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 special welcome to the 28 new subscribers who joined since last weekend 👋 

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👀 Headlines 👀 

😠 Quantum startups are not happy with the allocation of government support in their sector. (Capital Brief)

• Michael Biercuk, founder of Sydney quantum startup Q-CTRL, warns that Australian quantum startups may relocate offshore due to insufficient government support.

• Aside from a controversial $940 million investment in US-based PsiQuantum and $40 million in Silicon Quantum Computing, the Australian government has provided minimal financial backing to other local quantum companies.

• Particularly under scrutiny is the $1 billion National Reconstruction Fund (NRF), which is intended to support critical technologies but has yet to make any investments in the quantum sector.

• Biercuk also slammed the strict export regulations imposed by the Department of Defence, which classifies quantum technologies as defence goods that require proper permits. 

👼 Angel investors stand up to proposed investor test changes in the halls of Government (Innovation Aus)

• The Parliamentary Joint Committee on Corporations and Financial Service met on Thursday (here's the 9-hour live stream), and the debate about proposed changes to the wholesale investor test continued. 

• ASIC notes that the percentage of Australians qualifying as sophisticated investors has increased from 2% in 2002 to over 16% today, leading to more retail investors accessing high-risk investment products.

• Cheryl Mack, CEO of Aussie Angels, argues that increasing thresholds will create barriers to innovation funding, potentially decimating early-stage investment and harming startups.

• Sydney Angels' Adrian Bunter argued that raising thresholds without alternative assessments could reduce the number of wholesale investors by up to 80%, severely impacting startup funding.

  • Here is a link to the timestamped link where you can hear Cheryl and Adrian talk.

📋️ The NSW Government has decided not to fund the Startup Muster report in 2024 but to instead support a ''national dataset'' that doesn't yet exist. 

• Without government support, the future of the Startup Muster report is in doubt and will now rely on private sponsors and volunteer efforts to continue.

• Startup Muster provides valuable qualitative insights beyond basic metrics, including reasons founders leave Australia, hiring practices, fundraising methods, and interactions within the innovation community.

• The NSW government is collaborating with the federal Industry department on a National Startup Data Project in response to a 2019 review highlighting major data gaps in innovation metrics.

• However, there are worries that the national project will not happen. There is currently no dedicated budget or resources for the project.

🥼 The R&D tax incentive transparency report 2021–22 has been released, and thousands of companies' $ spent on research and development has been revealed. (ATO Website) (Innovation Aus)

• The list was topped out by Atlassian, which claimed $200M in development. 

• The highest private ''startup'' listed was Glimour Space Tech, which reported $37.5M in R&D. 

• Morse Micro, a microprocessor and chip development startup, spent $27.4M to place among the country's top 30 spenders.

• In total, professional, scientific, and technical services companies took 43%, manufacturing took 21%, and wholesale trade, ICT, and financial and insurance services rounded out the top five with around 5% claims each.

• Want to see the spreadsheet? I’ve created a public viewing version here.

⚡️ Startup Retro ⚡️

Zitcha lands $15M Series A for ad tech solution allowing retails to monetise advertising space to their suppliers 

Founder: Troy Townsend and Jack Byrne

Retail media ad tech startup Zitcha has raised $15 million in a Series A funding round to expand into the US market. The round was led by VMG Partners, marking its first investment in an Australian company. It was supported by OIF Ventures, which had backed Zitcha's $4.7 million seed round in 2022.

Zitcha's platform enables retailers to sell advertising space to suppliers, offering data-driven, automated marketing solutions across email, apps, in-store digital displays, websites, and social media. Retailers like Coles, The Warehouse Group, and Ocado, along with global brands such as Unilever and Microsoft, already use Zitcha. The platform allows these retailers to plan, activate, and optimise campaigns with advertisers and generate new revenue streams across their owned channels.

CEO Troy Townsend will relocate to the US to establish Zitcha's new office and lead the expansion. The company has also partnered with Axonet, a US data platform, to enhance its retail media capabilities in North America. Co-founder Jack Byrne will oversee operations outside the US, with Australia remaining the engineering hub.

Zitcha plans to grow in Australia, New Zealand, and key markets in Europe and Asia, while scaling rapidly in the US. VMG Technology has many FMCG investments in the beauty and nutrition space. 

Due Diligence: Startup Daily, Smart Company

Water & Carbon Group has landed $10M USD for wastewater treatment technology

CEO: Jim Hunter

Water & Carbon Group has raised $US10 million to expand its wastewater treatment technology, which effectively removes toxic chemicals like PFAS (Per- and polyfluoroalkyl substances). The funding round was led by Switzerland-based VC firm Emerald, with participation from water treatment giant Ecolab.

Water & Carbon Group's technology, initially developed for ammonia removal, gained traction after successfully addressing PFAS contamination in complex wastewater environments. PFAS are synthetic chemicals often used in consumer products Teflon and firefighting foams. They were branded as "forever chemicals" by the Washington Post as they have strong carbon-fluorine bonds. They pose significant health risks as they can infiltrate drinking water sources. 

