This Week in Australian Startups #64, 21st April 2024
This Week in Australian Startups #64, 21st April 2024
A huge week… with $1.058B in capital raised this week in the Australian startup ecosystem!
98% of that came from two companies, both operating data centres - NEXTDC ($937M) and Macquarie Technology Group ($100M). Cloud is continuing to heat up, yes Software has been eating the world for some time, but the rise in adoption (and experimentation) in AI has led to an unprecedented demand for Cloud computing.
This article from the Guardian provides a good high level summary, and moving down the chain why water and energy is going to be even more crucial as demand from AI increases. It’s why companies like Amazon invest so much into water sustainability, with their specific goal to be “water positive” by 2030 - just last year Amazon announced new projects which will deliver 1.5B litres of water each year to local communities.
It’s not just out the goodness of their own hearts, but because their data centres need this precious resource they are consuming, at a rate that is only going to increase further with demand for AI.
In other news, doom and gloom headlines continue this time in an article published by the AFR ‘‘We’re not lemmings’: What happens when Blackbird drops a start-up’
The first paragraph reads “Australian start-ups are being warned the boost of receiving funding from big-name investors, such as Blackbird Ventures, can sour if they lose faith, with other VC firms admitting to avoiding backing discarded companies.”
In fairness the article does provide enough factual information to really understand what is going on, but does fail it’s overall narrative - “startups be warned, raising from Blackbird means you could fail if they don’t invest again”.
Each of the three startups used as examples from the AFR who did not receive follow on funding from Blackbird only had positive things to say about the VC. They each either secured follow on funding from other investors or have continued to operate.
“Blackbird’s strategy is perhaps the purest exemplar in Australia of textbook venture capital where a small number of start-ups in its portfolio that are growing well receive ever more investment, while others are cut off from cash.”
“Cut off from cash”, I think that’s quite an inappropriate term to use. An investment in one round is simply that, it is not a commitment to invest in future rounds - there is no startup being ‘cut off from cash’ by Blackbird as far as I’m aware.
“But a decision by Blackbird not to “follow on” one of its investments was perceived as an “incredibly negative signal”. “We’re not lemmings… but it’s hard to get past,” the venture capitalist said. “You need an incredibly clear narrative to overcome it.”
If your strategy is to follow, then certainly you will do that. If Blackbird doesn’t invest, then you won’t either. Indeed if you have a clear narrative, as Blackbird does, then you will invest in companies on the individual merit of that investment not because another investor is or isn’t - unless they share the same narrative as you.
“Blackbird has recently pursued a strategy of doing more early-stage investments than its rivals. AirTree makes the second-highest number of investments of the large funds, while Square Peg makes fewer and is seen as more loyal to its portfolio companies.”
Sounds like different strategies to me.
Blackbird invests in more early-stage companies, not an unusual approach for many large VC funds across the globe. This strategy allows you to get in early, make more high risk bets, and with any high risk bet it means there is likely to be more that don’t pay off - but those that do, pay off big just like Canva has. It also gives you an advantage if you do choose to invest in future rounds.
The next quote from Alexandra Gifford, chief of staff for Blackbird’s investing team sums this point up nicely;
“But we need to see significant progress towards our investment thesis to invest more capital,” she said. “Even when we don’t follow on, the companies remain part of our portfolio and we continue to help them where we can.”
And the quotes from the three companies who did not receive follow on funding, sounds like that is exactly the experience they’ve had.
Bill Kerr, founder and CEO of Athyna who is a Limited Partner of Blackbird shared this comment in a discussion on LinkedIn over the article
A better headline perhaps - “Blackbird has an investment thesis, and when companies don’t meet that thesis then it might not invest in them.”
