July 1, 2022

CTV Funding News - June 2022

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

Australian Funding Ecosystem

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Funding News & Analysis

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Get caught up with prior editions here.

Good Morning,

For some commentators, the most recent topics du jour seems to be that tech is dead, and that the idea of starting a startup is dead irresponsible. Others seem to be enjoying the fall from grace felt by startups failing, pivoting, or conducting layoffs.

Market conditions are tighter, and while financings are still taking place, the pullback is real and is now showing in our data. Not all startups are guaranteed to survive, but that is always the case, regardless of market conditions. Some other startups will thrive through the harsh macro conditions and benefit from the experience.

As I mentioned last week, I'm not in the prediction game. But I can say, without any doubt, that startups and tech are certainly not dead. I'm as bullish as ever on the gigantic opportunity ahead for Australian startups and I'm optimistic that the Australian startup ecosystem is very much alive.

Next week, join us for our 1H22 review, featuring an international all-star panel, to better understand what's going on from those on the ground.

It'll be a beautiful mashup of optimism and hard truths, with zero predictions from yours truly. Register here.

On a personal note, I'm returning home to Sydney next week after almost a decade in New York, and I'm excited to be joining Five V's venture team. I look forward to working with investors who have already invested alongside Five V, and I'm excited to find ways to work with those who haven't yet.

Founders thinking of raising capital, you know where to find me. But in the meantime, ignore the noise, focus on what you can control, and keep building.

Over to this month's breakdown.

– Chris

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After all that preamble... a record Half!

1H22 secured its spot in the record books as the largest ever month of Australian startup funding. As discussed last month, records like that mean very little, but recognising the milestone adds a little perspective to all the doom and gloom out there.

June funding continued to bounce along just shy of $500M, and the number of announced deals dipped back below 50. Just one $50M+ deal was announced, with a flurry of activity within the $1M to $20M range.

Many founders have highlighted the challenging fundraising conditions to us. We've heard everything from the ugly (certain unmentionable investors backing away from previously negotiated deals) to the expected (deals taking much longer to close).

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EdTech / Training topped the total funding charts for the first time since Go1 raised its behemoth $273M round back in July 2021. Fellow "do-gooder" sector Climate / Cleantech took out the second spot for capital raised and first overall for the total deal count.

Fintech secured the nineteenth overall spot, with just a single deal for under $200K of funding. Fintech startups accounted for 25% of total funding that flowed to Australian startups in 2021.

State of Origin rivalry trickled into funding markets, with QLD, NSW and VIC all neck and neck for the top funding spot. The Blues took out the top spot for deal count, followed by the Victorians.Thanks to Go1, the sunshine state took honors for most capital raised.

Average deal sizes across at all stages slipped well below 2021 and 2022-YTD averages.

Deals are still happening.

Show me some attention, please? Outdoor advertising software tracker startup Veridooh, which lessens the black-box factor from outdoor advertising campaign performance, received backing from local investors. To support its expansion plans into the US, marketing analytics provider Mutiny raised a seed round led by several angel executives from key customers. Cloutly, which de-clunkifies the process for driving customer reviews, raised pre-seed funding.

Let's take this online. Government-backed Australian Business Growth Fund delivered a chunky investment to last-mile delivery startup HUBBED, so that no Australian need leave their home for online shopping deliveries again. And, so we never need to leave for a new suit either; made-to-measure male stylistas InStitchu raised a pre-IPO round to help support the productisation of their own custom garment manufacturing software into a new SAAS product. Car subscription software startup Loopit raised an international expansion seed round from local investors. Speedlancer, a freelancer marketplace offering ultra-speedy design, writing, and data entry services, raised funding from US investors.

Death: the only thing we're willing to predict right now. Death disruptors Bare and Willed both raised capital from local investors. Bare focuses on bettering the 'back-end' after-death (funeral) experience for grieving families, while Willed has modernised the 'front-end' estate planning process.

