Issue #2 - The rise of climate tech startups, hybrid funding rounds & more!
Hello 👋 and welcome to Issue #2 of Playbook Deal Flow!
Apologies for the newsletter being a little late this month…with moving houses, dealing with a throat infection and Melbourne finally getting out of lockdown it’s been a busy few weeks for me, but I’m excited to share 4 fantastic new startups this month as well as some analysis and insight from the startup ecosystem for the month of October.
Before we get into this newsletter, I wanted to start off by saying a big thank you to all of you for reading and supporting Issue 1!
This newsletter was an experiment to see if there was a way for companies to supercharge the way they are able to raise capital for their rounds and I’m delighted to share some great stats from the previous Issue:
Results from Issue 1:
😇 15 x Angel & VC intro’s made for 4 featured companies
💥 2 x Customer introductions were made for the 4 featured companies
📈 The newsletter achieved 70% open rates from existing subscribers
🔍 Of those that opened the email, there was a 23% Click Through Rate (CTR)
🙌 Issue 1 achieved an NPS score of 50
Here’s what the founders said:
“I was pleasantly surprised by the number of intros through Playbook Deal Flow, many of them have resulted in follow-up meetings and conversations. It's great to be part of the Startup Playbook community. Having followed the podcast for a long time and now the newsletter I have found that the people involved and the community are helpful, passionate and provide wisdom around helping your business to grow.” - Chris @ HANK
AND
“Getting involved in the Playbook Deal Flow process was really helpful for me and Glow on a number of levels. In my role as a founder and CEO, time is my biggest constraint, but this simple and engaging model provided an easy and natural opportunity to raise our journey into the line of sight of like-minded people. It created a platform for numerous conversations with investors and peers about our vision and growth potential and has helped developed our own deal pipeline. Rohit has been generous with his time and networks and has made heaps of helpful introductions throughout the process. I’d recommend founders and investors out there lean in to any opportunity to get involved! - Tim @ Glow
And a big thank you for some great feedback on ways to improve the newsletter. Here are some tweaks made to this issue:
Adding a minimum cheque size to deal infos. This will help give investors visibility on fit for potential investment and will ensure we keep the bar high for potential intros to startups with people who can meet their requirements
Adding a section for NZ investment announcements. You can find all of the announced funding rounds in October here
Unfortunately there are some limitations with the platform on formatting but I’m working on it.
There were also some bigger feature requests that were made that I am working on in the background…watch this space 👀
And if you are joining us for the first time, welcome! If you enjoy what you are reading, please consider subscribing to ensure that you don’t miss a future issue of the newsletter below:
Without further ado, let’s get into Issue #2 of Playbook Deal Flow!
The Deal Room:
Every month I’ll share details of a few companies that are currently fundraising. If you would like more information or want to connect with the teams, hit the “request an intro” button…I always do double-opt in intros…
Here are the companies selected for Issue #1 👇
CheeHoo:
🤔 The Problem: If there’s anything that COVID has taught us, it’s that the vast majority of us lead lives that are filled with must do’s and should do’s and it’s a tough balancing act trying to juggle all of the demands of our time spanning our personal and work life.
🙌 The Solution: CheeHoo is a Life OS Platform with a Customer app that helps busy people juggle their life with their tribes at home and work. CheeHoo is the assistant that has your back, it grows and learns with you and targets the day-to-day friction in life, its technology designed to serve you. It does this by helping you manage schedules, tasks, events and more!
🔑 Key Team members: Pauline Fetaui is the Founder & CEO. She built this app to scratch her own itch after juggling her own personal and professional career as the GM for River City Labs and Startup Catalyst, having previously spent 19 years in corporate life working for organisations such as the ATO, Hewlett-Packard and Bupa.
Other key team members include Anthony Kravinskas (CheeHoo CTO and previously Practice Lead at DXC and Program Director at HP) and Advisors Damien Choy and Alex Rankin (Global Head of E-commerce at TikTok, Formerly Chief Revenue Office at Alibaba)
🚀 Traction: Beta app has seen 4k downloads through small market tests in multiple beta groups. Acquisition funnels tested resulted in a CAC $1.07 and 28% MoM growth over 5 months with organic growth at 3% when no marketing exists.
😇 The Ask: Raising $450K round with $100K already committed. Minimum cheque size of $50K for investment
Coaxion:
🤔 The Problem: Traditional financing options have not evolved for operators with heavy earthmoving/construction equipment. This means that Operators need to either pursue traditional fixed fee loans that are devastating on cash flow when equipment is under utilised or they need to pursue more expensive/unit models like renting or hire purchase, where they lose the benefits of asset ownership.
🙌 The Solution: Coaxion provides a usage based or “pay as you use it” finance for heavy earthmoving/construction equipment. They use machine learning, IoT and 30 years of industry experience to apply data in a way that allows them to provide a variable payment model based on how much and how the machine is used.
