Blackbird Equity Targets, EVP Fund, AI Inquiry, ExoFlare, Hammertech

Thanks to our sponsors for helping to make this episode of The Startup Retro possible.

Rippling

Are you a founder overwhelmed by HR, payroll, onboarding, and IT tasks? Simplify with Rippling: an all-in-one platform for your global workforce.

Get 3 Months Free 

Google for Startups

Google for Startups Cloud Program Get up to US$350,000 of Google Cloud and Firebase credits for two years for your startup plus technical, business and financial support through the Google for Startups Cloud Program. 

Apply now

Google for Startups AI First Accelerator The Google for Startups AI First Accelerator is a 10-week equity-free accelerator program for Seed and Series A stage Australian startups building AI&ML-driven platforms and products.

Apply now 

Teamified

Build a top-notch team fast with Teamified. Teamified offers fractional CTOs, contractors, and remote team members from the Philippines, India, or Sri Lanka. Cut hiring times by 50%.

Get started 

The Day One Network

The Startup Retro is part of Day One, the podcast network dedicated to founders, operators & investors.

For broader updates on the Day One network, including news about other shows and network-wide updates, sign up for the Day One Newsletter. We are dedicated to creating content that helps Australian founders succeed.

Sponsor the show

Want to become a sponsor? Send us an email.

Follow Day One on socials

• Twitter
• LinkedIn

[00:00:00] Gemma Clancy: The Startup Retro is recorded on the lands of the Kabi Kabi and Wurundjeri people.

[00:00:04] Will Richards: G'day and welcome to the Startup Retro, a weekly show brought to you by the team behind the Overnight Success Newsletter, where we help you level up on the Australian startup ecosystem by giving you an insider's view on Aussie startups and venture capital.

[00:00:18] Gemma Clancy: The Startup Retro is brought to you by Day One, the podcast network for founders, operators, and investors. I'm Gemma Clancy.

[00:00:25] Will Richards: And I'm Will Richards, and in today's episode, we dive into the latest data released from Blackbird Ventures showing how they're performing against their gender-based investment targets. And I'm going to chat with Kirstin Hunter and Preethi Mohan, who we've been collaborating with for several months now to provide better, more regular reporting on how VCs are performing generally in this area.

[00:00:44] Will Richards: We also chat about EVP's new fund structure, which potentially might get up to 500 million in assets under management. And we also share a resource at podcast that will help founders research competitors in a way that they've probably never thought about before.

[00:00:58] Gemma Clancy: And of course, we'll deep dive into the startup raises that we found the most interesting this week, including one that could help get more eggs back onto our supermarket shelves.

[00:01:12] Gemma Clancy: All right, Will let's jump in the headlines this week. The thing that most caught my eye was an article in the AFR that was, um, covering Blackbird releasing some data around how they've gone in meeting their targets to have greater equity in their investments across female mixed teams and all male teams.

[00:01:32] Gemma Clancy: And the headline was quite jarring probably for anyone like, uh, probably from the Blackbird team, but it, it's fairly reflective of, of actually the blog posts that they brought out themselves, um, which essentially saying that you know, they're not really happy with the numbers. It's not, not good enough.

[00:01:47] Gemma Clancy: And that's quite a, quite a refreshing perspective to hear, um, because yeah, when you look at the data, it is a bit disappointing to see that certainly all-female teams or all women teams really didn't receive much, um, in the way of funding from, from Blackbird. And that's, um, that's really disappointing, I guess, because Blackbird is, is, you know, Australia's leading venture capital firm at the moment.

[00:02:09] Will Richards: So Gem, let's, let's jump into the numbers, that were reported. And I think going, following on from the conversation we had with Chris last week, it's, it's really important to, to work out, you know, is it the, the number of deals going in, or is it the amount of capital being put into the startups themselves? So I know you've done some research and some analysis that actually wasn't in the article. And I think percentages in this situation tell a very different story to just absolute numbers. So what did you find out?

[00:02:34] Gemma Clancy: Yeah, so Blackbird, the reason that they're reporting is because they made a commitment as part of this new initiative called EquityClear to report on this data and EquityClear has set out kind of a framework or the ways in which they want VCs to be reporting on this data so it's, you know, somewhat consistent so we can look at different firms and compare apples for apples, I guess.

[00:02:54] Gemma Clancy: And so the way that they've reported the data is that, well, they've looked at both the composition of their own investment team, um, as well as the, um, composition of the funding that's gone towards portfolio companies. And they also look at how many companies and they're adding to their pipeline for considering doing best in these companies or not, how many of them go through to getting a meeting and how many of them go through to ICO investment committee stage. And when we look at, um, the total companies that were added to Blackbird's pipeline, they, um, saw just shy of 1800 total companies added to the pipeline. And of those companies are 10 percent of them were all women teams and 30 percent around 36 percent of them were mixed teams.

[00:03:37] Gemma Clancy: Then when we get to the meetings. It's relatively similar. So, you know, slightly less than 9 percent were all women teams and 27 percent were mixed teams. And then when you get to IC stage, the all-women team number really drops significantly. It goes down to about 4 percent of all the companies that got through to that stage. And then the mixed team number also dropped slightly from, I guess, the initial, um, overall pipeline number down to. 29%. And then when you look at final funding figures, it's really reflected there. So the percentage of, of new investments, um, for FYI, 24 into all women teams was, uh, 13 percent and as a dollar, um, percentage, or it's 12 percent into all women teams and mixed teams, 19 percent and 23 percent respectively.

