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 warm welcome to the 25 new subscribers who’ve joined since last edition! You’ve joined us for a ripper of a week… 👀 

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👀 Headlines 👀 

📰 Meta announces it will not abide by the News Media Bargaining Code when dealing with Australian media.

• In 2021, The Morrison Government passed the News Media Bargaining Code to have large technology platforms (e.g. Meta) pay Australian media companies for the news content they distribute. This led to $200 million paid to Aussie news media businesses and an opportunity for digital-first media companies to launch.

• The Daily Aus, which launched in 2017, now employs 18 full-time staff and has grow an audience of 530K followers on Instagram, suggests the change will drastically affect its business and limit future growth. TDA has de-risked this slightly by building audiences on its own podcast and newsletter network.

• The Digital Publishers Alliance, Chaired by Tim Duggan (co-founder of Junkee Media), has been meeting with MPs and running full page ads in all the major newspapers to try and combat this development.

🙆‍♂️ vs 🏦 Employment Hero's founder & CEO, Ben Thompson battles Hostplus around the promotion of super funds to Employment Hero users.

• Employment Hero, the workforce management platform last valued at $2B from their $263 million raise in October 2023 has clashed with Hostplus, one of Australia's largest super funds with $100+ billion under management and 1.7 million members.

• Hostplus is also a direct investor in Employment Hero and an LP (Limited Partner) of AirTree VC, which has been investing in Employment Hero since its Seed round in 2016.

• We've mapped out the drama below in a special section, but it centres on Hostplus's support of a law to limit Australians' ability to consider other super funds. Here's a copy of the letter Hostplus submitted to the Australian Treasury.

🐋 The Victorian Government's $2B Breakthrough Victoria Fund has seen an exodus of board members as administration fees rise well above industry norms.

• Breakthrough Victoria is Australia's largest single venture fund, and it was launched three years ago at the height of tech valuations. 

• Since its launch, the fund has deployed $155 million, with $73.7 million going out the door last year. Scrutiny has piled on as the fund has an annual wage cost of $9.9 million a year across 50 employees.

• Forecasting current fees into the future, they could reach $500M or 25% of funds under management, well above the traditional 2% management fee.

• Breakthrough Victoria's portfolio companies include Eden Bew, Amber Electric, Flaim Systems and Smart Paddock.

⁉️ Touch Ventures, an ASX-listed VC, is parting ways with CEO Hein Vogel after 4.5 years, including a substantial loss in market value and investments.

• Afterpay initially supported the fund, but Afterpay's parent company, Block has since sold its stake in Touch Ventures to Gannet Capital.

• Vogel led Touch through its IPO, raising $100 million when it hit the market.

• Touch's early investments, including PlanPay and Till Payments, have both been marked down to zero. The business will update the market with its strategy at the upcoming AGM.

🚀🦄 LaunchVic announced their final cohort of the 30X30 program, which are best placed to become unicorns.

• The startups featured include a mix of HealthTech, EdTech, ConstructionTech, ClimateTech, and Entertainment startups. Check out the full list here!

🕊️ Dovetail struggles to spread its wings as the founder and key staff move on.

• Dovetail, the customer research software who last raised $89 million at a $960 million valuation, has seen Bradley Ayers resign after co-founding the business 7 years ago.

• The platform has 3,200 customers, including Canva, SafetyCulture, Shopify and Atlassian, with the bulk being US-based. Unfortunately, many customers have recently churned or lowered their subscription levels.

⚡️Startup Retro⚡️

Deep Space lands Seed round to enhance the efficiency of significant construction projects

Founders: Luke Johnson and Michael Clothier

Brisbane-based construction technology startup Deep Space, has secured a Seed round (value undisclosed) led by VentureOn Partners.

Deep Space specialises in data integration and automation tools that enhance efficiency and decision-making in construction projects. More specifically, it provides a project management platform for the construction industry, streamlining processes from design to handover. The platform helps ensure project certainty with better data management and live analytics to identify potential delays and cost overruns. Interestingly, Deep Space also has a marketplace for applications that users can access and use on their projects.

