This Week in Australian Startups #51, 21st January 2024

Welcome back everyone, 2024 is here. I ended up taking an extra week as you would have noticed with no update last week.

This week’s edition is going to be slightly different - I’ve combed through the top news and funding rounds since the last update on 17 December 2023 and included it all here. This means there’s no global updates as a one off this week - but back to the normal format from next week.

So - what’s the most interesting things happening in Australian startups this week?

Two not so good news stories to start, and a positive one to end.

1. Kiki a subletting platform taking on Airbnb announces a pivot to launch a “girls only club” to help “girls not just survive but thrive”

The best summary of events I’ve read is on Startup Daily, but here’s the tl;dr

• Kiki raised $7 million in a Seed round led by Blackbird Ventures to launch a "Tinder for subletting"

• Kiki pivoted multiple times, shutting down operations in NZ and then Sydney to launch most recently in NYC

• Now they are pivoting again to launch "Girls Who NYC", a women-only social club in New York, which has received significant backlash

With all five cofounders being male, there’s some valid concerns about what this reflects about our ecosystem and the inequality towards female founders in particular.

Unfortunately this is not a new issue or one that is only unique to Australia/New Zealand. According data from Pitchbook male femtech founders raised more money than their female counterparts in each of the last five years despite the fact that more than 70% of femtech companies are founded by women.

The best commentary on LinkedIn can be found on Lucy Wark’s LinkedIn post.

2. The Federal Government is proposing changes to the sophisticated investor rules

If you’re an investor or in VC you’ll know exactly what this means and understand why it’s bad news for the entire startup ecosystem and I’d also argue for the Australian economy. If you’re not, here’s a great summary that Stuart Dullard (Partner at Ashurst) shared on LinkedIn

The Government is considering law reform for managed investment schemes. One of the reform proposals is increasing the monetary thresholds which qualify an investor as a “wholesale client” which, in short, means less regulation and less investor protections. As part of the consultation, ASIC proposed almost doubling these monetary thresholds.

ASIC then went a step further and has proposed that different laws (with like thresholds) which qualify an investor as being a “sophisticated” which means companies can issue shares to these sophisticated investors without a prospectus.

Treasury was not consulting on company fundraising and has not identified any problems in this space (as it has with managed investment schemes). This is important because the sophisticated investor exemption is the exception which high growth innovation companies rely upon when seeking investments from angel investors. If we lose or diminish the pool of Australian angel investors this will have a material adverse impact for the traditional funding pathway for high growth innovation companies in Australia.

If you’d like to go deeper, check these out:

• Angel killers: what changes to the sophisticated investor rules could mean for Australian founders (Startup Daily)

• VC partner Alan Jones on sophisticated investor changes: ‘I won’t be the only one wondering if I’m a downturn away from being excluded from investing in the fund I run’ (Startup Daily)

• Why the federal government’s plan to increase the sophisticated investor threshold is terrible news for Australia’s startups (Startup Daily)

• Startup luminaries sign petition against new sophisticated investor asset limits (SmartCompany)

• Angel investors could be shut out by tougher sophistication test (AFR)

• VCs, angels call for qualifying exams — not bank balances — to decide 'sophisticated' investor status (Capital Brief)

• Navigating the Changing Landscape of Sophisticated Investing in Australia by Matthew Browne (LinkedIn)

• Killing the golden goose: how proposed changes to the 'sophisticated investor' test will stifle Australian tech by An Vo (LinkedIn)

• Investment Inequality: The Perils of Doubling Australia's 'Sophisticated Investor' Thresholds by Stew Glynn (LinkedIn)

3. Australian Startup Mafias are coming

Here’s the most exciting news for the week.

One of the biggest allures for joining a startup, particularly early on, is equity. The gamble that it’s going to be worth something huge in the future. Whilst this the business model for VCs, that money is returned back to them and their investors.

It’s different when that money goes to employees, particularly when they have joined early on and are cashing in big time. The two most well known Mafia’s around the world are PayPal - where the founders and early employees have gone on to invest and start companies like Stripe, Tesla, Facebook, YouTube, Airbnb and LinkedIn to name a few.