[00:04:25] Gemma Clancy: Okay. That's just, um, obviously far too low, um, if we're looking to get to equality. Yeah. So it's a really, really interesting topic. And I think it's, it was really good to see just the, the main line that I took out of, um, the blog article that Blackbird published was we own our numbers, regardless of the progress we've made on certain metrics, we know that we still have a long way to go.

[00:04:46] Gemma Clancy: And so they're certainly not shying away from that, which is great. And we're going to have a bit of a conversation with, um, a couple of thought leaders in this space, Kirstin Hunter and Preethi Mohan, um, later in the podcast, uh, around some of the data that they've been pulling out from across the ecosystem on this issue. So it'd be really great to chat to them.

[00:05:04] Will Richards: It's quite interesting that they get 18,000 deals a year.

[00:05:07] Gemma Clancy: 1,800, yeah.

[00:05:08] Will Richards: 1,800, sorry. Get submitted and then only 40 percent get a meeting. 60 percent of startups that submit their decks to Blackbird just get a hard no at the top of the funnel.

[00:05:17] Gemma Clancy: I'm not surprised, actually.

[00:05:19] Will Richards: I guess, yeah, it probably is the case though, like every, they're the fund that probably gets the most pitches, I'd say.

[00:05:26] Gemma Clancy: Yeah, well, I guess if you want funding, you go to Blackbird and that's why they're there. That's why they have so much power because they've got this great brand and they've got great reputation. And then people think I want funding. They probably send their, their deck to Blackbird as almost a, as a default, or maybe after they've sent it to a few other people for a sense check. And then they just send it to Blackbird as a default. Cause if you can get funding from Blackbird, it's a really great credibility signal. And that's why it's so important that funds like this, I guess. Uh, funding women because it gives them that credibility signal.

[00:05:54] Will Richards: Cool. So, Gem, another headline that grabbed my attention this week was, um, one around grant money and grant money from the Australian government going into businesses. And this isn't just numbers going into the startup space. It's, it's grant money going into SMEs all across the country. So, um, I tried to pull out what, like, what is important for the startup space in these numbers. Cause the numbers are quite large and it does also incorporate the R&D Tax rebate side of things to the report was done by Deakin University at a research centre that focuses on small and medium enterprise businesses, but it found that essentially.

[00:06:31] Will Richards: Of the 144,000 firms that received 2.4 billion of grant funding, 1.3 billion of that grant funding went to low-performing companies. And when you sort of say low-performing companies, okay, how do you define that? It was Sort of suggesting that these companies are basically being subsidized or only surviving on the grant funding. So they're, they're basically built to then just go out and apply for more grants, receive those grants, and that sort of pays for their next year of survivorship.

[00:07:02] Gemma Clancy: That's an interesting definition, because when I think a lot of VC-backed companies, you could claim that.

[00:07:08] Will Richards: Not profitable.

[00:07:09] Gemma Clancy: A lot of VC-backed companies couldn't survive. Um, you know, another year, maybe even two, three years, especially deep tech companies couldn't survive without VC funding. Does that make them low-performing? That's interesting. I don't know. It's just an interesting definition.

[00:07:22] Will Richards: I know you meant, I think it's, if you're consistently going to grant, um, you know, resubmitting, if your, if your business is set up to just claim grants to pay everyone's salary, then potentially, um, that business shouldn't really be active. Um, I guess the big, well, it is, you know, there is a pool of cash that's allocated for grants. And, you know, over one-fourth of that money is going to these businesses that are basically just using it to survive to the next round. I would have loved to go deeper in this and the report doesn't quite, but, you know, are these, you know, are some of these charities that basically need to do this sort of thing or are they not for profits that need to do this sort of thing? And they're never necessarily going to be high-performance or profitable businesses, um, just by nature of the thing. So, I think there's a little bit of that going on here as well. But for the startup space. I think we

[00:08:10] Will Richards: need to be a bit more vocal about where this money goes. And are there opportunities in the startup space that are being, that are basically missing out on grant funding that need it to enable more startups, maybe their platforms, maybe their startups themselves who are in the R& D process, who aren't actually getting the funding, who, who really are eligible and they're building something quite interesting that could create a lot of jobs or wealth for Australia.

[00:08:36] Gemma Clancy: Yeah, sounds like we need better data, greater transparency around that and maybe greater kind of detail in the data that separates companies that are maybe at that early stage and growing and therefore they're not going to be profitable. So they rely on this kind of funding from those companies that have been around for a long time and maybe them needing to go back for grants is a sign that they should be seeking out a different business model.

[00:08:58] Will Richards: Exactly right.

[00:09:00] Gemma Clancy: So there was another interesting, uh, government slash policy-related headline out there in the media this week, which was around the, um, public hearings for the adopting artificial intelligence inquiry that was held at parliament house this week. They've held previous public hearings earlier in the year in May. Um, but they held another couple this week and they were representatives there from big tech. So like Adobe and Atlassian, um, human rights organizations, legal experts, groups, um, representing employees and professionals, et cetera. And they're all kind of. There to talk to the government about, I guess, their concerns around AI, the opportunities for AI and how the government should do a better job of maybe managing, um, this emerging technology. One of the more interesting, I guess, things that came out of it was from the Media Entertainment and Arts Alliance and also the Australian Voice Actors Association, who would essentially like they're representing people in creative industries, actors, you know, obviously voice actors as well, and they want to make sure that their jobs aren't being replaced.

