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. 🇦🇺 🚀 

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👀 Headlines 👀 

Square Peg is raising $US560 million ($840 million) for its sixth fund, focused on seed and Series A investments, with a 10-20% minority stake strategy. (AFR)

• Simultaneously, it is raising $US210 million for its Opportunities Fund 3, which targets growth rounds in its top portfolio companies.

• The firm highlights its strong returns from Canva (652x) 🚀 and other successful investments like Rokt and Airwallex while acknowledging challenges in recent vintages.

• Square Peg is targeting international LPs to diversify its investor base as local super funds reduce allocations.

⛓️ Linktree, the link in bio tool 2023 accounts leak, showing a $61.6M loss with $2 spent for every $1 earned. (AFR)

• Founded by brothers Anthony, Alex Zaccaria, and Nick Humphreys, Linktree last raised $152 million in 2022, valuing the startup at $1.7 billion. 

• The FY23 accounts, which are ~15 months old, show $42.8 million in revenue, with expenses hitting nearly $100 million.

• The founders have taken ~$21 million off the table in secondaries throughout the journey. 

🚀 Hypersonic vehicles set to launch from South Australian spaceports in 2025 (Innovation Aus)

• Hypersonix  Launch Systems will partner with Southern Launch to launch aircraft capable of Mach 7.  

• Under the signed MoU, depending on environmental assessments, the craft will be launched at either Southern Launch's spaceports: Whalers Way or Koonibba.

  • Whalers Way is home to endangered species like the southern emu-wren and southern right whale. 

• Hypersonic is developing a hypersonic aircraft and engine known as DART AE. This is powered by a hydrogen-fuelled scramjet engine (like the plane at the start of Top Gun 2).

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SafetyCulture raises $75M of fresh capital while $90M of secondaries exchange hands at $2.5B valuation

Founders: Luke Anear

SafetyCulture, the workplace software startup, has raised $165 million in a funding round led by AirTree Ventures ($40M), alongside Blackbird, Hostplus, Hesta, and Morpheus Ventures. The company's valuation has dipped slightly to $2.5 billion from $2.7 billion in 2023. The capital raise saw $90 million worth of shares change hands in secondary sales as early investors took their wins. 

Founded in a Townsville garage in 2004, SafetyCulture has evolved from a compliance platform into a global leader in workplace solutions. It now serves 85,000 companies with around two million users. The company is exploring AI-powered tools to enhance its offerings, including generative AI that transforms workplace data into actionable insights.

Recent innovations include sensor products with IoT functionality and new marketplace and training features. Anear sees AI as key to unlocking SafetyCulture's vast data stores, which hold over 5 petabytes of workplace information. With around 800 employees and offices worldwide, SafetyCulture aims to grow its user base to 100 million within the next eight years, solidifying its position in the global tech landscape.

Due Diligence: The Australian, Startup Daily, Capital Brief, Smart Company 

Directo raises $2M for a marketplace that handles invoicing and fulfilment for 50% of Aussie pharmacies

Founders: Gavin Upiter

Directo, a Melbourne-based B2B marketplace for pharmacies, has raised $2 million in a funding round led by industry leaders and existing shareholders, including former Pharmacy Guild of Australia president Paul Sinclair. Founded by Gavin Upiter in 2017, Directo helps streamline logistics, invoicing, and fulfilment between pharmacies and suppliers. The platform has grown to serve over 3,000 pharmacy retailers and connects them to more than 200 suppliers, offering 45,000 products.

The new funding will be used to grow Directo's user base, develop value-added services, and introduce an investment incentive program for its pharmacy customers. Directo targets the $20 billion Australian pharmacy supply chain, reduces administrative efforts, and improves cash flow management.

In the past financial year, Directo saw 70% growth in gross merchandise value, a 57% increase in active customers, and a 40% rise in suppliers. The company's revenues have doubled annually, and it now runs at an annualised revenue of $40 million. 

Due Diligence: Startup Daily

Allegro Energy secures $17.5M Series A to scale water-based Redox Flow Batteries

Founders: Dr Thomas Nann

Newcastle-based battery storage system Allegro Energy has secured $17.5 million in a Series A funding round to accelerate the development of its water-based Redox Flow Batteries (RFB). The round was led by The Grantham Foundation, with participation from US fund Lightbank, Origin Energy, Melt Ventures, and Impact Ventures.

Allegro's RFB technology is designed to store renewable energy more safely and cost-effectively, boasting non-flammable, non-corrosive, and recyclable features. The funds will support the startup in building an 800 kWh pilot plant at Origin Energy's Eraring site, with future plans for a larger 60MWh pilot.

A Redox Flow Battery (RFB) stores energy by using two liquid electrolyte solutions held in separate tanks. When energy is needed, the liquids are pumped into a central cell stack, which undergoes chemical reactions that produce electricity. The process is reversed to store energy. RFBs are flexible and scalable because you can increase the size of the tanks to store more energy. They are also safe, non-flammable, and durable, making them ideal for renewable energy storage.