The platform also improves team transparency and collaboration by making essential information readily available. Deep Space has been involved in noteworthy projects, including the Hong Kong Airport and Cross River Rail, successfully applying their platform to improve efficiency and data handling capabilities.

These fresh funds will enable the company to scale both domestically and internationally. VentureOn Partners focuses on SaaS products and will take a hands-on approach to the investment.

Due Diligence: VentureOn Announcement

FLK it over lands $2.5M to transform real estate transactions with e-signature innovation

Founders: Andrew Colagiuri

Sydney-based PropTech FLK it over has clinched a $2.5 million funding round led by Bilgola Capital, Tech Labs Capital, and previous investor David Southon. This capital raise follows an earlier $2.13 million raise in 2022.

Founded in 2016, FLK it over aims to simplify the paperwork process for tenants through its e-signature solution. The SMS-driven platform offers smoother tenant signings and CRM integration, focusing on simplicity and mobile optimisation; improving the client and agent experience in real estate transactions, including hiring, leasing, selling, or buying.

The platform's digital approach to managing lease documents has seen significant growth. With its team of 24, it now supports over 700 real estate agencies and 4,500 property managers. According to the company, the SMS integrations can increase time to sign by 47% and reduce errors in signing compared to paper by 80%.

With the recent capital infusion and founder Andrew Colagiuri's ambitious vision for the next 18 months, FLK it over is planning for expansion beyond Australia and into new sectors, targetting efficient document handling and signing processes across legal, financial advice, and accounting businesses.

Due Diligence: SmartCompany

Rocco lands ice-cold investment from Afterwork Ventures for its designer smart fridge

Founders: Sam Naparstek and Alyse Borkan

Rocco, a company reimagining the humble bar fridge, has landed investment from AfterWork Ventures. The investment follows a deep belief that design is becoming increasingly important in consumer products, including appliances. Rocco's entry-level product is a $1,500 USD smart bar fridge.

The fridge doubles as a drinks cart with features including smart system controls from your phone, sub-zero compression and a smart system for managing drink stocks. The flippable shelving system allows for drinks of all shapes and sizes. Wine fridges are traditionally made with timber slats to stop the vibration from damaging the wine and don't usually get ice cold.

A few trends are going Rocco's way, with the large appliance market currently worth US$600 billion. Moreover, there's been a 75% increase in spending on non-alcoholic drinks over the past five years, which are often served cold. The initial batch of fridges wholly sold out within 2 months and the product is already building a fanatical fan base of supporters.

Due Diligence: AfterWork investment notes

Bae Juice secures $1M for US expansion of anti-hangover pear juice

Founders: Tim O'Sullivan, Sumin Do and Liam Gostencnik

Melbourne-based Bae Juice, known for its hangover prevention juice made from Korean pears, has secured a $1 million investment in a round led by billionaire technology and gaming entrepreneur Laurence Escalante through his family fund, Lance East Office (LEO), as well as existing investor Honan Capital.

Bae Juice, which launched from a a 20sqm storage unit in Melbourne in 2018, has expanded into the Australian market and is now available in Woolworths, BWS, and Dan Murphy's. Momentum is high with over 2.5 million units sold in five years. The product relies on the benefits of the Korean pear—known for its high fibre and antioxidants—to help with hangover symptoms.

The company plans to use this latest investment to solidify its market leadership in Australia while aggressively pursuing the US market. A new distribution deal with a large Australian retailer will see it's local distribution network hit 5,000 stores.

The global ambitions are seeded by a partnership with Gold Coast Distributors with extensive experience in scaling products in the US. The target is to be in over 1,000 New York stores by the end of 2024, as it's the first beachhead in the region. The founders also hinted at launching new flavours and products as part of their expansion strategy and were finalists in Melbourne Young Entrepreneur of the Year Awards.

