There are 2 major things that have happened in AI startup news. Leonardo AI have been acquired by Canva, and an Aussie seed stage startup raised a MONSTER round.
You don’t need to work in tech to have heard about the 2 ex-Atlassian co-founders Andrew Pankevicius and Alexander Valente joining their 3rd co-founder Lucas Sargent creating an AI startup and getting backing from top-tier Blackbird VC and Atlassian Ventures (clearly no bad-blood there!)
Why is it so special? Redactive AI is the only developer platform that solves for the missing AI engineering and security skill-sets lacking within enterprise software teams.
The vast majority of businesses are turning to AI for improvements to operations, but there are a few major concerns, namely security and permissioning. Redactive AI aims to solve this through enabling large enterprises in high regulatory environments to access AI tooling.
Redactive AI is already being used two large Australian financial service organisations as their Responsible AI platform of choice, helping roll out GenAI use cases to over 500 employees each, along with frontier technology companies building AI native applications for security conscious enterprises.
Unlike Co-pliots and off the shelf AI tools, Redactive focuses on creating the gen ai capability for the organisation to build their own usecases. Redactive AI’s tooling enables enterprises to securely use Generative AI applications from scratch, bolstering the capabilities of their own software to create their own personalised IP for their customers & employees.
I am thrilled to be chatting to Alex, who has the kind of casual style that can only come from raising over 11 million dollars. With a branded cap and stylish t-shirt, he’s definitely silicon valley-esque, which might be explained by the extensive time he’s spent there. But don’t let the potential swagger fool you, he is deeply passionate about his customers and solving problems and has been doing so for some time at the biggest tech startups in Australia.
Hardware for racehorses ...
Alex is either an academic or a sucker for punishment (or both!), with an electrical Engineering plus Law Degree.
“I love study and what I love about electrical engineering is that it’s an international skill set and translates across the globe - you see that with software it can help people across the world and is not language-dependent.” When it comes to law “.....I realised I’m more of an engineer….” During uni he met some people in startups and “got hooked on the sector”.
I counted exactly zero wrinkles on Alex’s face, but Redactive somehow isn’t his first startup “Leaving uni I tried to start my own hardware startup” (we told you he was a sucker for pain) but it was great learning which Alex clearly leveraged in knowing how startups fail.
“I built gate centres for racehorses to measure whether they were injured. I still think it's a cool idea but it’s a difficult go-to-market. I learnt a lot about business and how to service customers.”
When Alex realised his previous startup wasn’t going to fulfil him, he decided to learn from the best - at Atlassian working on their enterprise data centre products..
…to Atlassian and Immutable
At Atlassian, Alex was helping global businesses in how to utilise their software and solving business-specific challenges, including data residency and cloud operation, plus how 3rd parties can use enterprise requirements that companies have.
Alex also worked on ‘insight’ at Atlassian - supporting developers in extending software that already existed.
“At the time I thought it was a niche job but realised that meeting these really difficult requirements - unblocking the blockers is critical” Thus taking on that challenge at his own startup for Redactive.
Clearly there were no hard feelings after Alex left - “[Atlassian] have been outrageously supportive - they invested in us!” - he is referring to Atlassian Ventures contributing to the seed round, but more on that later.
Clearly keen to get closer to the fast pace of growth stage startups, Alex moved from Atlassian to Series C startup Immutable (Australia’s gaming and crypto darling) as a Senior Product manager. Turns out that despite their notorious employee benefits, it was no slouch!
“Gaming coupled with crypto and making products for developers ... .it's the fastest possible moving industry and a really awesome business - the co-founders are some of the most awesome people to work for and want to build world-changing technology” - Alex may have just helped them get a few new hires with that!
At Immutable he continued his work “supporting people to build the applications they want to build. Unblocking people is empowering - you can do a lot of good in the world.”
