OneVentures' 7th fund, accelerator cohorts & Google monopoly ruling

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Gemma Clancy (00:00):

The Startup Retro is recorded on the lands of the Kabi Kabi and Wurundjeri people.

Will Richards (00:07):

Good 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.

Gemma Clancy (00:17):

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

Will Richards (00:24):

And I'm Will Richards. In today's episode, we dive into OneVenture's new fund announcement and we go into the history of their funds and how they got to their seventh fund.

Gemma Clancy (00:33):

And we'll also talk about the two new accelerator cohorts that have been announced this week from Startmate and reMarkable, as well as the recent US Court decision that's labeled Google an illegal monopoly.

Will Richards (00:43):

And of course, we also go into our favorite startup raises of the week. And as per usual, we also include a couple interesting startup relevant resources for you to nerd out on.

Gemma Clancy (00:53):

Let's get into it. Okay, Will, let's jump into some headlines. What caught your eye this week?

Will Richards (01:00):

One headline that caught my eye this week was OneVenture's announcing that they're going to launch a seventh fund, and this fund is targeting a $200 million close. And I think it's interesting because you sometimes see these headlines come out, and usually the fund will announce that they've got a certain amount of capital committed in these sorts of announcements. So they might say something like, "We've got 30 million committed and we're aiming for 300 or 200 million." I'm sure they do have some capital committed for this fund because I'll jump into how they performed up till now. But it's quite interesting to see in this sort of cloud of a challenging funding environment, a few funds announcing that they're going out there raising and doing it really quite publicly. And I have got some inside words of a few funds announcing closes fairly soon, and there's some pretty big funds who have closed some funds that we'll be hearing out in the coming weeks, which is really exciting.

Gemma Clancy (01:58):

Yeah, it's promising. So I guess maybe if they're not deploying, that's one thing, but it doesn't mean that they're not raising, so hopefully that means they're preparing for an upswing at some point, whenever that comes.

Will Richards (02:11):

Yeah, so this fund will basically mark if they do get to the 200, OneVenture's having over $1 billion under management in total.

Gemma Clancy (02:19):

Wow, that's huge.

Will Richards (02:20):

Yeah, so they launched in 2010, and their fund one was pretty successful. Just some numbers behind fund one. They returned it, it's officially closed and it's returned all its cash to investors, and those private investors made a 10 X return on that investment. And yeah, I think it really got on the back of post GFC, the tech boom that happened in that period. So super successful fund one.

Gemma Clancy (02:49):

Yeah. So around the same time, Blackbird's first fund would've been around similar time to that?

Will Richards (02:54):

Well, this was actually predating Blackbird's first fund. So Blackbird first fund was 2013, 2014, was when they started investing. So this predates it slightly. And fund two though also had a really solid return. I think if you listen to First Check and a few other podcasts around being a fund manager, graduating from fund one and two into third and fourth fund is the really difficult thing. Because that's when you have a bit of data to look back on and prove out your thesis. So if you don't have those returns on those early funds, it's next to impossible to jump to the third and fourth and fifth and now as we're seeing the seventh fund.

Gemma Clancy (03:34):

Yeah, it's very impressive.

Will Richards (03:35):

Yeah, fund two had a really interesting return as well. So they invested in a small business you may have heard of called Employment Hero. And that single investment, which from what I can read publicly, and I spoke to their team as well, they didn't really get to the details of this, but it sounds like they've exited this investment. But that single investment had a 13 X return in Employment Hero, and that single investment as well also returned 1.5 X of fund two itself. So that fund is still active, fund one's closed, fund two is still sort of active, hasn't fully returned, but right now it's gotten a pretty impressive multiple of five X.

Gemma Clancy (04:15):

In a good spot.

Will Richards (04:17):

In a very good spot.

Gemma Clancy (04:17):

Yeah. Makes them pretty confident to keep raising future funds like they're now. So that's pretty cool. What are some of the other companies that they've invested in?

Will Richards (04:25):

So a couple startups that you've probably heard of that OneVentures has invested in, you've got 6clicks, Flippa, the marketplace for buying and selling businesses, BuildKite for automatic dev processing, those sorts of things. Lumary, it's a health tech business as well, they've been funded by OneVentures. Because they've been active for so long, they've got quite a large portfolio. And if you go onto their website, you'll sort of see quite a few brands that you recognize in the Australian ecosystem. They're one of these venture funds that have done really well to get to where they are.

Gemma Clancy (05:01):

Yeah, I think they're quite, I wouldn't say underrated, but they certainly don't get quite the same coverage all the time as some of the other big funds like Metri, Blackbird, Square Peg and the like. But they're definitely, I mean obviously in terms of fund size and maturity, so everyone should definitely be keeping an eye on what they decide to do with that next fund. And where did the majority of the money come from, I guess, this time around? Who are they generally raising from?