[00:10:03] Gemma Clancy: And they were suggesting that taxes should be imposed on businesses that replace staff with AI tools, which is a really interesting concept. And I'm not really sure what the detail is around how that would be implemented, but that's 1 suggestion. And they also wanted to see, um, some updates to employment laws to ensure that workers were consulted on how AI tools are being used in their businesses. So it's just a really interesting space to look at. And I think, you know, especially for startups who are developing AI-related tools, they're just going to be really conscious of how industry bodies like this are kind of, uh, keeping an eye on what's happening and certainly, you know, don't want any technology to get in the way of the rights of, of their kind of members or their constituents.

[00:10:45] Will Richards: It's interesting. I think it's like, you have to be careful about what precedents are set because these are industries, obviously the ones that are being impacted first by the AI revolution, let's say, um, in its current form and what precedents are set in this world. That will then affect every other industry moving forward. I sort of know though, like you've got these like unions sort of saying, Oh, let's tax these AI tools or these AI companies. I'm not sure if that's going to work, but then on the other side of the fence, I've been reading about these estates of, of famous movie celebrities or, you know, Um, voice actors who have passed away. And now that they've passed away, the estates are essentially just like, Oh, how can we make more money out of, you know, the IP of, of our dead relative essentially. And there was recently a transaction of a few celebrity voices being sold to audiobook companies to just like, Voice over audiobooks and they're going to take a fee on that voiceover and use AI to basically reread the book in the voices. So you'll be able to get your book read in whatever voice you want at some point. And I think it's just interesting of like, where's the economics? And if the economics are in that person's favour, they're like, yeah, I'm happy to sell it. If the economics aren't in that favour, they're like, oh, let's tax them.

[00:11:56] Gemma Clancy: Yeah. Well, that's really interesting because I know that the, so the media entertainment and arts alliance, the, the union that's kind of made submission to this public hearing, um, they, uh, I know from my advertising days that they're kind of the ones responsible for setting the standards for what are the contracts that should be put in place for, um, actors and voice actors around how their voice is going to be used. So they'll say, you know, best practice is X, Y, Z. Um, and so they're essentially wanting to have a seat at the table to say, well, If it's, if it's a transaction that's happening around this voice actor's voice being used for the purpose of AI, we want to know what the rules are and we want to have a say on what those rules are. So that's why I guess they're having a say there because they, yeah, they want to make sure that, um, yeah, if a voice actor's voice is, is used that they are getting compensated appropriately for it. Um, whereas right now, I guess it's, it's pretty opaque what the rules are, um, and so it's going to be interesting to see how that evolves. And if you're like a, you're a tool that, you know, Say users, you know, our voices may be like those kind of meeting transcription services or like even podcast, you know, tools like the way you can get, get an AI voice to fill in the gaps. Um, you can have to keep an eye on regulation coming out of things like this.

[00:13:05] Will Richards: The next headline that also caught my eye was EVPs new fund and. EVP is a venture fund that invests in sort of series A, B2B, SaaS world.

[00:13:15] Gemma Clancy: Pretty active. Like we've seen quite a few of their, their raises over the last couple of years.

[00:13:19] Will Richards: Yeah. 10 investments a year. They've got 300 million under management at the moment and about 40, 40 investments in their portfolio.

[00:13:28] Gemma Clancy: Amazing.

[00:13:28] Will Richards: But this fund's quite slightly different to their previous funds and the fact that it's a An open trust, open unit trust, which means, uh, investors can basically put money in and pull it out when they'd like. There are some limitations to that. You can't pull it out every day, but there will be sort of blocks where you can when there's a liquidity event, for example, which compared to a traditional fund where you sort of lock your capital away for 10 years. What's interesting is they've, they've raised. 20 million, um, for this fund already. And that's hence why they've had the announcement, but they expect this fund basically to grow to 500 million over the next decade. And it's going to be open at this stage. This is going to say, we're never going to close it. It's going to be a lifetime fund. That's that always exists. And it will continue to invest in. Startups that they've invested in through their traditional methods who now need more growth capital, but would like to stay involved with the EVP team. So they've got startups like ShipIt and Pendula and Deputy who are high performing and basically they want to ensure that their pro rider rates. Pro rata, um, options are exercised and they take full advantage of their, um, high-performing assets.

[00:14:36] Gemma Clancy: Yeah, that's super interesting. It's like, I guess the, the, the success of their portfolio and the size of their portfolio and the fact that they're now raising like a fifth fund is, has allowed them to explore a different model. For engaging with investors and it'd be interesting to see if more VC firms as the ecosystem matures and these funds get bigger and bigger, if more funds, um, look to do things like this, cause it sounds like a pretty nice complimentary model to the traditional VC approach.

[00:15:04] Will Richards: Yeah, I think it is something we're starting to see. So you've got Startmate's new continuity fund as well, which is a similar idea to this. It's not, I don't think it's an open fund like this one is, but the mentality of we want to back our high-performing assets. Um, no question asked. It's that same idea. Um, and I think it is. It really is a sign of the ecosystem maturing and the early investors basically want to make sure that they capture as much value from their high-performing startups as possible.

[00:15:37] Gemma Clancy: So, Gem, we saw some pretty cool startups raise capital this week. Did you have a favourite?

