💌 Aussie Startup & VC Summary | 5th April, 2025

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

This week we continue with the shenanigans at StrongRoom AI, go deep into the NSW Government's Innovation Blueprint and look at Canva’s first-ever round of lay-offs. Is being asked by your employer to incorporate AI the start of the end?

👀 Headlines 👀 

💡 The NSW Government released the NSW Innovation Blueprint 2035. (SmartCompany)

• The Blueprint is a 10-year plan to establish a long-term vision and policy priorities for the state’s innovation ecosystem “to solidify NSW’s position as the innovation powerhouse of Australia.”

• After spending some time reading the Blueprint, it’s fair to say it offers plenty of ideas without any commitments. Regardless, here are the top priorities for the Blueprint. 

  • Strategic funding: Streamline existing and future programs for navigation, equity, and support of key industries in the Industry Policy. 

  • World-class access: Improve access to NSW facilities and develop Tech Central as a flagship innovation district.

  • Talent: Foster collaboration and innovation hubs, aiding diverse founders from Western Sydney and rural areas.

  • Global initiative: Launch an annual Tech Week and attract global and local investors to increase venture capital in NSW.

• The response to the Blueprint was overwhelmingly meh. This follows a disappointing federal government budget for innovation and startups. We’ve put together some of the best reactions about the Innovation Blueprint in the curated opinions section of the newsletter below 👇

💥 StrongRoom AI collapses with EVP claiming founder admitted to fraud and faked accounts (AFR)

• Continuing from last week's summary, Melbourne-based health tech startup StrongRoom AI has entered administration after local fund EVP filed allegations of financial fraud and misconduct in the Federal Court.

• EVP, which invested $10.4 million in the company’s latest round, claims founder Max Mito admitted to falsely booking over $1.1 million in loans as revenue.
  The VC alleges StrongRoom concealed more than $4 million in debt and misrepresented itself as profitable, despite reportedly losing $800,000 monthly.
  The company is also accused of claiming government R&D grants using inaccurate or falsified staff expense data and issuing fictitious invoices for investments never received. (AFR)

• According to reports, former CFOs, accountants, and other ex-employees raised serious concerns about poor governance, fake figures in investor presentations, and misuse of funds, including a director allegedly using company money for a trip to Morocco.

🪚 Canva makes the first known round of redundancies by shedding 10 technical writing staff and replacing them with AI (AFR)

• The cuts come nine months after executives encouraged employees to embrace generative AI tools like GPT and Claude.

• Affected staff had reportedly followed this directive, only to be told their roles were no longer required. Canva has offered at least six months' pay for career coaching to those leaving and insists the decision wasn’t purely cost-cutting. 

• Canva said the move reflects a shift toward engineers owning documentation processes, supported by AI tools.

• While a small proportion of its 5,000+ workforce will be laid off, the layoffs raise questions as Canva eyes a Nasdaq listing and seeks profitability.

⚡️ Startup Retro ⚡️

QuintessenceLabs secures $20M to use quantum principles to fight hackers and cyberattacks

Founder & CEO: Vikram Sharma

Canberra-based quantum cybersecurity startup QuintessenceLabs has secured $15 million from Australia’s $15 billion National Reconstruction Fund (NRF), making the federal government the lead investor in its $20 million raise, chipping in $15 M. In October 2021, QuintessenceLabs raised a $25 million Series B funding round led by Main Sequence and TELUS Ventures.

Unlike startups racing to build quantum computers, QuintessenceLabs is focused on using quantum technology to defend against cyber attacks. Its products include quantum random number generators and quantum key distribution tools — technologies designed to protect critical infrastructure from the encryption-breaking power of future quantum machines. The startup, founded in 2008, counts the US Department of Homeland Security, DARPA, and JPMorgan Chase among its clients.