Will Richards (05:27):

Yeah, it's a really interesting point because in the article by the AFR, the founding director, Michelle Deaker, said that this is the first time they'll be targeting super funds. And I find that such a fascinating thing because it's amazing to think that they've gotten this far on their seventh fund without speaking and getting capital from superannuation funds here in Australia, but still getting 900 million assets under management. So from the reading and the stuff that they've put out there, it sounds like they're getting a lot of funding from family offices, private investments, private investment managers, those sorts of networks. But this is the first fund that will target super animation.

Gemma Clancy (06:13):

Yeah. Cool.

Will Richards (06:14):

So Gem, what caught your eye this week?

Gemma Clancy (06:15):

A couple of things. I think the first one was around a couple of new accelerator cohorts that have been announced, and we record this podcast on a Friday morning. And then of course there's always news that comes out on a Friday that we can't always capture on the podcast, but after we recorded last week's episode, Startmate announced its latest winter cohort, which is one of Australia's best known and highly respected accelerator programs, and there are 11 companies in this cohort, and they were selected from about 600 applications.

(06:48):

So it's a pretty big deal to get into Startmate, and the companies that get into it, they receive $120,000 in funding at a 1.5 mil evaluation unless they've received funding over 200K before, in which case they match the previous valuation, but it's not a small amount of money. It's a really cool program, 12 weeks where they get mentorship and guidance to try and accelerate their startup. And it all culminates in a pretty big pitch tonight, which is part pitch, part rave, which was always a really fun event to go to. So I was quite excited to jump in and see what startups had got into that cohort. Did you have any favorite picks out of that bunch, Will?

Will Richards (07:30):

Yeah, so one of the startups we actually had an exclusive on a few weeks ago, PREVE, the physiotherapy focused application, that got into Startmate, which was really exciting. So after we broke the news, the founder got back in contact and said, "Oh, thanks so much for covering that, by the way, here's some more news that you'll be covering in a week or so." Yeah, really good to see them in the Startmate Accelerator for winter.

Gemma Clancy (07:53):

Yeah. Yeah. I had never heard of this startup before, but there's a company there called Recant.ai, and there's no huge amount of detail about what their tech will do or how it will be built out. But their whole aim is around preventing online abuse and it looks like you'll be able to sign up for it, determine some rules around the types of things that you don't want to receive in terms of comments and interactions on your social media accounts. And the platform will help filter to those out, and I think that's really a fantastic tool. I think there needs to be more solutions out there like this. I'm sure a lot of influencers would probably get on board with something like this, so that was really interesting.

(08:33):

The other one where I actually have met the founder a couple of times is called Fairgo.ai, and they have an AI platform that's about streamlining the recruitment process. And it's largely about running AI interviews as one of those first phases of screening out applicants. And it's not only about being able to get through applicants a lot faster and figure out which ones are right and which ones aren't, but also around removing bias from that process. Because hopefully, I guess if they build out the AI models correctly, there'll be less bias than maybe the average person. That's a really, really cool startup definitely to watch from my conversations with the founder so far.

Will Richards (09:13):

Awesome. And there was also another accelerator that announced their cohort this week.

Gemma Clancy (09:18):

Yes.

Will Richards (09:18):

And I know their team really well at reMarkable. So what happened over there?

Gemma Clancy (09:22):

Yeah, I met a couple of people from the reMarkable team at Sunrise this year, and then I've been following them on LinkedIn, and I've absolutely loved their... their LinkedIn content's quite funny, so everyone can get around that. But reMarkable was focused on supporting startups that offer solutions to the disability sector or people who are disabled as well as the aging and I guess general healthcare sector as it relates to those sectors. And yeah, they've been around since 2016 and they have a 16-week accelerator program that offers a pretty similar amount actually to Startmate as part of getting into that program, which is a hundred thousand dollars for 6% equity.

(10:04):

And they have selected a range of startups that are going to be part of their next cohort. And they're largely actually post-product and post revenue startups, which is quite different to a lot of accelerator programs where often you'll go into accelerator program with maybe very much an MVP. And certainly a lot of accelerator programs, they don't expect people to have much revenue, if any. Yes, that's a really interesting one because they're much more focused on for-profit and for-purpose businesses that have a proven impact on the disability sector.

Will Richards (10:36):

I think it is an interesting point to look at what the different accelerators offer in terms of the standard deal that they give because you've now got Antler with a very standard deal. Startmate has a standard deal, Skalata, they're not accelerator, but they have, I'm pretty sure a standard minimum deal. The deal terms don't fluctuate. And then you've got reMarkable as well with the standard deal. But I reckon that valuation of 100K for 6% equity has got to be the highest valuation you get at an accelerator here in Australia.

Gemma Clancy (11:09):

Yeah, no, that's a good point.

Will Richards (11:11):

Especially considering they're investing that money so early. Oh, sorry, these are pre-revenue.

Gemma Clancy (11:17):

No, it's post.

Will Richards (11:17):

Yeah, yeah, post-revenue startup.