Australia
Top News
Nasdaq-listed Brisbane EV charging venture Tritium collapses into receivership (Startup Daily)
Build Club is launching an accelerator for AI founders to take on the US (Startup Daily)
_SOUTHSTART teamed up with the Adelaide Economic Development Agency to launch an accelerator for the SA capital’s startups (Startup Daily)
Eucalyptus head of growth Matt Rossi departs to launch his own marketing startup, Oodle (Startup Daily)
DroneShield raising $75M as contract pipeline for anti-drone technology grows to $500M (BNA)
Visa Foundation backs First Australians Capital with $2M investment (BNA)
Macquarie Technology to acquire two Sydney data centres for $174M (BNA)
Former Mighty Kingdom CEO sells off shares, scopes out class action after "catastrophic failure" (BNA)
Investible forms $US150M fund in Singapore, says 'Made in Australia' push is 'overdue' (AFR)
Uber, GoCatch should negotiate an outcome, judge says (Capital Brief)
Rampersand appoints two new partners ahead of 'golden decade' for VC; Taryn Pieterse and Andrew Poesaste (Capital Brief)
Olivia Grivas has been promoted to Investment Principal at Skip Capital (Olivia Grivas)
Jumar Bioincubator names the first cohort of its early-stage biotech startups (InnovationAus)
A year after Milkrun’s demise, the quick commerce founders are back (AFR)
Kiki founder Toby Thomas-Smith shares an update on its new new approach (Toby Thomas-Smith)
Funding Rounds
Preplocal, B2B food distribution marketplace, raised a $200K pre-Seed round from Skalata (Startup Daily)
Sumday, a carbon accounting startup, raised a $5.3M Seed round led by Planeteer Capital (Startup Daily | SmartCompany | BNA)
Bygen, an agricultural waste conversation startup, raised a $2.6M Series A from Breakthrough Victoria and Alberts (Startup Daily | BNA | Investible)
Diversity Atlas, a diversity, equity and inclusion (DEI) data analytics platform, raised $6M bridge round from Gener8 VC (Startup Daily | SmartCompany | BNA)
MGA Thermal, a renewable energy startup, has raised $5.7M (Startup Daily | SmartCompany | BNA)
NEXTDC, an Australian data centre operator, has raised $937M from institutional investors as it looks to open up to retail shareholders (BNA)
Macquarie Technology Group, an Australian cloud, data centre, government cyber security and telecom company, has raised a $100M underwritten capital raise to help fund the acquisition of two data centres (BNA)
Deeligence, which uses AI to make legal due diligence better for M&A lawyers, has raised a $1M pre-Seed round (Elena Tsalanidis | AFR)
WorkRex, an AI marketing and growth assistant for SMBs, has raised a $220K Seed round from Skalata (mivision | Skalata)
Tability, which provides simple OKRs and AI-powered goal tracking, has raised an undisclosed amount from Empress Capital, Investible, Jelix Ventures, Right Click Capital and Skalata, alongside Innovation Bay’s angel investor community, Horizon (Innovation Bay)
Around The World
Top News
Tesla recalls the Cybertruck for faulty accelerator pedals that can get stuck (TechCrunch)
China Orders Apple to Remove Popular Messaging Apps like WhatsApp, Signal and Telegram (WSJ)
'DePIN' Is Venture Capitalists' Latest Crypto Obsession. Can It Match the Hype? (CoinDesk)
Andreessen Horowitz closes $7.2 billion for new funds (Axiom)
Stanford University releases it’s seventh edition of the AI Index Report which measures trends in AI (Stanford)
Apple loses smartphone crown to Samsung as Chinese rivals gain ground (FT)
Boston Dynamics’ Atlas humanoid robot goes electric (TechCrunch)
23andMe CEO Anne Wojcicki Plans to Take Company Private (WSJ)
Colorado law extends privacy rights to the neural data increasingly coveted by technology companies (NYT)
Inside Amazon’s Secret Operation to Gather Intel on Rivals (WSJ)
Amazon says 'Project Curiosity' wasn't a secret operation to spy on rivals (Quartz)
Google fires 28 employees after sit-in protest over controversial Project Nimbus contract with Israel (TechCrunch)
Lacework, last valued at $8.3B, is in talks with Wiz to sell for just $150M to $200M, say sources (TechCrunch)
Samsung shifts executives to six-day workweeks to ‘inject a sense of crisis’ (The Verge)
Meta launches Llama 3 (The Verge)
The European Commission could approve Apple’s plan to open the iPhone’s NFC technology as early as May (The Verge)
Post News, the a16z-funded Twitter alternative, is shutting down (TechCrunch)
Webflow acquires Intellimize to add AI-powered webpage personalization (TechCrunch)
Funding Rounds
Lawhive raises $12M to expand its legal tech AI platform for small firms (TechCrunch)
Ramp raises another $150M co-led by Khosla and Founders Fund at a $7.65B valuation (TechCrunch)
Cape dials up $61M from a16z and more for mobile service that doesn’t use personal data (TechCrunch)
Equities platform Midas raises $45M Series A as fintech retains its sparkle in Turkey (TechCrunch)