The capital will help ramp up manufacturing, positioning the company to scale globally.

Due Diligence: Startup Daily,  ESD News

Number 8 Bio secures $7M Seed round for livestock feed that reduces methane emissions

Founders:  Dr Tom Williams and Dr Alex Carpenter

Agtech startup Number 8 Bio has secured $7 million in a Seed round led by Main Sequence, with contributions from Breakthrough Victoria (1.7M) and The March Group. Founded in 2022 by Dr Tom Williams and Dr Alex Carpenter, the company uses synthetic biology to create feed additives to reduce livestock's methane emissions by up to 90%. Unlike seaweed-based solutions, Number 8 Bio focuses on cost-effective, scalable approaches, combining methane reduction with increased livestock productivity.

The funding will help advance product development, scale manufacturing, and build key partnerships. Number 8 Bio has already shown promising results through trials in collaboration with Queensland Animal Science Precinct and the University of New England, demonstrating the solution's effectiveness in both dairy and cattle sectors.

The startup also plans to expand its core technology to anaerobic digesters, aiming to make fermentation processes more efficient and produce carbon-negative food ingredients. With plans to build a manufacturing facility in regional Victoria post-Series A, Number 8 Bio is poised to help the agriculture industry reduce its methane emissions and improve sustainability. 

Due Diligence: Startup Daily

Algenie secures $1.1M in pre-seed funding to replace fossil fuels and plastics with algae

Founders: John Martin, Nick Hazell and Mathieu Pernice

Algenie has raised $1.1 million in pre-seed funding to scale algae production as a sustainable alternative to fossil fuels and plastics. Backed by the University of Technology Sydney (UTS), Better Bite Ventures. Algenie aims to tackle climate change by using algae to cut carbon emissions and create eco-friendly materials.

Algenie's innovative helix-shaped photobioreactor dramatically improves algae production efficiency, potentially reducing costs tenfold to $1 per kilogram. The system can produce 100 tonnes of algae annually from a space the size of a shipping container, enough to generate 2.5 million sustainable plastic bottles. By leveraging algae's natural ability to absorb CO2, Algenie's approach offers a scalable solution for carbon sequestration and renewable product development.

Partnering with UTS, Algenie is working to optimise algae strains for large-scale production. The startup's model can adapt to fluctuations in renewable energy, taking advantage of cheap, plentiful power when available. 

With potential applications ranging from biofuels to sustainable plastics and textiles, Algenie aims to license its technology globally and collaborate on large-scale infrastructure, positioning algae as a key resource in the fight against climate change.

Due Diligence: Capital Brief, Startup Daily

Renewable Metals raises $8.1M Seed extension for battery recycling system 

Founders: Mark Urban, Gary Johnson and Nick Vines

Renewable Metals, a Western Australian-based battery recycling technology company, has raised $8.1 million in a seed extension round. This builds on an initial $8 million raised in 2023, backed by Investible's Climate Tech Fund, Virescent Ventures, and the Grantham Foundation. The funds will accelerate Renewable Metals' plans to establish a pilot plant in Perth and build a demonstration-scale lithium battery refining plant in the UK by mid-2025, ten times the size initially planned.

The alkali-based recycling process recovers critical minerals such as nickel, copper, cobalt, and lithium from end-of-life lithium-ion batteries while avoiding the creation of secondary waste. Renewable Metals' technology also eliminates sodium sulphate, a common byproduct in conventional recycling.

The new capital to scale up production, with growing interest from battery manufacturers and recycling companies. The company's process offers a 30% cost advantage over competitors, positioning it as a global leader in sustainable battery recycling.

Due Diligence: SmartCompany

Neurode lands $5.4M for a headband that helps manage ADHD symptoms drug-free

Founders: Nathalie Gouailhardou and electrical engineer Damian Sofrevski

Sydney-based startup Neurode has raised $5.3 million for its non-invasive, wearable solution for ADHD. Co-founded by neuroscientist Nathalie Gouailhardou and electrical engineer Damian Sofrevski, Neurode's headband provides light electrical stimulation to the prefrontal cortex, improving focus, memory, and impulse control. The device, worn for just 20 minutes daily, aims to be a side-effect-free alternative to traditional ADHD medications like Ritalin and Adderall, which many users find intolerable.

Neurode’s headband also tracks brain activity over time, offering personalised treatment. Gouailhardou, who has ADHD, emphasised that Neurode was born from her struggle with the side effects of medication. The company is addressing a growing demand, particularly as more adults are diagnosed with ADHD and seek alternatives to stimulant medications.

The $5.3 million funding will be used for product refinement, clinical trials, and the launch of a private beta program, allowing users to test the headband and provide feedback. Neurode also has plans to explore future applications of its technology in treating cognitive decline and depression.

