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 27 new subscribers who joined us this week. It’s great to have you here!

👀 Headlines 👀 

👋 Breakthrough Victoria’s CEO Grant Dooley is stepping down, three years into his role (Startup Daily)

• The government-backed $2 billion innovation fund has faced criticism and a $360 million budget cut by the Victorian government over 9 years. 

• The fund is known for investments into Quantum Brilliance, Eden Brew, and augmented reality app Jigspace, and facilitated the local establishment of US companies like Liquid Instruments and World View.

• The departure follows recent key departures from their board including Seek Co-Founder Andrew Bassat.

⚖️ Breakthrough’s turbulent week also includes a potential legal battle with one of their portco founders (AFR)

• Seer Medical co-founder Dean Freestone is suing Breakthrough Victoria, claiming he was unfairly dismissed and coerced into diluting his equity in the startup. The lawsuit alleges threats from the fund, including withholding a $2 million loan, which would have been ‘unlawful and unconscionable’.

• Founded in 2017, Seer provides in-home epilepsy diagnostic technology and has raised over $80 million from investors. The company has faced financial struggles, including a cash flow crisis leading to significant job cuts after a $30 million investment from Breakthrough Victoria in 2022.

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⚡️ Startup Retro ⚡️

Kinoxis Therapeutics lands $14.5M Series B for dementia drug development

Founders: Hugh Alsop and Michael Bowen 

Sydney-based biotech startup Kinoxis Therapeutics has secured $14.5 million in a Series B funding round to advance its drug KNX100, aimed at treating agitation and aggression in dementia patients and those struggling with methamphetamine or cocaine addiction.

The funding, backed by Uniseed, UniSuper, Sydney University, Stoic VC, and US-based Avicella Capital, will support Phase 2 clinical trials starting this month. Kinoxis previously raised $5 million in a Series A round and received US government funding for its research on opioid addiction treatments.

KNX100, developed by researchers from Sydney University's chemistry and psychology faculties, has shown promise in preclinical studies, reducing aggression and agitation without the severe side effects associated with current treatments like atypical antipsychotics. The trials will focus on 60 dementia patients, addressing a significant unmet need in managing late-stage symptoms.

Due Diligence: The Australian

Aglow secures $1.25M for membership platform for beauty salons 

Founders:  Karl Margrain and Jo Blundell

Subscription beauty startup aglow has raised A$1.25 million in a funding round led by Kiwi based Icehouse Ventures, Previously Unavailable, with support from Timely founder Ryan Baker and Tyro cofounder Peter Haig. Founded in May 2023 by Karl Margrain and Jo Blundell, aglow offers a subscription-based membership platform for beauty salons and clinics, now serving over 600 locations with 5,000 members across Australia and New Zealand. 

The platform helps salons transition from pay-as-you-go services to predictable recurring revenue, generating over $16 million annually. The shift in model for salons is similar to the transformation of gym memberships. The membership model has already driven significant financial success for users, with some salons generating over $1 million in recurring revenue through aglow. 

By using the platform, salons see increased customer spending and rebooking rates, reinforcing the value of the subscription model. Customers of the salon benefits the new standard. The funding will accelerate aglow’s expansion into the US, enhancing its mission to provide financial stability for beauty businesses. 

Due Diligence: Startup Daily, Business News Australia

Hapana lifts the bar with $17.3M Series A for CRM solution for fitness clubs

CEO: Jarron Aizen

Sydney-based fitness software startup Hapana has raised $17.3 million in a Series A round led by OIF Ventures and Bailador, aiming to scale its global presence. Hapana's platform, a white-label CRM solution for membership management, payments, and loyalty programs, is used by major fitness brands like F45, UFC Gym, and KX Pilates across 17 countries. Last financial year, it processed over $500 million in payments from more than a million club members, serving 1,000 gyms and fitness studios worldwide.

The fresh capital will be used to launch Hapana’s second-generation platform, enhancing user experience and adding new functionalities for large franchise fitness brands. This update will provide greater visibility and control over their networks, facilitating expansion into new markets. Currently, Hapana’s platform allows fitness clubs to create schedules for classes, personalise their online and app presence, create customer membership packages and inclusions and manage payments securely. 

This investment marks OIF’s third deal from its Opportunity Fund and continues its successful partnership with Bailador, following their co-investment in Instaclustr. Bailador’s Paul Wilson and OIF’s Kevin Wilson will join Hapana’s board.

Due Diligence: Digital Nation, Business News Australia, Startup Daily

DeCarice raises pre-Seed for hydrogen injection technology to replace diesel fuel

Founders: Goran Bozic and Professor Shawn Kook

DeCarice, an clean tech deep tech startup, has secured investment (value undisclosed) from Investible to accelerate the global rollout of its innovative hydrogen injection technology. This technology, developed at the UNSW Engine Research Laboratory, enables heavy-duty diesel engines to run on up to 90% hydrogen, reducing carbon emissions by up to 85% without compromising performance. The investment was made through Investible’s Climate Tech Fund.