Gemma Clancy (11:20):

Maybe because it's post product, post revenue, they've got greater conviction to support them, and it makes more sense to take a bit less because they have to be further along their journey. They're not necessarily coming in right at the start taking a big bet that maybe it will, maybe it won't work. They've somewhat already proven it out.

Will Richards (11:37):

Yeah, I suppose it is de-risk to an extent if they're post-product or post-revenue, because if you look at the Startmate Accelerator companies, there'll be some of them that will have traction, but they definitely say they won't invest. They'll invest earlier that you'll pre-revenue for sure. I would be surprised if you were pre-product. Well, maybe pre is probably a good example of a business that is actually super, super early who doesn't necessarily have an MVP. They've just got a good team, but they've already come in with a capital raise as well. So they're an interesting example of someone who's gone into the accelerator, already raised capital, and actually if you raise capital before going to Startmate, the deal terms are actually really, really good.

Gemma Clancy (12:17):

Yeah, well, exactly. Because they just match the valuation. Yeah.

Will Richards (12:19):

So if you set that valuation beforehand and back yourself to get into an accelerator like Startmate, it's just the best of both worlds.

Gemma Clancy (12:25):

Yeah. Super interesting to compare.

Will Richards (12:27):

If anyone has any insight of other accelerator equity offers, let me know. We can maybe make a bit of a graphic or a blog post about, which is-

Gemma Clancy (12:37):

Yeah, a bit of a comparison table be interesting.

Will Richards (12:39):

Yeah, a comparison table about the deal terms on accelerators.

Gemma Clancy (12:44):

Yeah, I always be surprised if nobody's created that before. There's probably founders out there who've... like a really savvy founder who's trying to pick what accelerator to get in, probably created one of the tables before. So if you want to save us some time and send us your proposed table, that'd be great. But yeah, if not, we'll create one.

Will Richards (12:59):

You also forget how many accelerators there are in Australia. We made that accelerator table as well of all the accelerators in Australia, and I was like, "Oh, wow. There is a lot of niche accelerators out there." Which is fantastic because they're catering to all the different demand.

Gemma Clancy (13:17):

There are a lot of accelerators, but there's not necessarily that many that offer a very significant amount of-

Will Richards (13:22):

Venture

Gemma Clancy (13:22):

Yeah, funding upfront. Certainly not at the six figure level. The last headline that I wanted to cover was one that was not necessarily super Australian startup ecosystem specific, but it feels like such big news that it almost felt negligent to not cover it, which is around a US court ruling that Google is in their eyes considered an illegal monopoly, which is a pretty big headline, pretty big deal. And we're not really sure what I think the outcome of that ruling will be just yet. There's going to be a separate proceeding that will be held to determine what the penalties are for Google and the parent company Alphabet.

(14:01):

But there's a lot of speculation going around right now about what it could mean. Do they have to separate the business out into different parts? What happens to the commissions that they pay to the likes of Apple and Samsung? Because at the moment Google pays Apple, for example, around 36% of the revenue generated through Google searches on its devices. And that is seen as part of its anti-competitive approach where it's trying to lock in those devices to make them the default search option. But yeah, I thought it was too big one not to discuss briefly at least.

Will Richards (14:40):

So when they're saying illegal monopoly, because you can be a monopoly and exist, but you can't be a monopoly that takes advantage of their position in the market and it affects poorly or affects businesses poorly. So is this saying they're doing that?

Gemma Clancy (14:56):

Yeah, well, I guess the US Court decided that, yeah, it's crossed the line between just being a monopoly and certainly being illegal. And you can't deny that there's other options out there, like Bing, when it comes to talking about the commission conversation with Apple, they apparently offered Apple up to a hundred percent of the revenues that they would generate, but Apple still chose to go with Google anyway. So Google's argument back to this whole decision is that, "Well, we're getting chosen because we're the best and not because we're blocking our competitors." But it was funny, I was reading some of the Twitter threads around this, which is always a dangerous thing to do, but one person did say, "Well, if you're the best, then why do you have to pay the commission?" Why do you have to pass on the revenue is an interesting point, I guess. And yes, so Google certainly thinks that they're well within their right to approach it that way. They are considered the best, and even the court findings said Google is the best search engine objectively. So yeah.

Will Richards (15:59):

Interesting to see how it'll play out. Obviously when it happened to Microsoft, actually the acquired episode went into it a fair bit about how there's a bit of a myth around what happened in those years post being found guilty of being a monopoly. Obviously there was some cool stuff developed, but the share price didn't budge at all. So yeah, interesting to see where it goes next. I'm assuming they'll definitely be appealing and there'll be a lot of money spent on legal action to protect this.

Gemma Clancy (16:24):

Yeah. Yeah. But it could open up the door actually for other startups to come through, especially their AI search engine startups. So have you ever used Perplexity?

Will Richards (16:32):

Yeah. Use it a fair bit.