[00:15:41] Gemma Clancy: I certainly did. And the one that I picked was mainly because it's just so topical in the news right now. And I don't, I kind of wonder whether the team actually intentionally. Like announce the raise now, but it's, it's almost too much of a coincidence, but what I'm referring to is the raise from, um, Exoflare and Exoflare is a biosecurity threat management platform. So what they're doing is, you know, replacing paper records, um, that were used or are traditionally used for tracking visitors and other movements. Um, in agricultural, um, realms of producers, transporters, processes, everyone involved in the kind of movement of agricultural goods, um, with a platform that is about building, uh, biosecurity resilience across, um, this sector. And, um, they're already working across pork, cattle, sheep, goat, chicken, um, and dairy industries. So it's a really, really interesting like startup from the perspective that obviously right now if you're on the Eastern. In the eastern states of Australia right now, and particularly in Melbourne, I think it's a problem. You've probably gone to the shop

[00:16:39] Gemma Clancy: and found that you can't buy eggs. And you've probably, if you've watched the news, you'll know that that is because there's been quite a serious bird flu outbreak. And I think maybe people can become a bit desensitized to the news around bird flu because it's happened before.

[00:16:55] Gemma Clancy: Um, but every time there's a bird flu outbreak, it's actually incredibly devastating for people. The agriculture industry, and just to give you a sense of kind of how devastating the bird flu is, and I'll come back to a bit more detail around the race, um, afterwards, but just to give you a sense of like, how big some of the issues around these kind of outbreaks are. So chicken's a really big thing in Australia. We eat a lot of chicken. We, we eat a lot of eggs. So Australians get through around 50 kilogram of chicken meat for every man, woman and child every year. And we eat around 18 million eggs a day as a country, which is like, I just can't even get my head around how many eggs that is.

[00:17:30] Gemma Clancy: Um, but, um, there's a lot of eggs and so, so far just out off the back of this outbreak, around 2 million birds have been culled. So 2 million chickens and that the impact of that is around 1. 8 million less eggs a day. So you think in the scheme of a number of eggs out there, this is why you can't get eggs at Woolies and Coles and wherever else, if you know the basics of economic supply demand, like, you know, there's not enough eggs out there, the cost of eggs is going to go up, the ones that are out there, um, and this crisis is probably going to have impacts right through to the end of the year, if not beyond, um, which is not great when eggs are such a staple and chicken is such a staple of our diet, um, it's just going to fuel The existing cost of living crisis, and then just on top of that, if it wasn't bad enough, like we see the impact on humans, um, bird flu can be really, really bad from perspective of, um, that being that the, the strains of bird flu can be transmitted to wild or native birds.

[00:18:23] Gemma Clancy: Um, I don't know enough about the biology of the current strains that are out there to know whether it's going to impact our native bird life right now. But, um, there's, I've, I've kind of, uh, looked into this before and it is pretty scary what could happen to our native bird life if bird flu, um, does, does kind of creep into those habitats as well. So it's a pretty scary topic and it's really, really important that we get on top of it. And so it's, it's good to see, um, a tech company like ExoFlare actually coming up with a solution. That's a little bit more progressive than paper forms.

[00:18:50] Will Richards: Yeah, I'd love to get stuck into the actual, the race itself as well, because the people who invested in the startup are super interesting.

[00:18:58] Gemma Clancy: Super interesting.

[00:18:59] Will Richards: So tell me about the investors and how much money they put in.

[00:19:01] Gemma Clancy: Yeah, so it's um, a 5.3 million seed round, which is a pretty sizable seed round, um, especially at the moment. And the investors behind it are pretty reflective of the The nature of, of the raise. So the lead investor was Salus Ventures, the, uh, well, the managing director, there's a Mike Ferrari who used to head up in In-Q-Tel, which is, um, the CIA founded a not-for-profit investment firm. Um, that's really, really focused on kind of any investment around global security in In-Q-Tel have also invested. So it's kind of not surprising Mike's probably got those connections and probably, probably, probably why that that's happened there. Um, and it makes a lot of sense. Biosecurity super connected to kind of global security.

[00:19:41] Gemma Clancy: Um, so we've got Salus Ventures, um, In-Q-Tel and then Woolworths, um, Venture Fund W, um, 23 also invested. Wait, you should already kind of be quite obvious why, why they would have invested given the current bird flu outbreak and the impacts of that. And then Cultivate, which is an agri-food investor. So you can say that's a, I mean, it's an incredible team of investors that are super, super relevant to the problem that, um, we're dealing with. Obviously understand it, um, and understand the opportunity that they're, that they're facing. And the team behind this is also like super interesting and impressive. Um, so the co-founders, uh, Adrian Turner and Chris, um, I can apologize, Chris, if I've said your last name wrong, um, they're both veterans of Silicon Valley.

[00:20:23] Gemma Clancy: I assume they've moved back to Australia. Adrian used to be the chief executive of the CSIRO's data 61 organization and, um, and both him and Chris both kind of got backgrounds in cyber security. An interesting thing that Adrian said in some of the media, um, Uh, this week was that he believes the commercial opportunities of biosecurity will actually follow a really similar trajectory to, um, cyber security. So that's, I guess, the link between that, their background and this news, uh, venture that they're starting.

[00:20:54] Will Richards: It's super interesting. I think like going off what happened in COVID as well, when supply chains got cut, like, I think everyone felt the pinch there as well. Um, and. It doesn't take much for supply chains to, to get altered these days.

