February 1, 2022

CTV Funding News - January 2022

Welcome to the Cut Through update for February, where we slice and dice January startup funding. Enjoy!

Australian Funding Ecosystem

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Funding News & Analysis

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Good Morning,

And there we were, thinking 2021 was strange. Welcome aboard to the 387 new subscribers who joined us this month. As always, thanks to those who continue to refer friends, family and colleagues – I appreciate it.

A couple of updates as we kick-off the year (for real):

  • I'm excited to have Google Cloud as a newsletter sponsor in 2022. To keep CTV subscription-fee-free, I went hunting for an ecosystem player who would allow CTV to remain independent and who shares CTV's desire to see great Aussie startups succeed. Google Cloud's Digital Natives team fit that brief perfectly. Welcome Googlers!
  • CTV will focus solely on Australia in 2022. We'll cheer on our friends across the Tasman from the sidelines, but we won't include NZ deals in our monthly figures.
  • CTV will cover newly launched start up investment vehicles – venture capital funds, venture debt products, angel syndicates, anything – if it's a vehicle deploying responsible capital to Australian startups, we'll cover it. This was a major founder "ask" in our EOY survey. Investors, please drop me a note when you have relevant news.

And of course, The State of Australian Startup Funding goes live in a few weeks. Keep your eyes peeled for further updates from CTV and Folklore over the next week or so!

Ok, onward...

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Stay calm, and don't over extrapolate.

My favourite university class was Behavioural Finance. Our professor's pet obsession was to sway us from the behavioural bias of extrapolation: the tendency to take a recent experience and project that will continue.

I generally agree with Prof; however, kicking off the year with a Unicorn Month©, the largest ever venture investment in an Aussie startup, and a $700M fund launch announcement, it's hard not to extrapolate that we're in for a massive year.

More than a billion dollars of startup funding was announced in January, making it the fourth-biggest funding month on record. This was up 12.8x on January 2021, which clocked just $80M. Extrapolate that growth!

Deal sizes ran the gamut. 50% of deals were more than $10M.

Despite the low deal count, the Pareto principle held firm again. The largest 20% of deals accounted for 78% of total deal volume. The record breaking Cyara deal skewed the numbers significantly, accounting for 44% of reported deal volume.

New segmentation 👀

The smaller deal count than usual, paired with our new and more granular industry segmentation, resulted in a less recognisable set of industry segments atop of the deal count podium in January.

PropTech/RealTech/Construction saw the greatest number of deals announced with five, followed by HealthTech with four, followed by Blockchain/Crypto/Web3 and Transport/Logistics, each with three.  

Thanks to Victoria-founded but now US-headquartered Cyara, Victoria led the charge from a dollars funded perspective. New South Wales stood head and shoulders above the rest in deal count – accounting for more than half of the reported deals.

The smaller deal count, paired with the clunky availability of official deal stages, meant that average round sizes looked inflated compared to 2021 levels. The average Series A and B stage deals were double the average witnessed in 2021, and Seed deals came in 25% higher than 2021 levels.

Note: the above excludes deals not noting the official round stage.

Quite the way to start the year.

Let's get meta. ChronoBank raised to support its ambitions of mobilising the global workforce via easier employment access and payment for work using the blockchain. Itheum raised a Seed from data mogul Morningstar to scale its personal data monetisation infrastructure. Itheum's tools allow users to monetise their data, by trading it peer-to-peer as an NFT. Some massive investor names jumped aboard the STEPN raise. STEPN allows its users to purchase NFT Sneakers in the virtual world, which generate tokens when the user works out in the real world.

Busier than a Sydney open for inspection. PropTech/Construction was one of the most active segments in June, with five startups raising a combined ~$130M. RentBetter raised to disintermediate the rental agent, and HappyCo raised to make both tenants and landlords happier. Meanwhile, EstimateOne and Buildxact raised to help builders streamline quoting, procurement and management of construction projects.

From (pre) cradle to grave. SA-based Fertilis raised from overseas investors in hopes of making the IVF process a little less stressful for families. The startup aims to reduce the number of times an embryo needs to be handled by a human clinician. At the other end of the circle of life, Gathered Here, raised to continue its end-of-life services platform's scaling. And, for the ailments along the way, Mosh raised to help make some of the more awkward male health issues a little less tricky. Inspiretek raised a Seed to help athletes with mental health support and give them the tools to achieve peak performance.