Gemma Clancy (16:34):

Yeah, it's really cool. And I think more and more people are going to get around things like that when they realize the benefits of them. And if Google's slightly less prominent or there's some more rules in place to make sure that they can leave the door open for a bit more competition, maybe that will allow the likes of Perplexity or its counterparts to kind of enter. That'll be interesting.

Will Richards (16:58):

So at Overnight Success, we have a monthly initiative called Pulse Check where we get some expert guest writers to cover a trend or a topic or an industry that they're working in or an expert on. And I love it because having these correspondents focusing on industries that don't necessarily get coverage, especially from an Australian perspective, is super interesting. Because Gem, you really lead this initiative inside the business. So I often come quite late to it and sort of see it as almost a finished product, especially this month. And I love it. It's sort of seeing it as a reader, and you often learn new things or hear about different initiatives that you just never would previously.

Gemma Clancy (17:41):

Yeah.

Will Richards (17:42):

So I'd love to maybe get stuck into what was your favorite part about Pulse Check this month?

Gemma Clancy (17:47):

Oh, there's a few, and just I guess stepping back a bit is one of the reasons that we wanted to start it was that we were getting people reaching out to us asking if they could write for Overnight Success. And then we couldn't necessarily manage all of those requests in a way that made sense that Will and I are usually writing Overnight Success late on a Friday, incorporating more people into that process is pretty hard. But we still wanted to capture this additional expertise that comes from all corners of the ecosystem of people with knowledge bases that are so different to ours. There's always quite a few golden nuggets. Funding the Balance is part of every single edition of Pulse Check and Finding the Balance is the initiative that was brought to us by Preethi Mohan and Kirsten Hunter, and we interviewed them on the pod I think a couple of weeks ago.

(18:37):

And that covers the funding gender equity gap that we have in Australia and probably around the world at the moment. And it analyzes the data of the funding that we've had over the previous month, looking at how much funding went to men, how much went to mixed teams, and how much went to gender minority founders. Every month they kind of summarized what the data was, and this month they've included a new graph which showed the funding that's gone to men after they've disaggregated it from when you look at mixed teams versus male only teams, we look at what percentage of those mixed teams are made up by men. And then they take the total funding amount and they divide it by that percentage, and then they combine that with the male only teams to look at how much money went to men, and then how much funding went to everyone else. And they've plotted that out to see over time how much money has gone to men over the last year or it's a bit less than a year.

Will Richards (19:30):

And what does the data say?

Gemma Clancy (19:33):

And the data says that more and more funding has been going to men just increasingly.

Will Richards (19:37):

The trends kicking up. So this month, so July, we saw just over 92% of funding go to men, male founders, which is crazy.

Gemma Clancy (19:45):

Yes, as the lady said in the write up, up and to the right in all the wrong ways. And that pretty much captures the data. So that's one section I always kind of wait out for it. They also have a leaderboard of investors who are leading the way and investing in the most gender equitable way or the most gender minority founders. And that's always good to watch, Alice Anderson Fund is always leading that at the moment. But yeah, that's always one of my favorite sections. What was one of your favorite sections?

Will Richards (20:17):

I'm going to call out two. So the first one I'm going to call out is by Georgina Healy. She focuses on artificial intelligence, and she increased my vocabulary this month by introducing me to brat and brat summer.

Gemma Clancy (20:32):

I immediately felt uncool and then cool again after reading about what brat is.

Will Richards (20:38):

And yeah, her whole contention was that AI is having a moment and really putting it together with the trend of brat that we're seeing.

Gemma Clancy (20:48):

These are a Gen Z thing, right?

Will Richards (20:50):

Yeah, so brat really took off with Charlie XCX's latest album, which is also called brat, and it has this distinctive ugly green color. But yeah, it's just this trend that's really kicking off and Georgina was really pointing out what we're seeing in AI and especially in Australia as well. It's becoming quite a dominant force in the investment landscape as well. So it was really cool to see the trends happening there as well.

Gemma Clancy (21:12):

Yeah, I loved her creativity with that one. That was great.

Will Richards (21:14):

Yeah. The second one is by Lea and it's Aussie founders going global. And you may remember last week or the week previous, we covered Cuttable and their raise around their new ad tech startup. We mentioned as well that their founder, Sam, had previously had a massive exit with his business Cloud Guru. So what Lea did was she jumped straight on that and did some research on the story behind Cloud Guru and their journey, especially expanding internationally. So each month she focuses on Aussie's going global and she's got a real global perspective having spent a fair bit of time in the US as well in the investment and startup space over there.

(21:55):

So really interesting article and short little deep dive on how they expanded internationally. And she even went into the investment notes of the likes of Airtree when they made their initial Cloud Guru investments, and there was interviews back then with Sam about how he was thinking about going global. So quite interesting to sort of see what advice he was giving back then and how he was thinking about it, and potentially how he's going to think about it this time round with his new startup.

