Saturday, May 21, 2022

Ignition Lane’s Weekly Wrap: The unicorn boom, valuations head south, Meta faces legal trouble

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Welcome to Ignition Lane’s Weekly Wrap, where they cut through the noise to bring you their favorite insights from the tech and startup world.

Ignition Lane works with ambitious business leaders to apply the Startup Mindset to their technology, product and commercialization challenges.

This shawl is going out free for subscribers every Saturday. Don’t forget you can see Gavin Appel talking about the week on the Startup Daily show on Australia every Monday at 2 p.m. If you miss it, you can view the shows of the week here

Here’s their review of the week.

One is born every minute

We didn’t think it would happen, but… another week, another Australian unicorn! Melbourne-based Linktree has raised $152 million at a valuation of US$1.3 billion (4x more than last year), led by Index Ventures and Coatue Management.

For those of you keeping up with it at home, that’s 5 new Australian-established unicorns in Q1 2022: Linktree, Zeller, Immutable, Employment Hero, and Scalapay.

Back to Linktree. Don’t be fooled by the apparent simplicity of its ‘link-in-bio’ product (a category it created in 2016). Much more than a link landing page, Linktree’s strategy is to place itself at the center of the creative economy:

“Everything is hyper-focused on this idea that if we add value to users, if we help them win, maybe they’ll pay for adding value to their lives by reaching their audiences, converting more, getting better results, or save time,” [cofounder] said Zaccaria. “We’re really focused on helping creatives save time and help them run their businesses.”

As a result, it is growing at a staggering rate. With nearly 40,000 signups per day, Linktree has grown from 4 million users at the start of the pandemic to over 24 million users today – the majority of them outside of Australia.

How has it managed to achieve such rapid global growth operationally? Linktree’s VP of Strategy and Operations, Michael Stocks, recently shared a few insights on a AirTree COO Forum† Our favourites:

  1. Be purposeful about where to expand, when (don’t try to do everything at once): “We quantitatively looked at historical data on how each market performed based on key metrics, then added a few qualitative layers such as ‘How hard is it to do business in that area if we hired a team there?’ and ‘Do we see a long-term opportunity for the creative economy in this area?’”
  2. Find brilliant, hungry generalists for your first local hires: “high quality operators, understand marketing, local trends and growth and talk to customers.”
  3. Take a data-driven approach to price localization: eg market research, price experiments and optimizations with real customers.

So, from where might Australia’s future unicorns spawn? The chairman of both Tesla and the Technology Council of Australia, Robyn Denholm, says they likely come from mining technology, ed technology, gaming, distributed ledger and diversified fintech.

Who’s next?

Down rounds galore?

Valuation data from US technology and startup country doesn’t look so rosy.

Partner of Redpoint Ventures this week Logan Bartlett shared a presentation about the tumultuous SaaS valuations. Public SaaS multiples peaked around Q3 last year (20.8x next year’s revenue), but are now returning to pre-pandemic levels (8.8x):

While liquidity was at an all-time high last year (driven primarily by public listings), about a third of US tech companies that have gone public in the past 4 years are now trading below their pre-IPO private round valuations. Even Zoom fell below pre-pandemic prices this week, despite 5x revenue growth:

This means that we will likely see relatively less IPO activity in the near future, which: could be frighten growth investors. For now, however, valuations for growth remain high. That may be because there has never been more dry powder in the VC boxes. Many have recently raised mega-billion-dollar funds — Tiger raised $11 billion, for example, and Insight raised $20 billion in February.

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For the Series A to C fundraising rounds, Carta (a US startup that provides capping and valuation software) found that: US round sizes and valuations are declining this quarter:

Jason Lemkin of SaaStr warns“the coming months and quarters could be the worst time to raise growth and expansion capital in quite some time.”

We have yet to see how this will pan out in the ANZ collection data. Maybe a few rounds of downside (when the pre-money valuation of a fundraising round is lower than the post-money valuation of the previous round)?