Taking the leap and bringing friends along
With the dream career as an employee, it's a wonder why Alex chose to quit what was clearly working for him “I wanted to do a startup, that sense of responsibility and to create my vision. But specifically, this is the problem I want to focus on. Both of those things needed to be present in order for me to go and take that risk.”
He admits he couldn’t do it alone, and needed his other 2 co-founders ready to take the (non zero risk!) plunge. “What excites us the most is developing the vision and going deep in the problem space. We genuinely think we can have a large impact on people using AI - that is way more exciting than the initial ‘i want my own thing’.”
Turns out Alex has been making friends across every life stage “Lucas and I were in the same year at middle school - I’ve always known him to be a great AI engineer and we were in the same Age of Empires group chat!” Andrew and I worked together at Atlassian - we were always spitballing stuff together”
Turns out a lot of the Redactive team thought highly of Alex and his co-founders before taking the leap “A lot of our early team were former colleagues of ours willing to take the risk with us. The superpower of our team is the ability to communicate openly.”
The path to $11.5 million
Though clearly a very technically proficient team with a technical product, the team ensure wider audiences can understand the Redactive offering in their blog they mention “Unlike Co-pliots and off the shelf AI tools you hear so much about, Redactive bolsters the capabilities of an organisation’s software teams so they can create their own GenAI intellectual property for their customers & employees.”
(This author has become better at prompting) “Please explain it like we are 5?” “Redactive helps enterprises move fast with AI, safely. We do that by helping internal application developers access permission sources live with live data sources. We are able to do this securely and without leaking data. On top of that we offer substantial uplift to their security team and enable their whole company in a safe and responsible way.
They need capability and we need multiple things to ensure they are secure, powerful, performing and all of these things require a substantial amount of work.
We don’t just sell the application. Copilots and app upsells are siloed application products. We help a solution applicator to suit the company's needs.”
It's not just about the engineers
This author speaks to AI startups daily, and there has been rhetoric here in Australia and globally about the difficulty hiring for AI engineers (SOURCE).
“I think hiring anyone is difficult. When you're an early stage company and people don't know who you are, it's hard.” Joining a company with little brand name and taking a leap at a startup definitely isn’t for the faint-hearted.
“What we found is that hiring AI engineers is easier when your problem becomes more interesting - they are excited to work with us.”
But it's not all sunshine and daisies - “Where we have struggled is hiring for other roles. We have a (very) technical product, what Australian talent is good at is marketing certain products over others.” We were able to laugh based on HBO Silicon Valley reference - where a deeply technical startup had hired marketing wizards who wanted to sell an entirely different product as it was easier to market.
Under pressure? Don’t be Redactive
The elephant in the room is that Redactive have raised one of the most monster seed rounds the Aussie ecosystem must have seen since 2021. Redactive have been covered by articles such as Forbes.
One must wonder if they are feeling the pressure now “Not really. We are all pretty relaxed.” (Note - baseball cap and t-shirt back this up). “What keeps us up at night is ensuring customers are successful. The main focus remains customer success and satisfaction and that is something picked up at Atlassian. That's how I think of the responsibility. I am more pressured.“
They aren’t cocky though, despite the hype and positive media attention, it hasn't all been smooth sailing “A substantial amount of trouble along the way and we need to battle test over months. We have to test selling via different channels and different iterations of the product and many things fail along the way.
“An exec from a former employer would say ‘running a business is essentially a series of mistakes that are non-fatal.’ We get things wrong all the time and you have to keep pushing forward to find the things that resonate. What you see today is something that does resonate - but it didn't always look like this.”
Advice for AI startups looking to raise?
The big takeaway for readers looking at AI startups, or for AI startups hoping to raise is what Alex refers to as solving a ‘burning need’ for customers.
“What I learnt along the way is that the companies that need GenAI the most are the ones that consume a substantial amount of text. These are companies that have lots of processing which is why we target enterprise customers.
There is no point solving customers that don't have that burning need. I would say if you are looking to raise - find customers that are really experiencing burning problems.” Couldn’t possibly have said it better myself.