Gemma Clancy (22:23):

Yeah, good pick up. And I just can't go past, I guess there's just so much gold in this month in particular, and this is kind of a quick wrap up. We've got Gad Perry who always covers entertainment and fan tech, and he has such a unique insight into that sector, always pulling out things that I hadn't otherwise heard of, but I always read them and think, "Oh my God, I should have known about that." We've also got Holly Clark who works with LaunchVic, and she's a real expert on ag tech. And this month she talked about why more farmers are and should get into becoming funders. So getting into venture so that we can help accelerate the ag tech industry in Australia.

(23:04):

And we've also got Bernice Chong. She is always digging up some amazing insights on accelerators. So she covers a section we call Accelerator Watch, and this week she talked to Dr. Carl Turner who's helping create entrepreneurial pathways for Indigenous Australians and the OCA pre-accelerator program that he's helping run as part of OCA Ventures, which he's an investment manager for. And then Andrew Harding as well, he always covers climate and nature tech. And this month he was wrapping up some of the Cut Through Venture report insights around that sector. Yeah, so go and check out the August edition of Pulse Check. You can find it on our website. You just go to the newsletter section at the top and you'll find it there, and let us know what you think.

Will Richards (23:53):

So Gem, let's jump into the startup raises this week and you've done a lot of research onto your startup pick of the week. Who was it?

Gemma Clancy (23:59):

It's a company called Ionic. I think the reason I was so drawn to it is because it's one of those startups where you just can tell when it's genuinely solving such a huge and important problem, not just for us in the developed world, but for people everywhere, and probably even more so for people in the developing world. And at the same time, it's clearly aspiring to be a very commercially viable and successful business, not just a not-for-profit. And striking that balance can be incredibly difficult. It can be very hard to solve some of the world's biggest problems in a way that's super commercially viable.

(24:35):

So at least when it comes to things like this, which is in the area of healthcare. So what they do, so they're revolutionizing glaucoma screening by enabling online visual tests on the likes of your laptop or a tablet rather than needing to go to a specialized location and use really big, bulky old school machines that will scan your eyes. So it's really amazing that essentially they're taking something that would otherwise be off limits for a lot of people around the world and turning into something that the majority of people should be able to access as long as they've got some form of-

Will Richards (25:14):

A camera.

Gemma Clancy (25:15):

... device with a camera in it. Yeah, it absolutely blows my mind. So I had to look into what is glaucoma? I've heard of it, but I didn't really... I couldn't have told you what it was. So it's essentially a group of eye conditions, it's not just one eye condition that damages your optic nerve, so it essentially means you can't see. And usually at first when it starts coming on, you lose your peripheral vision and then you eventually lose all your vision. And it's mostly common in older adults. I think most people would associate it with being something that older people get, but it can affect anyone.

(25:47):

And so I guess important about this technology that's been developed by Ionic is that you have to get regular exams, especially I guess as you get older, to look for the warning signs because otherwise it's not really always obvious to people that it's coming on. And the more early you can catch it, the more likely that you can slow the degradation of that optic nerve, which is super important. And it's not something that's necessarily curable. There's treatments, but it's not curable. So you just have to look for it and then implement those treatments as soon as possible. And it's so prolific. 50% of glaucoma cases in Australia go undetected, and in the developing world around 90% of those cases go undetected. So clearly there's a need for a tool like this to make detection more readily available.

Will Richards (26:38):

I think it's such a great story of just the democratization of technology and AI coming together to really change the way something's done. So tell me about the actual raise itself, because they had a pretty interesting story winning a pitch competition and sort of putting themselves on the map.

Gemma Clancy (26:54):

So they raised $2.6 million, and like you mentioned, they won SmartCompany's pitch event, The Pitch, late last year. And I think that helped them kind of put themselves on the map because the founder, his background, his name is Simon Skalicky, I apologize Simon if I said your name wrong. He's an ophthalmologist, he's an eye doctor, so he's very much come from a medical academic background.

Will Richards (27:18):

Didn't see that coming.

Gemma Clancy (27:20):

Didn't see that coming. He's got amazing founder, product and market fit, so he wouldn't have been in this text, but I doubt that he would've had many connections to VCs and whoever he needed to get this thing off the ground. I was watching a video about his story and he talked about being part of a Microsoft Accelerator program, so I think that would've helped a little bit in the early days as well. But yeah, he's managed to get some funding from a guy called Martin Goodrich who has led the round, and then that's also been supported by Haynes Consulting Group and Kirshner Private Wealth. So not your typical big VCs, but yeah, he's clearly managed to raise quite a bit there with 2.6 mil. And that should be heaps, I guess for his next phase of growth where he's looking to really expand out into even more markets overseas.

Will Richards (28:10):

And in terms of traction, they're already active in a few African countries with clinicians all across Ghana and Nigeria. So it's cool to see that they're already piloting the software and it's already making a difference in the region.