For example, traditional encryption systems often rely on pseudo-random number generators, which can be predictable and thus vulnerable, especially as computers become more powerful. QuintessenceLabs addresses this by utilising quantum phenomena to produce truly random numbers. Their qStream™ 100 QRNG generates high-quality random numbers at speeds up to 1 Gbit/sec, ensuring robust, fundamentally unpredictable encryption keys. 

By integrating quantum-based technologies, QuintessenceLabs provides solutions that offer superior protection against sophisticated cyberattacks, including those posed by future quantum computers capable of breaking current encryption methods.

Due Diligence: AFR, Information Age, Startup Daily

Flagship raises $6M seed round to help retail merchandisers operate efficiently

Founder: Simon Molnar

​Sydney-based retail tech startup Flagship has secured $6 million in a seed funding round led by US venture capital firms Coreline and Veridical Ventures, with participation from Australian investors Tidal Ventures and Macdoch Ventures. This funding comes just six months after Flagship's official launch into the US market. ​

Founded by Simon Molnar, brother of Afterpay co-founder Nick Molnar, Flagship aims to bridge the gap between e-commerce data and brick-and-mortar retailers. The platform provides physical stores with real-time data on inventory levels, product views, and conversion rates, enabling analytics-driven product placement and the creation of localised visual merchandising guides. Over 600 stores globally, including Australian brands like Peter Alexander and R.M. Williams, as well as US brands Vuori and Mejuri, are utilising Flagship's technology. ​

For example, Venroy implemented Flagship's platform across all its stores, which led to an 83% reduction in the time required for the visual merchandising team to visit stores and a 50% decrease in the time spent executing in-store visual merchandising changes. 

With the new capital, Flagship plans to enhance its US expansion efforts and invest in research and development, focusing on integrating AI-powered recommendations and automation into its platform. 

Due Diligence: SmartCompany

MOOD.ai secures Angel investment at $2M valuation to build a workplace wellbeing app 

Founders: Nathan Jones and Adam Johnson

Sydney-based startup MOOD.ai has secured pre-seed funding at a $2 million valuation, with early angel investment from Chris Salmon. This capital injection enables co-founders Nathan Jones, a PhD candidate in Experimental Psychology, and Adam Johnson, a seasoned product engineer, to remain hands-on during the platform's development. The funds are primarily allocated to build, test, and launch the as they work towards acquiring early customers and preparing for a broader market rollout.​

Currently in beta testing with over 50 active users, MOOD.ai offers an intuitive workplace wellbeing platform that prioritises privacy and psychological safety. It features daily emotion check-ins, secure AI-powered chats, and predictive mental health insights. Organisations receive anonymous, real-time data and actionable recommendations, enabling teams to enhance workplace wellbeing without compromising individual privacy.​

The team is collaborating closely with a select group of users to refine the platform's experience and validate key assumptions. This iterative approach ensures that MOOD.ai effectively addresses the nuanced needs of modern workplaces. The company is on track for its App Store launch in May 2025, aiming to revolutionise employee mental health support through innovative technology.

Due Diligence: OS Exclusive

Next Level Collaboration raises $500K pre-Seed for its video game program for neurodivergent children 

Founders: Jess Rowlings and Dr. Matthew Harrison

​Next Level Collaboration, a University of Melbourne spinout, has secured a $500,000 investment from the Genesis Pre-Seed Fund to expand its innovative video game-based program for neurodivergent children globally. Founded in 2020 by CEO Jess Rowlings, a speech pathologist, and Chief Research Officer Dr. Matthew Harrison, the social enterprise leverages cooperative video games to help children aged 8 to 15, particularly those with autism and ADHD, develop collaboration and social skills. ​

The program, already implemented in over 100 Australian schools, offers structured sessions where participants learn about cooperation, engage in multiplayer games requiring teamwork, and reflect on their collaborative efforts. This approach aims to boost self-esteem, foster a sense of belonging, and build lasting friendships. The recent funding will facilitate the development of an online platform, providing training modules to international schools and allied health professionals, enabling broader program adoption.

