This Week in Australian Startups - 23rd November, 2022

Arguably the biggest news this past week in has been Deliveroo making the call to completely exit the Australian market, with absolutely no notice to either restaurants or drivers.

In some cases, drivers on their lunch break only found out when they tried to log back in to pick up more work and restaurant owners via social media posts only hours after meetings with Deliveroo’s marketing team.

“I was working in the morning, stopping at midday and then suddenly when I wanted to start working again, this notification pops up on the screen of the app,” Rodrigo, a Deliveroo rider said. “And I went to the emails [to] check [and they said] that they cease immediately, effective immediately . So I couldn’t even finish the day yesterday.”

There’s a common thread here with all the recent layoffs across tech, a real problem exists in communicating bad news. It’s almost as if tech executives don’t realise the impact, or perhaps simply just don’t care enough.

Deliveroo declared it “cannot reach a sustainable and profitable scale” without significant new investment. In a post-covid, post-lockdown world the decline in delivery has been coming - NBC did a great piece about how it’s changing in the US.

Running any marketplace business has challenges. For food delivery apps, they need to balance restaurants, customers and drivers. In such a crowded marketplace, it means you’ll always be spending money to continue to acquire customers you already “own”, or have in your database. For most customers (myself included), I have all the apps. If I happen to get a notification offering a discount, that’s the one I’ll be using to order my dinner that night.

For restaurants the cut charged can be in the region of 38%! With other costs increasing (wages, ingredients, materials) this is not sustainable for restaurants that are not big chains like McDonald’s. There’s more businesses are taking actions like Lucas Restaurants and are bringing things back in house, opting to not participate in the food delivery app market - either stopping delivery all together or doing it themselves.

For many customers who have credits/vouchers (I saw a post on LinkedIn where someone just purchased a few thousand dollars worth of vouchers), they’ve been left in the lurch by Deliveroo - here’s the moment for competitors to swoop in and Menulog is just doing that by accepting Deliveroo vouchers.

My take on the gig economy is that a fundamental change has started, and these models will need to change drastically. Majority, if not all, gig economy platforms and marketplaces have relied on cheap labour as they don’t directly employ the workforce that makes it all possible - no benefits, no entitlements, no employment liability or cost. This is changing and making it more difficult for companies like Deliveroo to be “profitable” (Deliveroo is still yet to turn a profit). In the UK, Uber drivers won a landmark case classifying them as employees not contractors.

Changes like this are around the corner in Australia too, the Albanese government has promised to improve conditions for gig workers with new legislation on the cards for 2023 - including giving the Fair Work Commission, the power to regulate “employee-like” forms of work.

Top News

• Deliveroo just shut down in Australia, more here

• Voly founder confirms it’s the end for his grocery delivery startup, more here

• RBA and ASIC rip into the ASX after dumping its $250 million blockchain experiment, more here

• iOS developers say Apple’s App Store analytics aren’t anonymous, more here

• Musk antagonist George Hotz hired to fix Twitter search — he’s got 12 weeks, more here

• Alphabet Seeks To Cut 10,000 Poor-Performing Googlers, more here

• Consumer data right startup TrueLayer puts Australian operations on hold, more here

• TikTok begins testing an early version of its platform research API, more here

• Bob Iger steps back in as Disney CEO, replacing Bob Chapek, more here

• Musk’s impact on content moderation at Twitter faces early test in Germany, more here

• Meta’s surveillance biz model targeted in UK ‘right to object’ GDPR lawsuit, more here

• Elizabeth Holmes sentenced to 11 years in prison for Theranos fraud, more here

Australian Funding Rounds

• Byron Bay-based Subpod completes $800,000 equity raise, more here

• Women-founded social network Kindship raises $1 million to support parents raising kids with disabilities, more here

• Software development platform Buildkite raises $31 million Series B, more here

• Advanced Navigation closes mammoth $108m Series B backed by KKR, more here

• Engineering design startup ClearCalcs nabs $2.5 million raise for global growth, more here

• Retail media startup Zitcha raises $4.7 million, more here

• Energy sector infrastructure inspection scale-up raises $15 million, more here

• October Funding roundup by Techboard

International Highlights

• SponsorUnited secures $35M investment to build out its database of brand sponsorships, more here

• Spain’s Cobee raises $41M for an employee benefits ‘superapp’, more here

• Custom jeweler Wove bags $3.85M to make engagement ring purchases less stressful, more here

• Index Ventures launches £253m seed fund, more here

• Leta, a Kenyan supply chain and logistics SaaS provider, raises $3M to scale in Africa, more here

• SigmaOS, a web browser for the modern worker, raises £3.4m. More here

Events

• Melbourne: Cut Through Angels - Feel Good Fintech, November 24

• Brisbane: Silicon Drinkabout, November 25

• Perth: First Nations X: Indigenous Business Opportunities, December 7

• Sydney: Migrapreneur Meetup, November 25