June 18th Weekly Start-up Retro

G'day and welcome to Overnight Successes, the weekly newsletter that makes you smarter about the Aussie start-up and Venture scene.

Flying Fox Ventures raised the bar of what it means to be founder friendly…

Introducing the Fox Den (+ interview with Kylie Frazer from Flying Fox Ventures below!)

Being a founder is an all-in bet. Your time, capital and resources are poured into a single entity. In the venture-backed portfolio, the chances of your business returning significant returns are slim. Not zero, but slim. The start-up is quite high on the risk/reward curve.

With high risk and reward at play, we see Venture Capital funds governed by power laws. In simple terms, typically most startups within a fund investment will fail while a small percentage of the startups will generate the bulk of returns.

How can a venture fund give its founders diversity? With a shared carry model! With this new model, all founders who in the fund will share the success of the group. Flying Fox Ventures will allocate 5% of its carry to all portfolio company founders. Typically, a fund will use the 2 and 20 models where 20% of all profits over a hurdle will be kept by the VCs.

How can a venture fund give its founders diversity? With a shared carry model! With this new model, all founders in the fund will share the success of the group. Flying Fox Ventures will allocate 5% of its carry to all portfolio company founders. Typically, a fund will use the 2 and 20 models where 20% of all profits over a hurdle will be kept by the VCs.

This unique model could yield some interesting results. Founders may give Flying Fox access to the cap table when they would otherwise not for diversification. Another interesting dynamic could be founders within the fund looking to help each other more.

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Contents

1. Start-up retro: Summarising the weeks start-up raises with a smidge of context.

2. Interview with a VC: Interview with Flying Fox Ventures co-founder, Kylie Frazer!

3. Notice Board: Signposting key events and opportunities in the ecosystem.

4. Accredited Tweeters: Snippets from Twitter

5. (KaaS) Knowledge as a Service: 2-3 articles to make you smarter. Or share with co-workers to make them think you’re smart.

Start-up Retro!

DeathTech

🌱Willed

• News: The death management platform, Willed, has locked $6M away from a group of institutional investors. The start-up, founded in 2019 gives new life to death planning by allowing users to create their will in less than 20 minutes. The platform can also arrange a funeral and make a bequest. Such as, “I give all my worldly belongings to that pink newsletter”. The business model is interesting - death, taxes and reoccurring revenue. Willed has a $14 a year subscription that gives users unlimited changes to their will, cutting out expensive lawyers. The capital will be used to build out capabilities within the platform, which also extends to cryptocurrency. The timing is on point, the last time I checked my crypto portfolio, I almost died.

ClimateTech

🌱MicroTau 🦈

• News: MicroTau, the manufacturing start-up looking to reduce drag on aeroplanes has raised a $5.6M seed round. The start-up is based on a manufacturing technology that prints nature-inspired properties to replicate their functional properties. This seed round will be used to help scale the manufacturing capability of drag-reducing patterns. The patterns are based on shark skin and have the potential to save commercial aviation US$20B worth of fuel and reduce CO2 emissions. The technology can be retrofitted onto existing fleets. Interestingly, MicroTau is also capable of replicating other animals and plants, including adhesive gecko skin, anti-reflective moth eyes, self-cleaning lotus leaves, and anti-bacterial pitcher plants. (MicroTau Press Release)

Last-Mile Delivery

🌱HUBBED

• News: The final mile delivery service looking to connect “convenience locations” has collected $12M from the Australian Business Growth Fund. The capital comes at a cost of a 30% stake in the business and will be used to help grow the Australian Business… who would have thought. HUBBED technology allows businesses to provide click & collect and returns services to their customers from 24/7 locations. Customers benefit with more convenience and retailers get more delivery options. The ‘network’ which includes 2000+ locations like 7/11 and BP, will grow to over 3000 with new capital and benefits with new revenue streams and foot traffic.

Infrastructure

🌱VAPAR

• News: The female-founded pipeline maintenance software company, VAPAR, has raised $2.5M in seed funding. Pipeline inspections which were typically completed via manual video inspection can now be done in minutes with a few clicks. The global market for pipeline maintenance is around $88B and VAPAR offers a preventative measure to identify issues before they occur. The pipedream of fixing a problem before happens is estimated to save companies around 4-5x the price of repairs. VAPAR is currently inspecting over 100KMs of pipeline inspection a month and will be using the seed funding to expand internationally and build out their team.