The second is Revolut - where now its Mafia has raised more money than Revolut itself! Linas Beliūnas shared in a LinkedIn post that ex-Revolut employees founded 100+ startups and raised $2.2 billion in funding, surpassing the $1.7 billion raised by Revolut itself. In just ~5 years.

The three Mafia’s coming up in Australia are;

1. Canva - the AFR reported Canva is closing on a major share sale worth ~$1.5B

2. Airwallex - Startup Daily reports Airwallex is getting ready to IPO in 2026

3. Employment Hero - the AFR reported that despite a $263M Series F raise announced last year, only $125M was filed with ASIC which suggested the remainder ($138M) is likely made up from early investors and staff selling stock to new investors

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Top News

Australia

• The CEO of ad agency Claxon has launched a new VC and growth advisory firm, One03 Ventures (Startup Daily)

• Airwallex sets up for IPO by 2026 (Startup Daily | AFR)

• Stake co-founder Leibowitz to step aside from CEO role after assets under management surge in 2023 (BNA | AFR)

• Canva’s early investors and employees are getting closer to a $1.5 billion payday (Startup Daily | AFR)

• Competition watchdog the ACCC is getting new powers over Big Tech to support media (Startup Daily)

• Brisbane asset management software group RedEye acquired by US giant Accruent (BNA)

• Victoria’s startup ecosystem crosses $100 billion valuation threshold (SmartCompany)

• Will Australian VCs get a slice of the US$400 billion AUKUS pie? (SmartCompany)

• Uluu scales up its seaweed alternative to plastics with Quiksilver collaboration (SmartCompany)

• Shark Tank’s Dr Catriona Wallace bets big on diverse startups (SmartCompany)

• River City Labs to exit The Precinct in Brisbane as CoSpaces appointed new manager (BNA)

• Canva unveils plans for Sydney office tower HQ as staff numbers surge past 4,000 (BNA)

• GoPro to acquire Sydney helmet tech scale-up Forcite (BNA)

• OpenLearning acquires three higher-education marketplaces from Prosple (BNA)

• Pacific Equity Partners takes majority stake in fast-growing EV charger group EVSE (BNA)

• Many start-ups that survived 2023 are delaying inevitable, VCs warn (AFR)

• ASX battles to convince venture capital, founders to think local (AFR)

• Potentia Capital beats EVP for Whispir takeover (AFR)

• Employment Hero’s mega capital raise doubled as liquidity event (AFR)

• Amazon’s Twitch axes a third of its staff as tech cuts enter new year, including Australia (AFR)

• Mighty Kingdom shareholders reject bid by Shane Yeend to overthrow board (The Australian)

• Linktree Appoints New CPO and Two Technologists to Lead Machine Learning, AI and Personalization (Linktree)

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Australian Funding Rounds

This Week (15th January 2024 to 21st January 2024)

• Prota Therapeutics, a biotech company dedicated to developing and commercialising cutting-edge oral immunotherapy treatments, has raised $32M in a Series A1 raise (Startup Daily)

• National Renewable Network, which is building a connected network of solar and storage systems that radically changes the way renewable energy is delivered, has secured $10M from Catalytic Impact Capital (Startup Daily)

Since the last update (18th December 2023 to 14th January 2024)

• Futurerent, the rental income lending fintech, has secured $50M in debt funding for US launch (Startup Daily | BNA | TechCrunch)

• Solbari, which makes skin cancer prevention clothing, has won $10M from Australian Business Growth Fund (Startup Daily)

• Birchal, a crowdfunding platform, raises $2.39M on its own platform (Startup Daily)

• Payble raises $2.5M from OIF Ventures, as the VC also acquires a 48% stake for $1M from Identitii (Startup Daily | BNA)

• Getmee, which provides AI-driven personalised coaching to help you improve their language and communication, has raised a $2.5M bridging round led by Access Capital Ventures (BNA)