[00:21:06] Gemma Clancy: No, no, exactly. You can really underestimate how kind of, if it's like literally one outbreak in one place can impact an entire region, sometimes especially smaller suppliers that can actually work together. And so if one, one small supplier who works with a lot of other small suppliers is impacted by an outbreak, it'll impact that, it will impact that whole group of them. So it has an immediate ripple effect, even if the bird flu isn't, isn't, isn't Or in all those places. So, um, and that's just one example. So obviously like there's, there's so many different biosecurity, um, threats that face our agricultural industry. So, yeah, it's really interesting to see, um, a startup kind of facing this issue.

[00:21:43] Gemma Clancy: Okay, so Will, you now have the challenge of crafting a beautiful segue from bird flu and biosecurity threats to whatever your pick of the week is going to be. What's your pick of the week?

[00:21:55] Will Richards: Uh, my pick of the week is Hammertech, a construction tech startup. I have no idea how I would possibly segue, um, from your extensive analysis of bird flu and, um, dead chickens into this, uh, but I'll dive straight in. So the biggest race for the week for sure was, um, was HammerTech and it's a Melbourne-based construction safety platform. And they secured 105 million worth of capital from a single investor.

[00:22:25] Gemma Clancy: Wow.

[00:22:25] Will Richards: Which is a Californian private equity firm called Riverwood Capital. That money is essentially earmarked for growth in the U. S. and Europe. The investment also marked Riverwood's first investment in Australia from that fund and it's a pretty big investment. Big fund. It's a 1. 8 billion in us. So real money. And it's really focused on investing in higher-growth tech startups. So it's great to see a US investor of this magnitude, um, picking a Victorian Melbourne-based Australian startup.

[00:22:57] Gemma Clancy: Yeah. So what does HammerTech do?

[00:22:59] Will Richards: Great question. So HammerTech really focuses on, Streamlining three major things in construction sites, and these are generally quite large construction sites. Um, but streamlining safety compliance and site operations. And it's actual its first client was the Grand Prix in 2015. So the business itself is about 11 years old. So within a year they got the Grand Prix, um in Melbourne as their first client and then in 2019 Um jumped into the US market. So their current customers include the likes of Kane, Icon, Mervac and Parkview, which are major construction companies, um, that are global. And the product itself is actually made up of three main components. So you've got the site management, site user management aspect of it. So it sort of works out who has access to information or certain parts of a building site. The second part is a subcontractor. Um, management platform as well. And then finally, the third section is a project website, which from what I gather is sort of like a central hub of information for what's happening in the project that people working on the site can basically access.

[00:24:03] Gemma Clancy: Yeah, interesting. I think this is the kind of platform that probably the average person doesn't really think about very often. It's not the kind of thing people would maybe hear described and think, Oh, that sounds like a really big business, but like how, how successful are they really in the scheme of things? If they've raised 105 million, they're probably doing okay. Give me a sense of how they're going.

[00:24:20] Will Richards: Yeah, sure. Yeah, it's a good call because it's probably something that you drive past many sites every day, um, and don't realize that they're probably using Hammertech or a similar type of product to, to manage what's going on there. So, for a sense of scale, in the 10 years they've been active, they've managed over 20, 000 projects across the globe and they've had four and a half million. Workers on project sites actually enroll in the technology and use the technology while they're on site.

[00:24:45] Gemma Clancy: Wow

[00:24:45] Gemma Clancy: , that's a lot of data. Yeah,

[00:24:47] Will Richards: the subcontractor product itself has been used by 400, 000 plus subcontractors as well. So I think if you're in the construction tech, sorry, if you're in construction, not construction tech, if you're in construction, it's probably a, um, a product that you interface with a fair bit.

[00:25:03] Gemma Clancy: Um, yeah, without all that data about all these different workers and I guess the, the length of time that they've been in operation, the number of projects have been on seems like it's going to lend itself to a bit of an AI play with all that data and all the historical data that they've got. Um, does that sound like something that. From your research, they're going to lean into.

[00:25:21] Will Richards: Yeah, exactly right, Gem. So they've, they've got a real focus moving forward to, to bring AI into the platform. And since they've got so many data points across the globe, um, it's definitely something we're going to see, um, them roll out into Europe and the US.

[00:25:34] Gemma Clancy: Huge competitive advantage. That's really cool.

[00:25:35] Will Richards: I think as well, following on from the interview with Chris from cut through last week, where we really got stuck into this sort of void between startups who have raised, let's say, a seed or a series a graduating to those later rounds that that void definitely is, is big. And this is an example of a startup that has done just that and has secured that sort of makearound to now go for that really, really large growth. So it's, it's good to see, to see these sorts of announcements.

[00:26:10] Gemma Clancy: I'm really excited to welcome Kirstin Hunter and Preethi Mohan to the podcast. Preethi is the co-founder of NiceTo and the co-founder of Press Play Ventures. And Kirstin is the managing director at Techstars. And also a vine maker at Grapevine and together they coauthor funding the balance, which is a section of our monthly newsletter pulse check and also features in our weekly overnight success newsletter. And we're going to get into a little bit more detail around what funding the balance is and why it's so important with Kirstin and Preethi today. So welcome to the podcast. Thanks for having us. Thanks for having us. So I thought I'd just hand it over to you both to say why you thought it was important to start Funding the Balance and why you thought it's important to do now, what was the inspiration and just talk about what it is. Kirstin, do you want to kick it off?

