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 35 new subscribers who’ve joined us since last edition…! 👋 

Thanks so much to everyone who entered our _SOUTHSTART ticket giveaway competition! We will be announcing the lucky winners on LinkedIn on Monday 👀.

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👀 Headlines 👀 

🌱 QLD announces the first five VCs and Accelerators to take a cut of $130M QIC managed fund (AFR)

• The Queensland Investment Corporation (QIC), which is an entity owned by the Queensland Government, has announced the first five recipients of the $130M fund focused on stimulating support for QLD-based startups from VCs and Accelerators.

  • According to the QIC, more than 85 VC firms and Accelerators applied for the fund.

• We went deep into each investor, how they’ll use the funding and how the capital will be deployed below in New Fund, Who’s This? 👇

😶 Canva’s founders face a reputational fall from grace, as harassment allegations emerge against its recently departed CFO

• Earlier this week, it was reported that Canva’s CFO of 8 years, Damien Singh, had quietly departed the company in early February. Just days later, further details emerged about an internal investigation regarding reports of inappropriate behaviour.

• It leaves behind some large (and potentially uncomfortable) shoes for a yet-to-be-hired incoming CFO, who will be charged with task of guiding the company through a $2.3 billion share sale capital raise and then onto its IPO and beyond.

• This story unfolds on the backdrop of a growing movement across the Australian tech and startup community looking to encourage more respectful, equitable, safer and inclusive workplaces.

🍰 Rippling, an Employment Hero competitor lands in Australia with a new office

• The US based competitor landed with a splash, making remarks it was ready to disrupt local leader, Employment Hero.

• Employment Hero founder, Ben Thompson, clapped back saying there is a “graveyard for US companies” here in Australia.

• Employment Hero last raised at a valuation of $2B in October, while Rippling was last valued at $17.2B.

⚡️Startup Retro⚡️

Bugcrowd secures $156M to advance crowdsourced cybersecurity solutions

Founders: Casey Ellis, Chris Raethke and Sergei Belokamen

Sydney-based Bugcrowd has landed $156 million in their first round since 2020, led by General Catalyst, and with participation from existing investors Rally Ventures and Costanoa Ventures. Earlier local backers include Square Peg, Blackbird Ventures and Startmate.

Bugcrowd is a crowdsourced security company that combines the expertise of ‘ethical hackers’ to identify and mitigate cybersecurity threats for companies. Bugcrowd offers ‘bug bounties’ (up to $3M today!) to these ethical hackers in order to offer vulnerability disclosure services at scale, becoming one of the largest companies of its kind by 2019.

Bugcrowd has grown enormously since launching in 2012 and winning a (prophetical) ‘most likely to succeed’ award in a 2013 Silicon Valley startup contest, where it relocated to in April of the same year. By 2023, they had addressed 200,000 vulnerabilities, rewarded security experts with over US$80 million and helped customers prevent potential breach costs of up to $100 billion. They have seen 40% annual revenue growth and added 200 new clients last year, including OpenAI and T-Mobile.

The funding will support Bugcrowd’s global growth across EMEA, APAC and the US, as well as further innovation and potential strategic mergers and acquisitions. To think it all started over a prawn laksa… 🍤 😉 .

Due Diligence: AFR, Business News Australia

Marqo lands $19.4M to Advance Vector Search and realise AI's full potential

Founders: Tom Hamer and Jesse Clark

Melbourne-based startup Marqo has closed a $19 million Series A funding round led by Silicon Valley based Lightspeed, as well as Blackbird, January Capital and Chronosphere founder and CTO Rob Skillington.

Founded by Amazon alumni, Marqo has developed a ‘vector search engine’ that enhances AI models like ChatGPT and Google's Gemini by enabling them to access and retrieve more current and valuable information from vast data sets. Unlike traditional keyword-based search methods, Marqo's technology employs mathematical calculations to compare and analyse the features of various unstructured data types.

Unstructured data accounts for over 80% of enterprise data, including emails, Google Docs, social media posts, videos, and images. Despite being a crucial source of meaningful insights for businesses, extracting this data is a complex and challenging task. Enter Marqo. By enabling companies to harness the value of this rich and complex data, new clients like Redbubble and Temple & Webster are coming onboard.

This fresh funding will be used to advance the adoption of the next-generation search platform, with the Marqo head office set to relocate from Melbourne to San Francisco to lead this commercial expansion.

According to co-founder Jesse Clarke, CVs are flooding in from engineers and scientists completing their PhDs as the company considers itself “where the rubber meets the road in terms of academia to industry”.

Due Diligence: AFR, Marqo Blog

Diraq raises $23M in extended Series A to develop quantum processor

Founder: Andrew Dzurak

Australian quantum computing company Diraq has secured $23 million in a Series A funding round led by Quantonation, with participation from Higgins Family Investments and the University of New South Wales.

Diraq is striving to transform quantum computing technology into form factors with real-world application potential. Diraq will use the silicon chip-making process (CMOS) to provide end-to-end quantum computing. They are doing this by integrating millions of quantum bits (aka qubits) onto a single chip that is accessible and cost-effective, unlocking the plethora of benefits quantum computing could bring to society and the economy.

This raise extension follows the trend of increased investment in the Australian quantum computing sector over the past 12 months since a National Quantum Strategy was announced as part of a plan to integrate advanced technologies and AI into the Australian business sector. These fresh funds will help Diraq align with this strategy and advance this goal.

The funding provides 18 months of runway, during which time Diraq hopes to grow its team here in Australia, capitalise on its current international partnerships, and launch into the US.