The company sees vast potential in the US, where PFAS issues are increasingly recognised. Their treatment plants are deployable within months and offer a faster, more efficient alternative to traditional PFAS removal methods like activated carbon or resin, especially in heavily contaminated landfill leachate. Their Darwin project became the world's first commercial PFAS treatment facility, processing over 51 million litres of wastewater annually.

Now, Water & Carbon Group is expanding globally, with its second site in Pennsylvania capable of treating 378,000 litres of leachate daily. The company aims to build hundreds of treatment plants in the US to address growing concerns over PFAS contamination.

Due Diligence: The Australian

Enrola lands $800K pre-seed for better vocational educational enrolment process

Founders: Jo Thomas & Yvette Quinby

Enrola, a South Australian-based education comparison platform that simplifies vocational course enrolments, has secured $800,000 in an oversubscribed pre-seed funding round. The round was led by AfterWork Ventures, with participation from Skalata Ventures, Antler (following up on their initial investment) and a strategic angel investor experienced in scaling comparison platforms.

Founded by Jo Thomas and Yvette Quinby, Enrola addresses the complexities students face when choosing vocational courses. The platform offers personalized recommendations based on individual goals, experience, and lifestyle, along with hands-on support to streamline the enrolment process.

Australia's vocational education sector is rapidly expanding, with projections that one in three new jobs over the next decade will require vocational qualifications. Enrola currently partners with 12 leading Registered Training Organisations (RTOs) across sectors like Community Services, Health, Business, Automotive, Fitness, and Pharmacy.

With the new funding, Enrola plans to expand its course offerings from 90 to over 200, entering areas such as Mental Health, Business, and Education. The company also aims to reach new student segments, including school leavers and privately funded students.

Due Diligence: Enrola Press Release

Lorikeet Secures $7.3M Seed Funding to Advance AI Customer Support Platform

Founders: Steve Hind and Dr Jamie Hall

Sydney-based AI startup Lorikeet has raised $5 million in a seed funding round led by Square Peg, with participation from Skip Capital. The infusion of capital aims to accelerate product development and fuel global expansion, particularly into the U.S. market. The seed round also saw participation from prominent angel investors like former Stripe COO Claire Johnson and executives from Brex, Rippling, OpenAI, and Retool.

Lorikeet aims to address the surging demand for intelligent, efficient, and accurate customer support solutions across various industries and geographies. Founded by former Stripe executive Steve Hind and ex-Google AI engineer Dr. Jamie Hall who was part of the original team behind Google's Bard. Lorikeet has developed an AI customer support platform designed to handle complex inquiries beyond the capabilities of traditional chatbots.

Lorikeet's platform employs AI agents that follow standard operating procedures similar to skilled human support staff, enabling them to resolve high-stakes customer interactions effectively. The company has already attracted a roster of fintech and healthtech clients across the U.S., Australia, and Asia, including Remote.com, Step, Eucalyptus, Stashaway, and SensorFlow. Check out how Euc has used the platform here.

Due Diligence: Forbes, Startup Daily 

Ideally secures $5.5M for a consumer survey tool helping brands better understand how their products resonate 

Founders: Joshua Nu’u-Steele, James Donald and Brendan Cervin

Ideally, an insights platform that helps organisations test campaigns and creative ideas through customer surveys has raised $5.5 million in a funding round led by Icehouse Ventures and OIF Ventures. 

The platform automates the process of gathering feedback from hundreds of people globally, allowing marketing teams to quickly understand how their ideas resonate with customers. In practise, the platform is a survey tool for marketers that allows them to define consumer profiles and ask them questions to decipher what is important to them. The platform includes poven testing frameworks and boasts quick turnarounds for results with hundreds of results that can come in overnight. 

Ideally's clients include major companies such as Telstra, Asahi, Afterpay, Nine, and Kraft Heinz, using the platform to refine their campaigns and strategies. Ideally reached $1 million in revenue in half the time it takes most software startups and is on track to hit $5 million just as quickly. 

The platform's ability to provide overnight insights has positioned it as a valuable tool for brands looking to optimise their marketing efforts swiftly. CEO James Donald is now focused on expanding the company's customer base in the US.

Due Diligence: The Australian, Smart Company

Cartherics raises $15M for "off the shelf" cell therapy treatment for ovarian cancer

Founders: Prof. Alan Trounson and Bob Moses 

Melbourne biotech startup Cartherics has raised $15 million to kick off clinical trials for its ovarian cancer therapy, CTH-401. Founded in 2015 by Prof. Alan Trounson and Bob Moses, Cartherics is developing immune cell therapies to battle cancer. This round brings their total funding to $41 million.

The fresh capital fuels CTH-401's first clinical trial and broadens its pipeline to tackle other diseases. Despite treatment advances, ovarian cancer survival rates are still very poor. CTH-401 stands out as the only "natural killer" (NK) cell product in development that incorporates a chimeric antigen receptor (CAR) targeting TAG-72—an antigen found in solid tumours like ovarian, gastric, and pancreatic cancers. Preclinical studies show it effectively annihilates ovarian cancer cells in lab and animal models.