Due Diligence: (Smart Company)

🤝 M&A 🤝

Reece Group has acquired Shadowboxer (a venture studio) and its subsidiary Southpaw (a web design agency), as part of its Breakthrough Innovation Group (BIG). (Mumbrella)

• Konrad Spilva, founder of Shadowboxer, will become Reece’s Chief Digital Officer for Australia and New Zealand, while Stephen Graham, partner at Shadowboxer, is promoted to General Manager of the studio.

• Southpaw will continue to be led by General Manager Ant Mangos and Head of Technology Dave Sharpe, who will focus on advancing Reece’s digital strategy.

• Shadowboxer has worked with clients like Trendii, Wonki, Brightspace, Gifted and Jaunt. 

• Shadowboxer and Southpaw will continue supporting early-stage startups while delivering web solutions for Reece’s global business.

🤝 Vibe Check 🤝

⛏️ Is Australia sleeping its chance to become a leader in AI development by leveraging its resources and infrastructure? 

• Casey Flint, an investor at Square Peg, contends that Australia can win by capitalising on AI's value chain, particularly in data centres and clean energy, to secure its economic future. Check it out here.

💸 The Australian startup ecosystem has become the third-highest in global liquidity, following the U.S. and China, due to its ability to produce capital-efficient companies with global reach. 

• John Henderson, General Partner at AirTree Ventures, writes that despite limited venture capital investment compared to other nations, Australia has created world-class startups.

• This success has drawn the attention of international investors, who now see Australia as a prime location for venture capital, driven by its stable democracy, skilled workforce, and proven ability to generate high returns from limited resources. 

🚀 Accelerator News 🚀 

The Google for Startups Accelerator: AI First announces its cohort. The accelerator is a ten-week hybrid program for Seed to Series A technology startups that use AI/ML to build their businesses. Here’s the cohort! 

🏗️ Asseti - Asseti automates property asset management and tracking.

🖱️ BuildShip - Low-code visual backend builder powered by AI.

🐕 Fetch Pet - App for pet health and modern pet parenting.

👯 Gigabuddy - AI-powered platform for online community management.

👶 LoveHeart - An intelligent assistant who helps teachers with child development insights.

💻 Marqo - Platform for building AI applications with multimodal embeddings.

🛍️ Sauce AI - Real-time AI customer insights for product and customer-facing teams.

🎨 Springboards - AI + Human creative tool for inspiring and accelerating creative work.

Techstars announces the 12 startups that will complete the 13-week program at Sydney’s startup and innovation hub, Tech Central. 10 of the 12 startups selected have at least one female founder

📋️ Canopy – AI-enabled misconduct and psychosocial safety reporting platform.

📧 Dispute Buddy – Creates searchable timelines of texts and messages to resolve legal disputes quickly.

🏃‍♀️ Earthletica – Australian-designed activewear using sustainable materials.

♣️ Female Startup Club – Connects female entrepreneurs with training and resources to build their businesses.

👶 Gether – AI assistant that helps working parents manage their mental load.

🎯 Heatseeker – AI-enabled platform for quick and easy market tests to help companies grow.

🍵 Jaimee – AI companion for women to assist with stress management, confidence, and relationships.

💁 NEVAM CX – Empowers brands to perfect customer experience across every channel.

🖇️ OD-AI – Supports organisations with policies, processes, and training for best practice compliance.

⏳️ Shutterspeed – Automatic time/cost tracker and business assistant for content creators.

🧒 Understanding Zoe – Supports parents and carers of neurodivergent children to apply therapist recommendations.

📹️ Visuo – Delivers AI-powered personalised video experiences to improve customer acquisition, loyalty, and retention.

Amazon Web Services (AWS) has announced the 76 companies for the Global Generative AI Accelerator program, with 4 Australian businesses securing spots. The 10-week program will gain access to AWS compute, storage, and database technologies, as well as energy-efficient AI chips. The big haul? $1.5M in each in AWS credits.

🤖 Contact Harald - voice-based assistant provides on-site workers with a hands-free, voice-activated way to stay safe on the job.

🔍️ Marqo - An open-source tensor-based search and analytics engine that seamlessly integrates with your applications, websites, and workflows.

🎯 Relevance AI - Recruit teams of AI agents to complete tasks on autopilot. ‍

🎼 Splash Music - Splash is creating the world's best AI Music platform that can sing, rap, play instruments, and compose and produce original music

🧠 KaaS (Knowledge as a Service)

Will’s Pick #1 💁‍♂️ GTM funnel stages, metrics, and goals for B2B startups by unusual VC

• I picked this article this week after discovering it while helping a B2B startup map out its sales motion. I love it since it breaks down the each stage of a modern G2M motion and covers product-led, and sales-led startups.

Will’s Pick #2 💁‍♂️ How to clap back when an attack column brands you as a 'ZIRP horror story' by Jessy Wu

• Jessy provides her take on how a founder could respond following brutal press coverage. The conversation continued on LinkedIn 🍵.

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👋 Will & Gem

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