Due Diligence: Business News Australia

Bazaa secures $650k pre-seed investment to establish antique e-commerce platform

Founders: Aria Wigneswaran and Thibault Henry

Antique furniture and vintage home décor e-commerce platform Bazaa has secured $650,000 in an undisclosed angel round. Henry was co-founder of '10 minute' delivery startup Voly and has combined forces with Wigneswaran, who was previously the director of commerce at Depop.

Bazaa will bring the antique shopping experience into the 21st century by offering a curated online marketplace. Unlike competing marketplaces like eBay or Facebook Marketplace, Bazaa is committed to authenticity and quality and charges a 15% service fee for its logistical support to sellers.

The founders envision expanding Bazaa's inventory to include new goods whilst ensuring they retain the values of antiques, being that they are sustainably crafted and are of high quality. The company is appealing to the value of longevity over factory-made alternatives as the world wakes up to the woes of mass production. The platform has already onboarded reputable sellers and listed approximately 5,000 vetted items. Bazaar ensures the authenticity of all items and sellers through manual vetting but plans to eventually introduce automation whilst maintaining high standards for its antique marketplace.

With a strategy to eventually shift towards VC funding for its Seed round, Bazaa is currently focused on enhancing its platform and community of vintage enthusiasts and sellers. This involves overcoming the current challenge of educating consumers and sellers on the benefits of online vintage shopping, such as the potential for greater reach and increased turnover.

Due Diligence: SmartCompany

Thank you to T Guthrie for their suggestion of more inclusive language for our weekly reporting. 👏 

*As two of the announced raises (one all-male team and one mixed-team) did not include associated values, the above data is unavoidably imperfect.

Want to learn more about why we’re reporting these figures? Read about the ‘Funding the Balance’ initiative here.

Timeline of Employment Hero & Hostplus Controversy

1. In November 2023, Hostplus submitted a letter of recommendation to Treasury calling to prevent “Workforce Management Platforms” (software like Employment Hero) from intervening in employees’ choice of super fund through the utilisation of dark patterns or failing to inform the full suite of options available.

   • In layman's terms, they don’t believe a workforce management platform should be designed in a way that advertises, promotes or favours particular superannuation products to users.

2. On the 28th of Feb, Captial Brief highlighted the story following a thread on X by Ben Thompson, the founder of Employment Hero, as tweeted about the letter.

3. On the 1st of March Ben then wrote an article emphasising his company’s mission ”to make employment easier and more valuable for everyone”, including helping employees reconsider their superannuation provider. Aware that Hostplus were targeting Employment Hero with their letter to Treasury, he called out the CEO of Hostplus directly, slamming the company’s position.

4. 4 days later, on the 5th of March, Ben challenged Hostplus’ arguments around advertising and offered $1M of free advertising directly on Employment Hero for a performance comparison to Hostplus’ $30M+ spent on sports advertising. If the sports advertising outperformed, Ben would pay the fee. He also rejected Hostplus’ comments about dark patterns and limited fund options.

5. Also on the 5th of March, Hostplus wrote to Employment Hero investor AirTree questioning if Ben was still fit to be CEO, leaving Airtee in a very awkward position. Do they play ball with one of their largest investors, or do they play the founder-friendly game?

6. On the 12th of March, Ben wrote again on LinkedIn that plenty of investors were supportive of him but didn’t want to say anything publicly. He also reiterated that super funds will continue to consolidate into the future.

7. On the 13th of March, the AFR reported that the Employment Hero had ‘[handed] the win to Hostplus’ as they’ve updated their website to now highlight pre-existing super funds as the dominant option on the platform, not funds that are paying for priority placement.

⏩️ Accelerator Updates ⏩️ 

🐊 Hatch: Taronga Accelerator Program announces 2024 Cohort focused on overcoming the world's largest environmental and conservation challenges. The accelerator will run for 14 weeks with a $50K grant up for grabs.

• The Groundswell Collective – Tiny Forests - Developing ‘Tiny Forests’;community-built, small, dense pockets of native vegetation to protect biodiversity and unite local communities.

• ZeroTag - Intelligent and interactive labelling system for reusable containers to reduce food waste and track your food consumption.