[00:26:56] Kristin Hunter: Um, okay, I'll start on this one, you can start on the next one. Funding the Balance has come out of a number of different discussions that we've had over the last months and years around the state of funding. And in particular, the amount of funding going to founders of diverse backgrounds. I think anyone who's been in the ecosystem a while has seen things like Cutthroat Ventures, those reports that come out that year on year seem to paint, um, a pretty dire picture of the amount of funding that is going to women founders, non-binary founders, and founders who represent groups. just generally who aren't straight white men.

[00:27:31] Kristin Hunter: Um, and so what we found in seeing these numbers come out was that the annual report from Cut Through Ventures, the state of Australian funding report, uh, and the quarterly updates that came out about that were great for starting a conversation around where this money was going, but there was no way for founders and ecosystem participants to know what was happening in between those times. And to get that kind of. Yearly progress track of view of what was happening and where the money was flowing. And so that was the idea behind funding. The balance was to set about to rectify that. And so what we're trying to do is provide a weekly snapshot of the breakdown of where that money is flowing based on the funding announcements there that have come out in that week. And so that's what you'll see in the weekly edition of Overnight Success. And then every month, we look at the cumulative impact of where that funding is flowing over the course of the calendar year. And importantly, as well, um, for founders who are looking to raise money is we publish a leaderboard, which shows which investors are actually putting their money where their targets are and making investments and announcing those investments into companies that either are mixed gender teams or solely women and marginalized genders.

[00:28:41] Gemma Clancy: Yeah, it's a really fantastic initiative funding the balance and I'm really glad that overnight success could be a part of it. And I think, um, it probably started out with a bit of a group chat and now it's evolved into something that, um, is probably something beyond what I could have imagined in the first place, but I'm really honoured that you guys took the time to do it. Approached overnight success to launch this initiative and you've really driven it forward and made it really easy for us to do this reporting because it's not, it's not easy to do. I think there's a reason why this hasn't been done before. The regularity of this reporting and also the bravery to kind of put those numbers out there. It's not something that's easy and certainly it hasn't come without complications on our end. And I wanted to kind of cover that a little bit in this conversation, um, to talk about. Kind of what's been happening a little bit behind the scenes, the, the feedback that we've received, um, the constructive, you know, feedback that we've been taken on and, um, implemented. Can you talk to a little bit about kind of the evolution of funding the balance of the last, I think it's been 6 plus months that we've been doing this.

[00:29:36] Preethi Mohan: I think a bit of context. So nice to, we've been on a journey over the last few years to try to get the statistics around where investments are going in Australia and beyond the general stats of gender, which groups mix teams, we don't have the statistics. Much else to go from. So funding the balance has been an evolution and a bunch of conscious conversations that we've had with people from the entire ecosystem to have a considered approach and a way of keeping the ecosystem accountable. Even the terminology that we use. Um, there was a lot of chat in the previous release where we had to reconsider the terminology we're using. So now we've. moved from saying gender minority teams to women and people from marginalized genders. So we can be inclusive in our language, but we want to, our aspiration is to move beyond just looking at gender and to look at things like ethnicity and other forms of marginalization that occur in the ecosystem to get a proper status view.

[00:30:47] Gemma Clancy: Yeah. Yeah. And like, I've been absolutely blown away by how considered you both have been when we think about kind of the feedback that Has come through at no point have either of you kind of brush it aside and be like, Oh, well, that person's wrong. And therefore, you know, and we're right. Let's just kind of keep going. Cause we've, we've thought about this more than them. You've considered everything that has come through and obviously we can't take on everything and action everything, but you've been so considerate about it. And I think that that shouldn't go unnoticed. I also just want to highlight kind of some of the challenges. around actually collecting this data in the first place and why it's so challenging sometimes to get the data to be as accurate as we'd like it to be. Can you both talk to the process that we're using to collect the data and then confirm that it's accurate so that people can feel confident about the reporting that they're seeing?

[00:31:34] Preethi Mohan: So we have made a decision that we want to move at pace and we want to have something to share on a weekly basis, which means we're going with deals that have been announced. In public rather than data collected through surveys or directly from VCs. Um, the limitations of that is there is a time lag and it does involve a lot of manual scraping, which you both have been very helpful in supporting us. But on top of that, what we're trying to do to verify even genders is sending out a survey to people who have received the funding to confirm those details. So that's a bit of an overview of the process.

[00:32:17] Kristin Hunter: And so some of the regular challenges that we have in trying to pull this data into a format that is consistent and makes sense and allows us to compare. apples to apples, I suppose. Um, I mean, there are many, but, uh, one of the things that I regularly encounter is the, um, attribution to stage of funding. So we look at the cumulative flow of funds, but we also look within the different stages. So pre-seed, seed, series A, series B, et cetera, but not all funding announcements. Uh, described as being a certain stage, nor do they fit neatly into those stages. So we've had to be a little bit flexible as we go. And we often have to do quite a bit of background research on the company and its fundraising history in order to, um, to come up with the stage that we, we will place that fundraising announcement into gender identification of the founders is something that we are very, um, The point of this report is to show insight into where the money is flowing and in particular to highlight some of the challenges, but also some of the wins by gender marginalized founders and women founders. And it. doesn't help anyone if we are part of that problem by misgendering people. And so we are quite careful in how we allocate founders and, um, understand their genders as well. And that's not something that is always public or obvious. And so it's something that we do put a lot of time into to make sure we get right. Some of the other challenges that we have currency, if a deal is announced in US dollars, then we convert it back to Australian.