The sessions have a transformative impact, empowering participants to embrace their individuality and forge lasting friendships. The organisation's mission focuses on creating career pathways for neurodivergent individuals, aiming to transition participants into employment as they reach adulthood. 

Due Diligence: University of Melbourne Announcement

🔍️ Curated Opinions 🔍️ 

💭 Here are some thoughts and feelings about the NSW Innovation Blueprint.

• Dr. John Howard, the Executive Director of the Acton Institute for Policy Research and Innovation, suggested in his article on InnovationAus that the Blueprint is commendable for focusing on accountability, diversity, and job growth, but it is biased towards early-stage ventures, sidelining medium-sized enterprises, large corporations, and Government Business Enterprises (GBEs) that have potential for scalable impact.

  • He noted that, at this stage, there is no commitment or budget allocated to support the nominated areas. 

• UTS Innovation published an article titled “A Promise or a Pipedream?” on LinkedIn, arguing that although the Blueprint is a helpful start, it risks being just another shiny PDF with little long-term impact without funding, focus, or integration into broader innovation systems.

• Mat Voller commented on LinkedIn that the blueprint shows good signals but has a weak strategy, trying to be “Everything, Everywhere, All At Once,” lacks a clear target audience, and isn’t making any big bets. 

💰️ New Fund, Who’s this? 💰️ 

🦅 La Trobe Uni launches $18M Eagle Fund with Breakthrough Victoria to back deeptech startups emerging from university research, with a focus on AgTech, biotech, AI, and digital health. (La Trobe Annoucement)

• The fund was mentioned last week with their $1M investment in Gaia Project Australia (GPA) to scale its Omni-System, a next-gen indoor farming platform boosting salad green yields by 40% and cutting costs for growers globally.

• ExCelligent, a blood-based diagnostic platform that enables early and accurate detection of Alzheimer’s, Parkinson’s and other neurodegenerative diseases, was spun out of La Trobe's neuroscience research lab has also received $1M from the fund

📆 Notice Board 📆 

🎤 CAST & Momentus open doors for entertainment startups to showcase at Asia-Pacific Venue Industry Congress 2025.

• Startups innovating in entertainment tech—think fan engagement, venue operations, or immersive experiences—have a rare chance to pitch to 1,000+ venue decision-makers from 16 countries, including giants like Live Nation and Ticketek.

• Apply by 4 May here and check out that link for more information!

📣 Sunrise Australia 2025 has just dropped its BIGGEST speaker lineup yet!

• Hosted by our friends at Blackbird, Sunrise isn’t just another startup event - it’s a two-day celebration of exceptionalism in Australia and New Zealand where you can immerse yourself in our startup community, become a part of it, and help to shape it. 

• 🎟 Tickets are selling fast! Check out the unmissable lineup & grab your tickets before they’re gone here.

• 📅 April 30 – May 1 | 📍 Carriageworks, Sydney

The best place to find upcoming events to attend, and promote any events you’re hosting in the ANZ Startup Events Calendar.

Would you like to promote an event or an opportunity? Enquire about a Notice Board promotion here.

🧠 KaaS (Knowledge as a Service)

Will’s Pick 💁‍♂️  Careless People: A story of where I used to work, By Sarah Wynn-Williams

• I've just started reading this book. It’s an insider’s account of how big tech really operates, revealing the gap between good intentions and global consequences.

• Sarah cannot promote the book because Meta secured an emergency ruling blocking her, Sarah Wynn-Williams, a former employee and whistleblower, from promoting her memoir, "Careless People," due to a non-disparagement agreement she signed as part of her severance in 2017. Despite this, it’s a best seller and I’m enjoying it.

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‘Til next time,

👋 Will & Gem

🔨 Tool Box 🔧 

We’re often asked for recommendations for tools, agencies, and evening upskilling opportunities. We’ve contacted a few of our favourite tools and people and secured some discounts for you! Our community.