• Circular PV Alliance - Peak body promoting a circular economy for solar energy through environmental stewardship, economic growth and social responsibility, whilst overcoming solar PV waste.

• Woop Woop for Nature - Restoring biodiversity by driving large-scale and practical action for people to support nature, making it easy for everyone to play their part.

• Pledge for the Planet - Replacing money-based donations with behavioural ones, Pledge for the Planet motivates climate action via community and sports events.

• Medical Pantry - Making healthcare environmentally sustainable by rescuing unused medical supplies and delivering it to communities in need.

💻️ Future Technology Program announces its third cohort as KPMG Australia and Stone & Chalk join forces and support 5 startups developing workforce technologies.

• Crewmojo - Integrating with existing payroll systems, the Crewmojo platform personalises and enhances HR processes, making them engaging and meaningful employee experiences.

• GoFIGR - Connects employees to existing opportunities within the business based on skills, experience, and career aspirations

• Matae - Helps business managers and supervisors support their teams through business transformations by streamlining the process and preparing them to lead sustainable change and adopt new work practices.

• MyPass Global - Digital Skills Passports serve as a verified record of training, credentials, and licences, reducing onboarding and compliance costs and risks.

• RespectX — A reporting and case management system for managing psychosocial harm such as sexual harassment, bullying, and discrimination in the workplace, featuring an AI assistant to offer support to employees and case managers.

🎉 Wins 🎉 

🔬 EMVision scores a $600k grant

• Seeking to change the stroke care paradigm, EMVision’s project agreement with the Australian Stroke Alliance has landed them a $600k non-dilutive grant.

• EMVision has developed a safe, portable, cost-effective, non-ionising brain scanning helmet that can rapidly produce quality images of biological tissue.

• With the product’s potential to enable paramedics to diagnose strokes within the critical ‘golden hour’, the grant will enable validation pilot studies in preparation for an ambulance application.

🤝 Singapore's Sqreem Technologies acquires Melbourne's Trade Indy for $30M

• Founded in 2014, Trade Indy has achieved significant growth without venture funding. The digital advertising tech helps clients improve the performance of multichannel digital marketing campaigns by harnessing data that optimises ad placement and indicates customer propensity to spend.

🍗 Foodini takes on the US market

• After growing to 70,000 Australian users, the Sydney-based menu-checking technology platform is now expanding into the US market.

• Utilising AI technology and dietitian support, Foodini analyses menus to match with various dietary preferences, from gluten-free to vegan, providing a seamless dining experience for consumers ,and valuable insights for venues.

🧠 KaaS (Knowledge as a Service)

Gemma’s Pick 💁🏻‍♀️ The rise of the VC “platform”…

• I serendipitously came across two pieces of content this week which both covered the topic if VC “platforms”. Admittedly, while I’d seen ‘Head of Platform’ roles advertised at VC firms before, I’d never thought too deeply about what the role might actually entail and how it fit into the broader business model. But this week the idea was clarified for me when I listened to a recent episode of the First Cheque podcast, interviewing Trang Nguyen. I also spotted this LinkedIn post from Amanda Price (KPMG High Growth Ventures) this week, reinforcing this concept's increasing importance. I think this is particularly impactful for ‘ecosystem builders’ (like Overnight Success!) and startup support services (like mine!); here’s hoping it only leads to a more connected and collaborative ecosystem!

Will’s Pick 💁‍♂️ Gamecraft Podcast by Mitch Lasky and Blake Robbins

• Over the last two weeks, I’ve binged both seasons of Gamecraft, which is a modern history of the video game business, hosted by Benchmark’s Mitch Lasky and Blake Robbins. Mitch brings a heap of experience to the table, having apparently invested in every game I played growing up, including Tony Hawk Pro-Skater!!

• The best nugget in the episode was the Bartle taxonomy of player types, which is a matrix devising players into Killers, Achievers, Socialisers, and Explorers. The best games, and products, service all types of these people.

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‘Til next time,

👋 Will, Gemma & Kate