[00:33:44] Kristin Hunter: And then also sometimes as well, there might be a mixed component of debt and equity, or there might be a deal that is staged over different periods of time. So all of these are challenges that we have to try and incorporate into the data to make sure that what we're presenting. Is as accurate as possible and gives the best reflection of where the investment dollars are flowing, um, and how that flows across founders of different genders.

[00:34:11] Gemma Clancy: So, Kirstin, something that I think is really interesting about what you show in the final reporting is that it's, um, you don't just look at the funding that's gone to all women teams, mixed teams and male teams, but then you also look at how is the funding being split by women and men. Disaggregating it from those mixed teams. So can you talk a little bit about how you do that and why you've decided to do that?

[00:34:33] Kristin Hunter: Yeah, definitely. And I think that's a really great point. It's something again, that we put quite a bit of thought into. And the, the reason for doing that is in response to a lot of really quite well-placed criticism of a lot of the attempts at giving transparency into where the money is flowing, that, um, typically any team that has at least one non-male founder will count as a male. Contribution towards, uh, towards women, whereas actually what that might look like in a mixed gender team is you might have three male founders and one woman founder, and yet all of the money raised by that team counts as being towards diverse founders, even though three-quarters of the team is not. Meeting those diversity metrics. And so what we have done is we we disaggregate the funding that goes to mix gender teams into their contributing genders. And so what that means in that scenario where if we had a founding team of 43 men, 1 woman who raised. 1 million, then we would break that million dollars down into the portion of that money that was raised by the male founders compared to that was raised by the woman founder. And then that would go into the separate total. And so what we have seen really over the last couple of months, which has been really interesting to watch, it was a much stronger start to the year for women and founders of marginalized genders. But as the year has progressed, more and more of that funding has flowed to. Male-only teams and mixed-gender teams with a predominantly male composition with the end result that at the moment over 90 percent of the funding announcements that have been made this calendar year have now been attributable to male founders. So it is a big swing away from women and marginalized gender founders.

[00:36:14] Preethi Mohan: Yeah, the other thing we're noticing is that when it is mixed teams, it is usually. one woman or a person from a marginalized gender that's a part of that team. And so calling it a mixed team, I think is no longer enough. But also now in disaggregating the data, what we're seeing is that women and people from marginalized genders are raising half as much as men.

[00:36:39] Gemma Clancy: Yeah, and I think it's really interesting if we look at the blog that Blackbird released this week, talking about their own data as part of the equity clear initiative that they've committed to reporting, um, how they're funding across, um, genders, they have specific targets around the number of teams that they are funding that have at least one woman, but there's a huge gap between their funding of mixed teams versus, um, All women teams, and, um, I would really love to see that gap closed because, yeah, as we know, those mixed teams usually, um, you know, at least 2 male founders, maybe, um, and 1 female founder. It's not really an equal distribution there. Um, so, yeah, it's just an interesting thing to call out. That's not really getting talked about that much. So, finally, I'd love to kind of look ahead to what we want to do with funding the balance moving forward and what your vision of kind of what improved reporting looks like. In this space looks like, because I think there's always improvement there. Preeti, you've talked to kind of intersectionality a little bit there. Can you talk about what your vision is for improving funding in this space?

[00:37:39] Preethi Mohan: Where I would like to get to is a utopia where we're able to look at where the funding is going across a range of diversity metrics. And in that also look at how it is affecting intersectional founders, the reason being the people with more marginalized identities have bigger hurdles to get through when it comes to funding. And especially considering a lot of the funding here in Australia goes towards tech, we're building the tech companies of the future, which should serve us all rather than a few. So reporting is the first stage. If we can get to reporting as well as action off the back of the reporting, that is utopia.

[00:38:20] Gemma Clancy: Yeah, for sure. Yeah. And I think, I think one of the things that, um, I've noticed in some of the commentary around the reporting is okay, but what are we going to do about it? But I think, um, people probably underestimate what a huge kind of achievement is, it is to at least have, um, Got to the point of trying to report, trying to report accurately. And then we have such a big job ahead of us in terms of, in terms of expanding that reporting out to include even more factors that are currently just not even being looked at. And most of the reporting that is done, people just say, Oh, well, that sample size is too small. So we're not even going to talk about it. But the point is that it's small. So we have to talk about it. So it's this kind of horrible chicken and egg situation, isn't it? Um, and you know, there's so much more that we can always be doing.

[00:39:02] Preethi Mohan: I think at the end of the day, it's about making sure the ecosystem supports opportunities equally and equitably for everyone that exists in the ecosystem or wants to have a part to play in the ecosystem. And I think that's really the goal we want to achieve.

[00:39:20] Gemma Clancy: Hmm. Yeah. And what I love about funding the balance is that it's there every single week to remind people it's that, you know, this is a really important issue. And sometimes it's, it's kind of depressing putting those numbers together. I'm going to be honest and putting it in the, in the newsletter, but it just highlights why it's so important to remind people every, every week that this is, this should be top of mind for investors. Um, and that, you know, we're making slow progress, but we're, you know, slow progress is better than no progress at all. If you could give our Listeners, one key takeaway, um, from the work that Funding the Balance has been doing and what you'd like to see with reporting on this in the future. What would it be?