Local elevation upwards

solar cable has raised $210 million from investors, including Mike Cannon-Brookes and Andrew Forrest, to develop the Australia-Asia Power Link (AAPowerLink) that will connect Australia to Singapore, providing renewable electricity from resource-rich regions to growing charging centers.

EpiLess has raised $16 million to expand trials of epilepsy monitoring equipment. Erected on the back of the Bionics Institute and St Vincent’s/Uni of Melbourne, Epiminder’s implantable device monitors the brain’s electrical activity to detect seizures, paving the way for their eventual prediction.

kind raised $10.6 million to democratize software engineering by building dev acceleration platforms for SaaS.

medinet $10 million raised from Medibank for its telehealth platform.

Mast has raised $9.5 million led by OIF Ventures. Mastt gives construction managers a single view of the performance of their projects, programs and portfolios.

Bridget raised $7.7 million from OIF Ventures and Perennial Partners. Bridgit is a non-bank lender that focuses on bridging home loans.

Varicon Raised $2.25 million for its construction cost management and analytics product.

tectrax NZ$2 million raised from Movac. Tectrax has developed an electronic amphibious system for the pleasure boat market.

early work raised $700k in pre-seed funding led by Square Peg to build Earlywork as the world’s go-to content resource to explore forward-looking careers, and help young people chart their own path in a rapidly changing world of work.

Local launches and new stuff

Meta under ACCC fire. The Australian Consumer and Competition Commission (ACCC) has: launched legal action against Facebook‘s parent company, Meta, claimed it engaged in false, misleading or deceptive behavior by publishing scam ads. The ads promoted cryptocurrency investment or money-making programs alongside “approval” from prominent Australian businessmen such as Dick Smith, David Koch, Andrew Forrest. The links often led to scam websites. Despite Facebook receiving complaints about the ads, they were not removed.

Solving the gender gap at startup. The funding gap for women’s startups is getting worse (great article exploring why – here

Recognizing that it must play a role in closing this gap, Artesian became the first Aussie VC to join the Beyond the Billion pledge, a global commitment to invest more than $1 billion in female founders.

In NZ, a new business accelerator for women-led businesses, the Electrify acceleratorhas been launched. Applications close on April 3.

Hungry founders. A new accelerator program for plant-based meat/dairy startups launches. plant shape will provide research and development assistance, co-investment opportunities and “a deep connection to the food technology manufacturing ecosystem”.

decarb. National Energy Resources Australia (NERA) and the Government of Western Australia launched LET’s Pitch WA – providing pitch training for low emissions/decarbonisation tech startups and investor exposure. The winners will also receive tickets to the US 2022 exhibition and conference in Norway.

Helping hopo cash flow. food bomb launched Bombpay – a BNPL for cafes and restaurants that leverages FoodBomb’s wholesale ordering platform. BombPay offers Foodbomb users 21-30 days of credit and installment bill payments. The founders say this offering is critical to the hopso industry where “cash flow has never been tighter” thanks to supply chain problems and closures due to covid and recent flooding.

Meanwhile, a consortium of consumer groups from around the world is calling for more regulation of the BNPL industry.

Looking for rental? Start mate launched his talent engine – a platform that enables startups to find Startmate Fellows looking for their next dream role, and to connect their teams with their peers in the community.

Are you considering expanding to Australia? Join us next week in the UK Tech Nation APAC Webinar Series (20:00 AEST 24th March), where we will share insights from our recent project helping UK startups develop Australian GTM strategies. Register here

Change is in the air

A note from our packer, Bex:

Unlike the public markets, I’m about to pop. Baby Bex will be arriving very soon (despite being in deep denial). So as I adjust to life with this new venture, we’re shifting the wrap to a monthly cadence.

We aim to release each issue in the middle of the month. If your inbox is giving us less priority due to this change in frequency, keep an eye out for the wrap on our socials or in your spam/promotions tab.

Wish me luck!

It’s a wrap! We hope you enjoyed it.

Bex, Gavin and the team at Ignition Lane

Watch Gav chatting about all things tech with Startup Daily Monday at 2 pm!


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