Gemma Clancy (28:24):

Yeah, it's incredible. Yeah, it's really awesome. So I think it's across 18 countries at the moment. They've conducted about 5,000 tests. They've got a hundred clinicians registered in Africa, now they're looking to expand into India. I think they've already been a bit in arm a little bit, but you're looking to expand a bit more there and into other parts of Asia. And Simon, the founder, he said something really interesting in that same video that I was mentioning before around the fact that when they expand, it's not as simple as kind of just saying, "Here's the software, good luck."

(28:51):

In order to train their AI models to I guess spit out the right results, they have to figure out what are the normative values and ranges for each of these different markets because people in different places, different backgrounds, different cultures, all have different, I guess ranges that are normal for these test results to come back within. So yeah, I thought that was really fascinating. So they've clearly done a huge amount of due diligence to develop this product out, and I'm really excited to see what happens next. What was your pick this week, Will?

Will Richards (29:25):

Mine was quite different to yours. Mine was a FinTech startup focusing on credit assessment. So it was a business called Rich Data Co. And they raised a big 37 million series B to basically streamline credit assessments.

Gemma Clancy (29:41):

So let's talk about credit assessments, sounds quite fun, something that we could probably talk about for ages, [inaudible 00:29:49], and I'm assuming this is covering both a business use case for when businesses need credit, but also kind of just your average Joe below like you and me who might need a loan. Is that what kind of credit assessments can encompass?

Will Richards (30:03):

Yeah, exactly. So when you need a credit assessment, it's when you're doing things like applying for a loan, a credit card, even rental applications often require or do require you to get a credit assessment. But when you look at the B2B world as well, when there's a big business contract at stake as well, often you'll see businesses do credit checks on the counterparty just to basically make sure that it's going to go okay. And the business has the ability to-

Gemma Clancy (30:31):

They're going to repay their loans.

Will Richards (30:32):

Yeah, exactly. Exactly. So this business is really active in the US, so they have already partnered with a listed bank called M&T Bank, which is headquartered in Buffalo, New York, and they have about a thousand plus branches across 12 states on the Eastern Seaboard. So they've already got a pretty significant foothold in the US, and this funding will really be used to grow that.

Gemma Clancy (30:58):

How is that different to like a normal?

Will Richards (31:00):

Yeah, so the normal process is, let's say I am going for a mortgage, I will basically contact a few banks and they'll each individually do a credit assessment on my ability to repay that. And when they do that, they're all independently making requests to these big credit bureaus for information about me and my situation. What Rich Data Co is doing is continuous ongoing up-to-date checks on credit using AI basically to streamline that whole process and make it really cheap and affordable to constantly get a continuous view of borrowers health. So up until now, it's very much like time and place. And you often see people when they're doing a big transaction such as maybe getting a mortgage on a property, they really get themselves in a position where their credit ability or their credit score is really solid at the time of that application.

Gemma Clancy (31:58):

Get rid of all your credit cards, pay off all your debts. Just get yourself to looking absolutely schmick for whatever month that somebody's going to be looking at it, and then you can get back all your credit cards.

Will Richards (32:08):

Yeah, yeah, yeah. And I did exactly that. I had a few credit cards and canceled them.

Gemma Clancy (32:13):

I'm not sure if you should admit that.

Will Richards (32:15):

Lowered limits and whatnot. And then as soon as the month after settlement, like, "All right, well I want to get my credit cards back."

Gemma Clancy (32:20):

Yeah, you just put them back up.

Will Richards (32:21):

Yeah, exactly. So the way this differs is it's a continuous look. And I think as well when you have this line of credit as a business or an individual for a bank or someone who's lending, you get a continuous view of that borrowers credit. So they have one product in particular, which is called the early warnings' solution, so very, very inventive name, but it really is to proactively stay on top of their customers who are maybe exhibiting early lines of credit risk. And I think it's hopefully a better solution because then they can be proactive about maybe what's going on, maybe stepping in. Because the worst thing a bank wants is someone to default on their line, and it's obviously not good for the borrower as well when that happens.

Gemma Clancy (33:07):

True.

Will Richards (33:07):

So hopefully it becomes a bit more up to date and allows everyone to just be a bit more informed about what's going on.

Gemma Clancy (33:14):

Yeah, I wonder whether it will also impact the interest rates that they offer certain customers at the beginning of the application process for a new loan, maybe they would increase it. But if they decided they still were happy to provide the loan, maybe they just increased the interest rate slightly. I don't know. But yeah, it'd be interesting to see what the use cases are.

Will Richards (33:30):

It'll be interesting to see how it plays out because I think just this continuous trend of financial instruments just continuously getting more and more sophisticated. So just the amount of data flowing between the systems with open banking and those sorts of things now, it's becoming a much different product than it was previously. So I'll just talk maybe about the raise as well. So they got capital from Westpac and nCino who contributed together $28 million worth of the equity raise. And then Acorn Capital also invested about $9 million into the business as well. So they've got some pretty big names behind the investment round as well. And interesting, I saw that it was hard to pick whether it was based on research out at these universities. But they definitely have ongoing relationships with some of Australia's best universities around the product and around the product development. So they're continuing to work with UNSW, the University of Sydney and UTS around the innovation and the research and development of the platform itself. So great to see the university staying involved with a project like this.