Founded in 2023 by engine industry veteran Goran Bozic and Professor Shawn Kook, DeCarice aims to decarbonise hard-to-electrify sectors like mining and heavy transport. The startup’s solution offers a scalable path to significantly cut emissions in industries where clean alternatives have been elusive.

Global demand for green hydrogen is increasing with the decarbonisation of heavy industries an increasing focus. The technology allows heavy transport vehicles to maintain their existing fleet as the ‘duel fuel’ direct injection system operates alongside the existing diesel injection system. Expect to see the technology being used in heavy transportation, ports, mining and stationary power generators.

Due Diligence: Press Release

Funding the Balance | Weekly Edition

This week’s data is unavoidably skewed by the DeCarice funding amount being undisclosed.

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

🎉 Wins 🎉 

☀️ CoVentures, the single GP fund managed by Maxine Minter, has closed Fund 1 with over $5M under management (LinkedIn Announcement)

🧬 Sydney-based biotech incubator Proto Axiom has raised $20 million in a Series B funding round, valuing the company at $90 million (AFR)

• The investment included Salesforce CEO Marc Benioff, World Bank president Ajay Banga, and Churchill Asset Management.

• The incubator is aiming to raise an additional $10 million to bring the Series B total to $30 million, with plans to close by December 2024.

• Proto Axiom, led by Anthony Liveris, will use the majority of the funds to invest in early-stage biotech ventures, particularly university spin-outs, while also expanding its incubator services.

• The incubator made its first investment in March 2023, acquiring a majority stake in the University of Sydney spin-out EndoAxiom, which is developing oral insulin delivery for Type 1 Diabetes. It also invested in UNSW spin-out Swan Genomics, focusing on DNA sequencing technology.

• The fresh capital will allow Proto Axiom to make five to seven new investments with the $30 million fund over the next two to three years.

Aussie Kiwi Raisins 🥝 

WNT Ventures, a NZ-based fund with Aussie LPs, is raising between NZ$35M and $60M for its fourth fund (AFR)

• The fund is targeting net returns above 25% and seeking investment from global investors including in Hong Kong, Singapore, the US, Europe, and Australia.

• The new fund will invest in 10 to 15 New Zealand deep tech companies at the Seed and Series A stages. 

  • WNT Ventures is tied to the Callaghan Innovation Deep Tech Incubator and focuses on commercialising university research.

• Its portfolio includes companies like Foundry Lab (3D printing), Hairspace (AI-powered automated haircutting), and Mint Innovation (e-waste mining), which later attracted funding from Blackbird.

• Fund two, raised in 2017 with $NZ4.45 million, has a 27% internal rate of return and a 0.26 DPI, indicating the capital returned to investors. The firm is still deploying funds from its third fund.

🎉 M&A 🎉

Linktree has acquired Sydney-based social media scheduling platform Plann, founded by Christy Laurence in 2016, for an undisclosed sum marking Linktree’s fourth acquisition. 

• Christy Laurence will join Linktree, and Plann’s tools, including AI-powered features, will integrate into Linktree’s product suite.

• Plann serves 3 million customers across 160 countries.

• This marks Linktree’s fourth acquisition, following the purchase of Koji, Bento, and Odesli. 

  • Koji focuses on selling via link in bio. 

  • Bento focused on more dynamic and customisable bio pages. 

  • Odesli focuses on generating useful smart link. 

• Linktree, has been profitable since its 2016 launch and has ~50 million users.

🎉 Wins 🎉 

👼 BubbaDesk, Australia’s first co-working space with onsite childcare services designed for modern working parents, partners with Canva. Baby-chino’s included in subscription.

📣 Notice Board 📣 

🎓️ The Sydney Startup Careers Fair returns for 2024 on Thursday 26th of September, 2024, from 5:30pm

• Applications are open to any current university student in undergraduate or postgraduate studies. More information here!

🚀 Overnight Success is co-hosting a meet-up & panel in Melbourne, NEXT WEEK!

Click on the image below to find out more & register 👇️ Free to attend but spots are already being snapped up, so get in fast!

🧠 KaaS (Knowledge as a Service)

Gem’s Pick 💁‍♀️ Diaspora.nz by David Booth

• A podcast profiling the founders, innovators, and emerging leaders of the great Kiwi expat community, hosted by David Booth (and occasionally a guest co-host!). David is the founder of OnDeck and is now also an Entrepreneur in Residence and Investor at Blackbird Ventures - and an awesome podcast interviewer!

• I really enjoyed listening to two episodes from the most recent season, with Victoria Ransom (who exited to Google for $450B and now runs a new kind of remote school) and Rachel Carrell (founder & CEO of KoruKids, Europe’s largest childcare platform). Talk about serious powerhouse female-founders. Highly recommend a listen!

Will’s Pick 💁‍♂️ SEO for the AI Era by Sam van den Nieuwenhof

• This article by Sam explains the key points for SEO as we transition into a AI powder search era in super simple language. The piece uses examples from the Aussie ecosystem and I love that he picked businesses at all stages. A unicorn, rapidly growing and one to watch.

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‘Til next time,

👋 Will & Gem