[00:39:58] Preethi Mohan: I think the biggest thing is pay attention and make noise around it because I think the more involved we are as an ecosystem in this conversation, the better net effect it is for all of us.

[00:40:10] Gemma Clancy: Amazing. Thanks so much, Preethi and Kirstin for joining me today. And, uh, Keep an eye out for future monthly Funding the Balance report and our weekly edition in the Overnight Success Newsletter.

[00:40:25] Will Richards: So each episode, we're going to leave you in the same way we wrap up our weekly newsletter, which is with a section we called KaaS, which is of course, Knowledge as a Service. So we set, we share our favourite startup relevant read, listen, or watch of the week. And this week's KaaS, Gem, what did you read, watch, or listen to this week?

[00:40:42] Gemma Clancy: So the most interesting thing that I read this week was actually an opinion piece in the AFR that was penned by Jesse Wu, who is, um, a partner at, uh, After Work Ventures, and the article is entitled, Declined to Comment, Three Words Destroying Millions in VC Brand Equity, and I mean, if you're not already kind of familiar with that, On the interview, say you wanted to know what's in that article, then I don't know what's wrong with you, especially if you're interested in the startup and VC space.

[00:41:07] Gemma Clancy: But, um, it is a really interesting article. Jesse is really well known for expressing really well-crafted and considered positions on on somewhat controversial topics in the VC and startup space. And this is, uh, Certainly no exceptions. It's nice to see that finally something that she's penned, you know, um, it's, it's getting a platform, uh, you know, the status of the AFR, because she puts together things all the time on, on LinkedIn, um, posts that were probably almost as, as good as this article I'd say. Um, but yeah, so she essentially makes some points around the fact that she thinks that VCs and startups in particular need to engage a little bit more with the media. So, um, yeah. Um, that I guess they can have a seat at the table in crafting their own narrative and crafting the narrative around the VC ecosystem. And I'm not going to share my personal views on the article this week, because I want to kind of tease a little interview that we're actually going to have with Jessie next week, where she will, um, come on the podcast and we'll, we'll just talk through kind of a thinking a little bit more behind the article. And I'd really love to see people submit some of their own questions for Jessie. So you can either send them directly to me on LinkedIn, or you can fill in. A form that will be in the show notes of this podcast episode.

[00:42:20] Will Richards: Really looking forward to that interview.

[00:42:21] Will Richards: Gemma Cl

[00:42:21] ancy: Yeah, it should be good. It's

[00:42:22] Will Richards: always great to listen to Jesse speak. So, um, I'm sure there'll be a few nuggets of wisdom that come out of that.

[00:42:26] Gemma Clancy: What was your pick of the week, Will?

[00:42:28] Will Richards: Yeah, my KaaS this week was an article written by one of my favourite people in the Startup Ecosystem. Warwick Donaldson. 

[00:42:34] Gemma Clancy: I don't, I don't think I know Warwick. Who's Warwick?

[00:42:37] Will Richards: Warwick was um, at Sunrise this year wearing the mushroom hat.

[00:42:41] Will Richards: Ah. And um, he's quite a, it's quite a tall guy. So you sort of saw this mushroom hat above the crowd everywhere, which was um, always fun to see. 

[00:42:47] Gemma Clancy: I missed that. That's really sad. That sounds like a really, a sight to behold. But I'm sure there's more to Warwick than his mushroom hat.

[00:42:54] Will Richards: Definitely. Definitely. He specializes in helping deep tech startups raise capital. So he's a bit of an advisor in that space.

[00:43:00] Gemma Clancy: Yeah, cool.

[00:43:00] Will Richards: He's doing a newsletter series at the moment on practical information for Aussie founders. Um, and this article in particular was called ASIC and competitors. And really what it boils down to was how founders can use ASIC lodgements as, um, and as a research tool to work out who's investing in startups similar to their space or a space that they're entering, like their screenshots of how to do it. Cause it is quite a shocking user interface, the ASIC website. So it is a very practical guide, but what it boils down to for founders is, um, Before you basically go on your fundraising process, um, you can do some really nice research to get on the front foot and be really well educated in the market of who's investing in similar businesses. So when you do outreach, you can have. Very solid conversations with investors and just come off as a, as a really well researched founder who knows exactly what they're talking about.

[00:43:54] Gemma Clancy: No, that's really important. And I think anyone who's not yet delved into their funding or their, yeah, their investor pitching experience, especially in deep tech is important to know that. Cause I was actually working with a deep tech, um, towards the end of last year that Was embarking on their first fundraise and they hit a lot of dead ends because they were approaching kind of a relatively small group of investors who they knew would probably invest in that space, but a lot of them had already invested in at least one of their direct competitors. They could have saved themselves a lot of time if they'd done some of this research upfront, not even entering those conversations because they probably weren't going to go anywhere. Um, so this sounds like a great resource. 

[00:44:32] Will Richards: Yeah. Check it out.

[00:44:40] Gemma Clancy: Thanks for joining us for this episode of the Startup Retro. We would absolutely love to hear what you thought of the show, so feel free to reach out to us directly on LinkedIn, or even better, follow us on your favourite podcast player and leave us a review so more people can find us. And if you enjoy the podcast, you'll probably really enjoy our weekly newsletter, Overnight Success, which goes into even more detail on the news headlines and startup raises and much, much more. And you can subscribe to that at overnight success.vc Catch you next week.

[00:45:08] Will Richards: Catch you next week.

‍