Gemma Clancy (34:43):

Well, yeah, I guess you'd expect that kind of level of due diligence when you're raising $37 million. It's not a small amount of cash, but yeah, very impressive.

Will Richards (34:53):

I also had a special mention for a startup that I just really, really wanted to cover, so I'm going to be super quick with this one.

Gemma Clancy (34:59):

Oh, I almost covered this one too. It was like so close, so close as my top pick. Anyway, go on. We better tell them what it is.

Will Richards (35:06):

Yeah, so it's a business called Noveco Surfaces, and they actually didn't raise an equity round. It was a $7.75 million debt round from NAB, the bank. And really what they do is they recycle glass, so glass bottles, wine bottles, those sorts of things into tiles that you can use in construction sites, homes, residential, those sorts of things. And once again, it's commercializing technology that's come out of university. So the University of New South Wales in this particular instance, but my big call-out was I always go on the websites of these startups to look at what they're doing.

Gemma Clancy (35:44):

Oh, how nice is it?

Will Richards (35:45):

And the product is stunning. It is such a beautiful product.

Gemma Clancy (35:48):

So pretty, yeah.

Will Richards (35:50):

Yeah, definitely one to check out if you're renovating a home or a bathroom anytime soon. They do floor tiles, bench tops, all that sort of thing. And it's really stunning material.

Gemma Clancy (36:00):

Yeah. My mum listens to the podcast and she just finished re-tiling her front porch, and now she's probably going to be hearing about this wishing she used these tiles, but it's okay, mum, you picked the right tile. It's all good. I'm sure you can use these tiles another time.

Will Richards (36:13):

Yeah, I'm sure, I'm sure. So the funding will be used to really expand the manufacturing ability of the business itself. So right now they are generating 20,000 square meters of tiles a year, and that's going to be bumped up to a quarter of million tiles a year. And once that economies of scale kicks in, I think the actual price point for the tiles will really dropped down. So I think it's interesting that they're not sort of saying, "Where there's green tile solution, and if you're really into the environment, you should use us." What they're saying is, "This is a new version of tiles and we're going to be as cheap as the tile next to it when you go to Bunnings. So use us because it's better for the environment." And I think it's just an awesome use of recycled material that often we say these things are recycled, but where are they actually reused? Sometimes it's hard to see.

Gemma Clancy (37:07):

Yeah, it's great. Okay, Will, it's time for KAS, which is knowledge as a service, and it's the same way that we wrap up our normal weekly Overnight Success newsletter, which is with our top, our favorite startup relevant read, listen or watch of the week. But I wanted to make sure that you covered your own article as your KAS because you'll never bring it up yourself. And that's your article that you've published recently on the Overnight Success website around Australia's sports tech sector. So go on, tell people about your article, Will.

Will Richards (37:45):

Yeah, thanks for forcing me to plug my own content. I do have another KAS though, but I'll quickly summarize what I wrote about. My article really focused on the Australian sports tech sector, and I've been really sucked into what's been happening in the Olympics, and definitely been watching way too much sport. But I really got sucked into why Australia was sort of outperforming compared to these other massive countries. And I just fortunately went to the Australian Sports Tech Network, their annual report events. So they do a bit of a summary, a bit like Cut Through Venture, but just focusing on sports tech.

Gemma Clancy (38:22):

Yeah, cool.

Will Richards (38:23):

So heard some really interesting stories that night around what was happening in the Australian sports tech sector, and it's kind of this industry that bubbles away that doesn't get a heap of attention from the technology media in my opinion.

Gemma Clancy (38:37):

Yeah, it's pretty rare that we cover news about a sports tech company.

Will Richards (38:41):

Yeah.

Gemma Clancy (38:42):

I agree. Yeah, it's fairly underrated.

Will Richards (38:44):

And the sector as well is much bigger than you think. This article really focuses on athlete performance and I think that's probably what the Olympics really is at its core about, and it's sort of what you care about, but it has all these other, there's the whole media side of things as well. Sports now becoming one of the few things that actually gets people to watch TV live as we move away from linear TV. The only reason why you sort of watch TV live is to watch a sports event. So there's this whole aspect around fan engagement and broadcast and innovation in those aspects as well. There's the athlete performance side of things as well, and there's a heap of tech going into stadiums and stadium engagement of fans.

(39:25):

So one, trying to get people in the door, but then also trying to get them to spend money when they're in there and really engage with what's happening on and off the field. This article, I really focused on some of this technology and the startups that exist in Australia that have actually been used to great advantage in the Olympics. And I'll just talk to one of them, which I think is a great example of this, and it's a business called Gerford AI, which is actually a Melbourne based startup and it's using AI to... I think the best example in the Olympics is around the swimming. So the Australian national team and the US national team who won the most medals out of any country in the swimming in particular, both use this technology to improve their athlete's ability in the pool.