Brick by brick. Fergus, a tradie job management platform founded by a former Kiwi plumber, secured a sizable capital injection from European VC Octopus Ventures to accelerate expansion across the UK. Archistar, which gives architects, planners and developers instant information on the type of residential projects permitted on a site, given local planning and zoning rules, raised in preparation for its US launch. To fuel further expansion into the UK and US, AI-powered stormwater and sewerage pipeline maintenance software provider VAPAR raised a seed round.

Great news. Congrats to our fellow newsletter aficionados, The Daily Aus, for sweeping up a seed round from a bunch of Canva execs, as well as former Nine boss, the Gynge.

Pass Go, collect $145M

Corporate training unicorn Go1 defied the market crunch, securing the largest equity raise since March (Linktree) and doubling its valuation to more than $2.8B. The company operates the world's largest corporate education content hub for on-demand training. Existing backers, including AirTree, Madrona, Salesforce Ventures, and SoftBank Vision Fund returned, and several new investors, including global growth fund Five Sigma, joined them. With 5 million learners using the platform globally, Go1 more than doubled its revenue in the past year. Go1 has raised capital each year since 2018, with SEEK leading their first big $10M raise way back then.

Solar array manufacturer 5B Solar completed its Series B, led by existing investors AES Corporation and Artesian. Backed by our greenest former PM, Malcolm Turnbull and climate crusader Simon Holmes à Court, 5B enables rapid deployment of ground-mounted solar for utility, commercial, and off-the-grid projects. 5B began raising in 2021, and recently made some strategic moves to trim costs to position itself nicely for its next growth phase.

A group of Aussie super funds invested $40M in Edtech startup Edrolo. Edrolo provides print and digital resources for course curriculum content to assist schools engage with students better. The round was led by Blackbird, with participation from AirTee and super funds Aware Super, HESTA, NGS Super, and Telstra Super. Edrolo already works with 95% of Victorian and 77% of NSW schools, so we sense they'll utilise the funding to deepen penetration within the current customer base, rather than acquire net-new customers BD.

Telco infrastructure provider GigaComm raised a Series B with institutional investors Palisade Impact and Endeavour Asset Management leading the way. The Melbourne-based internet service provider claims to delivery speed more than 10x faster than the national download average (but does that really say much?). The cash injection will accelerate GigaComm's CAPEX heavy expansion into new states around Australia.

Drone-powered logistics startup Swoop Aero raises $18M after turning down a $100M acquisition from a mystery US defence company. Swoop Aero now operates a global fleet of 65 drones, which will balloon to 250 by year's end. Main Sequence Ventures led the round alongside CIA investment fund In-Q-Tel and Giant Leap, with threepeat return investors Artesian and Folklore continuing their support. The fresh funding will support Swoop Aero's entrance into new markets, scale its infrastructure layer, and integrate drone logistics services globally.

Female Founders

The share of deals with at least one female founder dipped below the two-year trend, while the share of deals with all-female founders remains slightly higher than we've seen in prior years.Female founder representation at the earlier angel/ crowdfunding/ pre-seed stages took a tumble in June, dipping well below the average historical figure and below the levels seen in accelerators and the Series-A. Given that unfortunate dip, we encourage all founders to come to meet more than 70 of Australia & NZ's most active investors this August at The Giant Warm Intro. Ask for advice, test your pitch, and create connections with investors. Apply here.

Funders from Downunders

This is where we'd usually list the most active investors of the month, and feature the ever-growing list of newly launched startup investment vehicles.

Well, that new fund list is now way too long for an email.

This month we'll launch our "We got the dry powder" active investor search tool for founders kicking off their fundraising journey. Our friends at Afterwork, Airtree, Artesian, Blackbird, Five V, Flash Ventures, Folklore, Gravel Road Ventures, Investible, Rampersand, Regen Ventures, Side Stage Ventures, Square Peg, Startmate, Telstra Ventures, TEN13, Tidal, and Tractor Ventures have all confirmed to us that they all still got dry powder.

If you're still actively funding startups, ensure you're included in the launch by completing this form.

That's it. See you at next week's webinar!– Chris & Sharon

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