That'll teach them. Edtech's Continu and Saas Guru raised from a list of top local and overseas investors to make knowledge workers more effective in their roles. Continu helps many of the world's leading tech companies keep their talent up to speed on everything from health and safety to technical courses to leadership training. SaaS Guru does exactly what it says on the tin: makes people cloud software pros.

Google Cloud accelerates organisations’ ability to digitally transform their business with the best infrastructure, platform, industry solutions and expertise. We deliver enterprise-grade solutions that leverage Google’s cutting-edge technology – all on the cleanest cloud in the industry.

Learn why top Startups choose Google Cloud to innovate quickly, turn data into real-time insights and manage resources more efficiently and cost effectively.

Learn more here.

The borders are open.

The five largest deals of the month involved large US venture firms, and US-based crypto exchange FTX led the sixth largest. Little known VC upstarts K1, Accel, Tiger Global, Felicis, BOND, Camber Creek and NewView Capital all made big local bets in January.

With its ~$500M investment in customer experience assurance startup Cyara, K1 set the record for the largest ever Australian startup investment round. There is no need to edit the record books, though, as it was K1 that set the previous record (in Simpro) in 4Q21. Cyara's platform monitors and assesses all customer interactions through a company's website, emails and call centres. Founder and CEO Alok Kulkarni claims an ASX-listing may still be on the cards, but with $500M in the bank, CTV suspects they'll wait out the current public market turbulence.

Led by Atlassian alum, customer satisfaction source of truth platform Dovetail officially confirmed its $88M Series A. Rumours of the mega-round surfaced late last year. 1 in 10 Fortune 100 companies now utilise Dovetail to make customer-data-driven product development decisions. Accel and Felisis were joined by returning investors local Blackbird and Grok, and several high-profile angels.

The notoriously speedy startup investor, Tiger Global, placed a bet in notoriously speedy grocery delivery upstart Milkrun. The startup, which employs a cheeky marketing team, currently services 35 Sydney suburbs via its network of 'dark stores'. Founder Danny Milham of Koala Mattress fame (and fortune) has jumped on one of the hottest (and perhaps the bubbliest) global startup trends in super-fast grocery delivery. It's Tiger's third investment in the segment globally.

HappyCo helps owners of built-for-rental apartment blocks (known in the US as multifamily units) improve their operations, maximise returns, and be better landlords to their tenants. A long list of global real estate and Proptech focussed investors joined the cap table. They joined a set of (likely very happy) local investors, including Alium, Folklore, Blackbird and Startmate.

Following a $30M raise less than six months ago, Eucalyptus raised another $60M to expand its five health care brands into the UK and add obesity management support as its 6th offering. Mary Meeker's BOND led the round. Locals AirTree, Blackbird, OneVentures and W23 joined BOND in the round.

Sports betting platform PlayUp added crypto exchange FTX as a strategic investor to help accelerate its US market expansion.

The Founders

The smaller deal count than usual makes reasonable analysis of gender investment distribution difficult. The percentage of funds to startups with at least one female founder came in well below the longer-term average, at 4.1%. We'll publish a detailed look at this dynamic as part of The State of Australian Startup Funding – and our regular analysis will return next month.

The Funders

Two big startup investment vehicle announcements hit the wires in January. AirTree Ventures announced it received $700 million in fresh funding to launch three new strategies: Air Tree Seed, Air Tree Web3, and Air Tree Growth. Meanwhile, Aussie Angels launched, giving Australian angel investors another path to invest in Australian startups. Investors can find and join angel syndicates to access exclusive startup funding rounds and invest deal-by-deal.Excluding crowdfunding participants, 101 unique investors were reported as part of January's funding flurry. The most active investors were locals Blackbird (Dovetail and Eucalyptus), Grok (Dovetail and Milkrun), Regal (Buildxact and Mosh), and AirTree (Eucalyptus and Milkrun).

That's it. Have an excellent month.– Chris

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