

⛑️ Everbility - AI-powered report writing co-pilot for allied health professionals.

🧠 Graphics et al - Enabling health professionals to create accessible health information diagrams and animations. ie. Canva for medicine.

🛍️ Keeyu - Predicts and prevents post-purchase e-commerce customer complaints.

🏠 Kite Therapy - Making evidence-based therapy for autism more affordable and accessible.

🌱 KiwiFibre - Creating composite materials to solve the technical and ecological problems of global industries. ie. turning bio fibres into carbon fibre.

🏋️‍♂️ Learna - A micro-learning app for people-skills at work.

🛜 NOA The Brand - Developing next-gen wireless charging technology to power up industrial devices.

📊 Telemattica - Providing real-time data on critical infrastructure to improve reliability, reduce costs and enhance safety for heavy industry.

🍔 Venu - A singular rewards programme for every restaurant, bar, and café, linked with your payment card.

🎉Wins 🎉 

🎓 HEX partners up with the University of Sydney in 'School of Record' partnership agreement

  • This pioneering partnership between innovative education company HEX and USyd is facilitating the recognition of academic credits for innovation and entrepreneurship programs (HEX’s speciality), hoping to bridge the digital skills gap and encourage students to pursue higher education whilst seeking out career opportunities.

  • HEX alumni will be able to apply a maximum total of 12 credit points for the successful completion of any combination of the HEX programs to a Bachelor of Commerce course at USyd. (LinkedIn)

💉 Medical Research Future Fund (MRFF) Grants $3.25M to four AI-driven Med Techs

  • These four chosen ones are all integrating AI and machine learning into their healthcare solutions. The fresh non-dilutive funding is intended to support the startups in achieving key clinical and commercial milestones.

  • Check out what they each do here.

🔬 Aussie quantum computing startup Q-CTRL awarded £1M ($1.9M)

  • Part of a £45 Million investment by the UK government into Quantum Technology Innovations, Q-CTRL was the winner of the Small Business Research Initiative (SBRI) Quantum Catalyst Fund Competition.

  • The proposal will deliver new quantum-hardware-optimised algorithmic solvers built on the startup’s software to the UK Department for Transport and Network Rail, helping to optimise station routing, as well as how trains are scheduled across large-scale rail networks.

👯‍♀️ 34 founders score the Boosting Female Founders grant

  • The successful applicants to this Federal Government grant program were chosen from 697 expressions of interest and will share in $11.6M worth of funds, which the startups are required to match. This comes after some complaints late last year from applicants who were kept waiting longer then expected to hear of their application’s outcome.

  • We love to see some OS readers in the mix of winners 💓. You can read more about some of the recipients here.

😍 We love sharing your startup wins! Have something you’re celebrating? Send Gemma an email via [email protected].

📌 Notice Board 📌 

🎤 Pitch Opps | 🚀 Accelerator/ Program |💰 Competition/ Grant | 📅 Event

📆 🏀 Startup 3×3 Basketball Tournament - 22nd March📍 Sydney

🚀 Diverse Perspectives Entrepreneurship Program 📍 Sydney

  • Designed for the “first and newest Australians” this program is seeking applications from Indigenous and migrant, aspiring social enterprise founders.

  • The program, hosted by StartSomeGood, First Innovators and Catalysr, is fully subsidised (making it free for participants) and supported by the City of Sydney.

  • Applications are due by the 25th of February. Learn more & register your interest here.

  • P.S. Keep an eye out for the subsequent crowdfunding campaigns set to kick-off in May!

📆 Women in Tech Connect - 28th February 📍 Sydney

  • Are you a technical woman working at a VC-backed Pre-Seed to Series A funded startup? You may be eligible to attend this invite-only training program hosted over 2 half-days by the Google Cloud Startup Team.

  • Learn more & register here.

🧠 KaaS (Knowledge as a Service)

Gemma’s Pick 💁‍♀️ Startup Growth Lessons, by Stella Startups

  • A shameless plug this week for my own (other) newsletter, co-written with my (other) co-founder at Stella Startups, Bridget Cull. It’s all about helping early stage startups navigate the unique challenges of executing effective marketing with limited resources, including case studies of successful marketing executions from Aussie startups, mar-tech tool recommendations and helpful resources. We’ve published two editions so far (woohoo!), featuring deep-dives on an ingenious outdoor campaign from Butter Insurance, and a website glow-up for energy tech innovators, Aquila. Check it out and let me know what you think! 🙏 

Will’s Pick 💁‍♂️ AngelList: A Venture Constellation by Mario Gabriele

  • I found Mario’s (quite long) blog post about the history of AngelList fascinating. The post reveals how the business started as a newsletter and tried and failed with plenty of ideas but stuck with the ones that worked. My biggest takeaway is how a series of valuable services can come together and create something spectacular that will compound over time. Additionally, if something isn’t adding that much value to the group but is still okay, it might be best to spin it off and focus on what really matters.

Have we missed something? Got some feedback? We love emails, so send one over!

‘Til next time,

👋 Will, Gemma & Kate