Gemma Clancy (40:15):

Correlation or coronation.

Will Richards (40:17):

Yeah, it's a funny one.

Gemma Clancy (40:18):

You make your own decision.

Will Richards (40:21):

Yeah, but it does, it's this computer vision that sits in the pool and it monitors the way the athletes moving through the water. It gives them an idea, a heap of different data points that the coach and the athlete can then reflect on and use to improve. So it's just bringing a whole new lens to performance and coaching to sports like swimming, but it's also been used in beach volleyball and table tennis. So it's an interesting example of just data being captioned and AI being used in sport.

Gemma Clancy (40:49):

Yeah. And no doubt more and more companies are going to be getting into this space in Australia because they can see probably our own Olympics on the horizon when we host them in Brisbane in a couple of cycles time. I know certainly Gav Parry who writes for Pulse Check, he's been keeping his eye very much on what's been happening on that intersection between media and arts and entertainment, and then how it intersects with sport and everything that's been developed in the lead up to the Olympics. Yeah, great article. Well done, Will. Everyone go and read Will's article.

Will Richards (41:19):

Thanks. What was your KAS of the week?

Gemma Clancy (41:22):

My KAS of the week is from my favorite podcast, The Imperfects, which is hosted by the founder of the Resilience Project, Hugh van Cuylenburg, alongside his brother and also Ryan Shelton, who's a fairly well-known TV entertainer and comedian. And yeah, The Imperfects, it's a great podcast here is just generally covering mental wellbeing. It ties into stories of well-known Australians who have had all their various struggles and unpacks those. But the episode that is actually in my KAS today is one that doesn't follow their normal format, and it's a little bit more of a typical kind of startup founder business podcast style. It's called How I Built This, the episode titled, How I Built This.

(42:05):

And you actually, you have to listen to it to understand why it says this and not this it. It's a too long of story for me to explain now, but it's a riff on the very popular podcast How I Built This, which interviews founders and how they built their companies. And so Hugh the founder of the Resilience Project, which is the company behind the podcast and runs these amazing wellbeing programs in schools and in organizations to help people build resilience through gratitude, empathy, and mindfulness. He talks through how he built the company. And I guess the main takeaway for me really was that age doesn't matter at all. I mean, Hugh's not old by any stretch of the imagination.

(42:44):

But he started out the Resilience Project when he was in his mid to late twenties and really didn't make much money for the first three or four years. I think it took three years for him to make the same entry-level wage he was making as a teacher before he started the Resilience Project. And that was like forty-odd thousand dollars. And so he just chipped away at it for years and years because he just was so passionate about it. And it was really, really awesome to listen to. And a good reminder that amazing businesses often don't have great shortcuts. Not all businesses are likely, now to AI, to get acquired after two years for millions and millions of dollars, but it doesn't take away from the businesses that take longer to build.

Will Richards (43:27):

Most things are not an Overnight Success.

Gemma Clancy (43:29):

Most things are not an overnight success. I don't know why I didn't realize that connection, but a hundred percent. But indeed, optimization. You must have thought that's where I was going with it.

Will Richards (43:41):

Yeah. Yeah. I was like, oh, "This is a great build up." And then it's like-

Gemma Clancy (43:45):

Connection to us. Did not make that connection, but yeah, clearly I resonate with it on many levels. So what was your secondary KAS other than your own article?

Will Richards (43:59):

My actual cast before you forced me to plug my own content was-

Gemma Clancy (44:03):

Your actual KAS.

Will Richards (44:04):

It's a newsletter actually, and I think it's going to be probably a source of many future KAS's, and it's written by an investor at Firemark Ventures called Josh Boccamazzo. And what he does is pull together and aggregate some really high quality pieces of content on a few key topics each week. So one's venture building, so building a startup. One will be on venture investing, so investing in startups. And then the third is sort of like a general resource around learning about the startup ecosystem and fundamental knowledge, which is really useful for just anyone who's interested in this space.

Gemma Clancy (44:39):

It's like KAS on steroids. I'm looking at it now.

Will Richards (44:42):

Yeah, it honestly is KAS on steroids.

Gemma Clancy (44:44):

Probably even more like VC nerdy, no offense Josh, but this is super nerdy.

Will Richards (44:50):

Yeah, it definitely goes into the deep... I've chatted to him about it, and he's obviously really deep in the weeds and loves learning about the space, so he finds some really niche.

Gemma Clancy (44:59):

I know there's a lot of people who love it though, based on the reactions to a lot of your KAS's, which are usually in this kind of realm. There are definitely a lot of people who will love this.

Will Richards (45:09):

So really good resource. Check it out. We'll put the link to the newsletter in the show notes, and it'll be in our newsletter this week as well. So one to check out.

Gemma Clancy (45:24):

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

Will Richards (45:49):

Catch you next week.

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