In simple English? Chimeric antigen receptors (CARs) are specially designed proteins that combine parts of antibodies with signalling molecules. They are built to recognise specific markers found only on the surface of cancer cells.

Cartherics genetically engineer these CARs into the DNA of immune cells like T cells or NK cells, so the immune cells display them on their surfaces. When the CAR on an immune cell binds to a cancer cell, it activates the immune cell to attack. The immune cell then releases toxic substances or signals called cytokines that kill the cancer cell.

These immune cells continue to hunt down and destroy cancer cells until they become exhausted. To make the treatment more effective, they grow large numbers of these potent immune cells in the lab. We also modify them to resist signals from the tumour environment that might try to shut them down.

The NK cell therapeutics market is set to skyrocket from $350 million to $11.4 billion over the next decade; Cartherics aims to rearm the immune system using an "off-the-shelf" stem cell platform from donated cord blood, genetically engineered for enhanced function.

Due Diligence: Startup Daily

Cauldren Ferm secures Queensland government funding for precision fermentation facility.

Founders: Michele Stansfield and David Kestenbaum

Biomanufacturing startup Cauldron Ferm has snagged funding from the Queensland government to build a cutting-edge facility in Mackay, located in the state's tropical north. The investment comes via the $415 million Industry Partnership Program (IPP), which targets decarbonisation initiatives, though the exact amount wasn't disclosed. This boost follows a recent $4.3 million federal grant and a $9.5 million Series A round in March, adding significant momentum to the regional NSW-based company.

Cauldron Ferm leverages continuous precision fermentation to revolutionise the production of everything from food and fibres to animal feed and fuels—achieving this at a fraction of traditional costs. The forthcoming Cauldron Bio-fab in Mackay will be the first and largest end-to-end contract manufacturer for precision-fermented bioproducts in the Asia-Pacific region, with a projected annual output exceeding 1,000 tonnes.

Situated in the heart of Queensland's sugar cane belt, Mackay offers abundant sugar supplies to fuel Cauldron's hyper-fermentation process. The facility aims to provide sectors like food, nutrition, beauty, personal care, chemicals, and biofuels with cost-effective, resource-efficient bioproducts.

With ambitions to expand globally, Cauldron is transitioning from its 25,000-liter demo facility in NSW to establish a network of industrial sites, starting with the Mackay plant.

Due Diligence: Startup Daily, Innovation Aus, Green Queen

Attekus lands $5M for event management platform for local councils after seven years of bootstrapping

Founders: Tom Muller and Andrew Cutler 

After seven years of bootstrapping, Australian event management platform Attekus has raised $5 million in a round led by Five V Venture Capital, with participation from Queensland's QIC Ventures. Founded in 2017 by former TechnologyOne colleagues Tom Muller and Andrew Cutler, Attekus developed Bookable, a platform that automates booking processes for local councils. Features include automated pricing, invoicing, waitlist management, and integration with existing systems like TechnologyOne's ERP.

Bookable is now used by around 20% of councils in Australia and New Zealand, and notably, the company hasn't lost a single customer. The fresh capital will be used to enhance product offerings and expand into new markets, including the UK's council sector, ANZ education, and government agencies. Bookable focuses on councils' public use areas such as sporting grounds, library facilities and community centres.

The platform automates scheduling, pricing, invoicing, and waitlist management, drastically cutting down administrative tasks. It integrates with existing systems like TechnologyOne's ERP, ensuring unified data management without duplication. Prioritising security and compliance, the platform securely handles data while enhancing community engagement by simplifying public access to council services.

Due Diligence: Startup Daily

🤝M&A🤝

Ansarada, a listed Australian provider of secure cloud storage for sensitive documents, was acquired by Datasite for $236 million. (Capital Brief)

• The transaction was finalised in September 2024, giving Folklore Ventures a significant exit six years after its Series A investment.

• Ansarada went public in 2020, a rare move in the current tech landscape where many startups stay private longer, unlike decades past when companies often went public quickly.

• IPOs remain complex for investors, and alternatives like secondary sales have grown, but exits still provide essential returns, as seen with Ansarada’s founders moving on to start Drova, a new ESG services company.

🚀 Wins 🚀 

Startmate delivers six times returns for investors after its $35,000 investment in cybersecurity startup Bugcrowd. (AFR)

• Bugcrowd, now a unicorn, raised $156 million in February 2024. Startmate sold 60% of its stake for $1.1 million, retaining $1 million in stock.

• Startmate invests $120,000 in startups for 8% equity and aims to make 100 new investments yearly. Earlier funds from 2011-2016 returned 3.3 times the cash on investments.

🧠 KaaS (Knowledge as a Service)

Will’s Pick 💁‍♂️ US Expansion: The Complete* Guide For Australian Companies by Hunter Watkin

• This is a great ‘living’ handbook for Australian companies setting up business in the US. It covers everything from incorporation, bank accounts, team visas, Insurance and even the copy on your website.

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‘Til next time,

👋 Will & Gem

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