FinTech

🌱🅰️Swoop

• News: The funding platform for SMEs and advisors, Swoop, has raised a $9.4M Series A round. The round was led by VC Velocity, Arab Bank Ventures, IAG and WeHo Ventures. The round follows the launch of Swoop for Advisors and will be used to help international growth. Swoop gives SMEs a marketplace of funding options ranging from loans, equities, grants and FX. They partner with a range of major banks and neo-banks. The platform is expected to see an uptick in growth with the current funding climate and has so far helped Aussie SMEs secure $100M in funding.

Venture Raises

• The University of Melbourne has raised $115M to help researchers get their work to market. (Start-up Daily)

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Kylie Frazer - Flying Fox Ventures

Tell us about the journey till now.

I spent 15 years as a corporate lawyer throughout Australia and Asia. Along the way I set up a few businesses – one failed fast and one I was lucky enough to grow to a modest exit. I started investing off the back of that, building one of Australia’s first commercial startup syndicates at Eleanor Venture. I’m now a Founding Partner at Flying Fox Ventures an early-stage venture firm that has backed more than 40 great companies like Mr Yum, Tiliter, Heaps Normal and JigSpace. We are about to launch our next investor cohort so if you are keen to be a part of our investor community, now is the time to reach out!

What trend are you personally most excited about?

I love thinking through what a post-personalized ads future might look like. Don’t get me wrong, I don’t think Apple’s stance on privacy will be the death knoll for the targeted ads sector. Tech, like life, finds a way. However, with many companies reporting a reduction of >95% in ROI on targeted ad campaigns, people are not going to sit around and wait for Big Tech to deliver. I’m expecting to see some innovation in adtech, sure. Perhaps more exciting is knowing I’m going to see plenty of new distribution models as companies are forced to really find where their customers are.

I feel like I may have disappointed people with this answer. I’m supposed to say lab meat or the metaverse. Space! Climate! What can I say? I love to get lost in the weeds of detail. For me, how you do business is just as exciting as where you do business.

What trend is Flying Fox Ventures most excited about and why?

I’m not sure it’s a trend, but we have enjoyed the resurfacing of profitability, capital efficiency and solid business building, as the latest must-haves in a venture round. Too many founders have forgotten how beautiful self-generation can be.

In your opinion, what is the biggest problem more Aussie start-ups should work on?

Connection. Most of us need more of it. I’ve been reading a lot about the rise of spirituality and religion in Gen Z. Are people more likely to seek solace in the metaphysical during times of uncertainty? Maybe. I still think that technology has a key role to play in better connecting us to each other and our country. It doesn’t have to look like social media.

Something you can’t live without?

Dumplings. And fiction. Sometimes together. In the bath.

Pass the mic, what would you like to shout out?

The Cape Banks Circuit in La Perouse is gorgeous. You will never jostle for space on the Bondi-Bronte track again.

Where to find you?

Not on social media! [email protected]. Or in the line for baked goods at Madame and Yves in Clovelly.

Notice Board

• Dream Venture Masterclasses is equipping Indigenous Australians with the connections, capabilities and access to capital to become investor-ready. The free program will provide up to $150K worth of seed funding. More info!

Accredited Tweeters

Knowledge as a Service (KaaS)

• Start-up redflags: what to look out for during the interview process by Royina Bakshi.

• Lessons from The Daily Aus - how an Instagram account became a business that's disrupting traditional news. By Harshdeep Kaur.

• Jeff Bezos: The electricity metaphor. This guy is interesting, I'm sure he'll be a big deal one day. Okay, the reason this is interesting is it's a great talk comparing the dot.com boom and bust to the early days of electricity. Similarities can be drawn to start-ups, and dare I say crypto.

• American Dynamism with Katherine Boyle, General Partner at a16z. It's hard to compress this podcast into a one liner. It's a really interesting conversation and the fundamentals line up with Australia.

Thanks again for reading, if you got this far, please forward it to a friend (or your whole company). There's also now an official email address, [email protected] if you want to say hello.