💡Need a primer on quantum computing? Try this 18-minute video.

Due Diligence: SmartCompany, Diraq Announcement

Cleverbean lands $400k of follow on investment to turbocharge its momentum

Founders: Alina Hunter and Lucy Chambers

EdTech start-up Cleverbean has scored a further $400k from Skalata Ventures, building on their $200k investment in May 2023.

Cleverbean is an e-learning platform from Sydney, offering solutions for what the business says is the 76% of Australian teachers who don’t feel they have sufficient support from schools to plan high-quality lessons, resulting in 59% of them facing burnout. The company links this to the shocking statistic that 30% of Aussie kids are on the brink of illiteracy.

Since the last cash injection, Cleverbean has succeeded in increasing subscription revenue 11% month-on-month and achieving 10% MoM user growth on both their monthly and annual subscription offerings.

Since the investment in May 2023, Cleverbean has made a few changes, including transitioning from a D2C model to a B2B sales approach, now focusing on selling to schools instead of individual teachers. This move landed them approval as a NSW Government Preferred Supplier. Other changes involve improved data insights on the platform and ongoing recruitment efforts to expand the team. The new funding will be invested into content, sales and school compliance.

Due Diligence: Tip off!

🤑 New Fund, Who’s This? 🤑 

QIC-managed Queensland Venture Capital Development Fund (QVCDF) funnels $130M into local startups

• The new fund consists of $30 million for accelerators and development programs to build a pipeline of investments, and a $100 million allocation for VCs.

• Five of the VC recipients announced include:

  • Antler, a Singapore-based early stage investor/accelerator group with an existing presence in Sydney and Melbourne, who will expand operations into Queensland and use the funding to rapidly invest at the Seed stage.

  • Five V, a private equity and VC group, who will focus on Series A and growth investments in QLD.

  • Salus, a dedicated fund investing in critical sovereign technology, which will invest in Queensland’s strengths in aerospace, defence, artificial intelligence and cybersecurity.

    • The funding from QIC has enabled Salus to close its debut $40 million fund.

  • Mandalay, a local fund that focuses on farm-to-fork innovation to deliver food security and sustainability.

  • Main Sequence, the CSIRO-originated fund aiming to bridge the divide between research and commercialisation.

• These firms are required to invest 1.25 times their allocation in Queensland, which only received 10% of the $3.5 billion injected into the Australian startup sector in 2023.

• Queensland Treasurer Cameron Dick noted the program's potential to generate around $200 million for local startups.

Bupa tries on its VC hat with a new $20M health fund

• The fund will invest in early-stage healthcare startups, aiming to address challenges in the healthcare system.

• Bupa will invest up to $2 million per cheque, focusing on innovation in healthcare, including relating to ageing, fragmentation, and affordability.

🎉Wins 🎉 

💸 OneVentures closes its first fund and pays out its backers (handsomely!)

• ‘Innovation Fund I’ was worth $40 million, with the Federal Government chipping in $20 million and private investors contributing the rest.

• Thanks to the successes of their portfolio companies, including Vaxxas, Smart Sparrow, Charmhealth and My Mobile Data, investors are set to take home 4x their initial investment. This is fantastic signal to the market that OneVentures and its peers (e.g. Blackbird Ventures, Airtree and Square Peg Capital), can offer strong returns and encourage follow on investments from LPs to “grow the pie” further.

💁‍♀️ Mining focussed private equity firm appoints Anna Shave to run its new $380M investment pool

• As Managing Director of Resource Capital Funds (RCF), Shave will co-lead an innovation fund focused on mining companies and the energy transition.

• RCF is headquartered in Denver Colorado, with regional offices in Perth and Melbourne, as well as Canada, Chile and England.

🚜 LaunchVic announces three new grant recipients, in partnership with Agriculture Victoria

• $50,000 grants are currently being awarded to AgTech startups on a rolling basis, with the latest recipients including:

  • 4Zero - future-proofing operations (including in agricultural industries) with value chain optimisation.

  • BioIQ - proprietary technology aiming to reduce the use of synthetic fertilisers whilst improving soil health.

  • Drone-Hand - cutting edge technology to locate, identify and count livestock with instantaneous results.

📌 Notice Board 📌 

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

🚀 MAP 2024 Accelerator Program 📍Melbourne

• Applications are now open for the next cohort of this prestigious accelerator backed by the University of Melbourne. Find out if you’re eligible and (if so), book a call with the team here.

🚀 UQ Ventures Empower Women’s Entrepreneurship Program 📍 Brisbane

• A 9-week experience designed to accelerate female-founded early stage startups. Applications close 19th Feb (Monday!), so get in quick!

💰️ 📆 FinTech Australia Finnies 2024📍 Sydney

• Award entries are open for this annual event, now in it’s eighth year. Entries close 15th March with the winners announced at the Gala Awards Night held on the 6th of June. Apply here!

🧠 KaaS (Knowledge as a Service)

Gemma’s Pick 💁‍♀️ It’s easier to forgive a human than a robot, by David Heinemeier Hansson

• A short but thought-provoking read from the co-founder of Basecamp and 37signals that proposes one reason why AI might not replace certain human jobs as fast as some might think.

• This felt like a timely share in light of the hype around this week’s sneak peek at ChatGPT’s new text-to-video tool, Sora. I have a feeling people’s appetite for “error” in creative fields might be a tad higher given the relatively subjective nature of the output, as compared to more black and white use cases like self-driving car safety.

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‘Til next time,

👋 Will, Gemma & Kate