🔑 Key Team members: Paul Higgins (Co-founder & Chairman), CEO of Dingo, a global leader in predictive maintenance software for heavy equipment managing $13B of equipment globally
Chris Maycock (Co-founder), Mechanical Engineer and Tech Innovator
Colin Armbrutser (CEO), Proven High growth SaaS CEO in US and Australia
🚀 Traction: 2 Assets have been financed with a pilot customer. The total asset value is 400K with the total forecast TCV estimated to be 510K of which approximately 260K are fixed/base repayments with the remainder being variable based on usage. They have taken learnings from pilot and applied it to the MVP product that is now ready for launch.
😇 The Ask: Raising $1.5M with $850K already committed. Minimum cheque size of $100K.
*Playbook Coach:
*(no affiliation aside from having a great name 😉)
🤔 The Problem: Despite Australian parents spending $2.1B per annum in organised sport and activities for their children (approximately $63M in personal coaches and trainers), the search for quality coaches is difficult.
Without the right coaching/trainers or adequate support, kids do not develop or reach their full potential. Within sport this leads to increased drop out rates, a lowering of basic levels of recommended physical activity for kids, and a general aversion to sport.
🙌 The Solution: Playbook Coach connects athletes with coaches, so that they can play to their potential. Playbook Coach makes it easy and safe to find a coach or mentor to support confidence, and competence, so people enjoy the sport they play and build a lifelong love of play.
Coaches range from club level to international athletes and Olympians such as Emma Jeffcoat (Australian Triathlete) and Ryan Harris (Former Australian International Cricketer).
🔑 Key Team members: Chelsea Murphy (Co-founder) Previous roles in HR, operations, data and finance across organisations such as Rio Tinto, David Jones and UQ Sport
Kieren Murphy (Co-founder) 15 years of experience in financial advisory, business consulting and business development. Founder of 2 financial planning firms; Cash and Parinity
Chris Lynn (Co-founder) International Cricketer and cricket commentator
Collectively they have worked with several other sporting businesses either directly or in consulting capacities
🚀 Traction: Over 450 coaches are currently live on the website, covering 30+ sports across 7 states/territories within Australia. Over 5,000 athletes have used the platform. Received $400K GMV in bookings to date with a 77% growth rate compared to the last 12 months.
😇 The Ask: Raising $1M round with $700K already committed. Minimum cheque size of $100K
Want to have your startup featured in a future issue of Playbook Deal Flow? Get in touch here
The Memo:
Each month, I’ll go a little deeper into one company and this month our featured company is StudyMe.
Choosing where and what to study at university can be a really difficult problem for high school graduates. That problem is compounded when you are thinking of studying overseas, particularly for universities and courses whose entry requirement they may not be already familiar with. As a result, potential students are often overloaded with choice and information when making such an important life decision
For universities, recruiting international students is a core part of their business but it is often a time consuming and expensive exercise. Through their current approach, Universities often spend time and money to attract interest from students, only to find that many students don’t meet their requirements and for many they may not even have the right course on offer.
This is where StudyMe comes in.
Instead of following the traditional approach where students search for universities via websites, fairs and through agents, StudyMe flips this model in its head.
Through StudyMe, Universities search for qualified students. Universities use the platform’s search tools to find students whose profile is a match for their courses and selection requirements.
Globally there are 28,000 universities and over 2M students that are currently studying overseas.
StudyMe’s business model is simple. Universities sign up for a small annual fee and pay a success fee for each student successfully placed at the university. the Annual Contract Value (ACV) of a University is $20K-25K
To date, StudyMe has signed up 60+ universities from 9 countries as clients and they are currently signing up 1500+ students per month from 100+ countries.
In their first year of operation they turned over $480K in revenue. This year they are on track to turn over $1.2m 🚀
StudyMe is raising it’s first round of capital of $1.2M of which $200K is already committed. The minimum cheque size for this investment is $50,000.
The Folio:
An update from last month where amongst covering a record month of fundraising in Australia, I also ran an analysis on the startling disparity of funding between teams led by all-male vs teams with at least one female co-founder.
I don’t have any specific solutions, but wanted to highlight a few things I am getting behind through my role at AWS.
We are sponsoring Startup Victoria’s next “Founder Connect” event focused on female founders. It’s an event geared towards helping plug founders into the ecosystem in a speed networking format. The event takes place online on the 11th of November. You can find details/signup here.
We will also be sponsoring 2 x year long memberships at One Roof Coworking space for the winners of the People’s Choice & Overall winners of the next Startup Victoria Pitch night.
Separate to this, I’m also be going to be making time each week to meet with female founders/founders from under represented backgrounds - founders feel free to reach out to me at rohit@startupplaybook.co :)
Obviously these are all small steps, but keen to hear any other solutions or programs we can get behind and support! Or reach out if you would like to join me in opening your schedule up to meet with founders!
Moving on to the month of October, we saw a total of $436.98M in funding being allocated to 46 startups. 2 of these announcements were for undisclosed amounts so have been left out of analysis, but below is a breakdown of the 44 investments by quantity of deals and volume of capital per investment stage.
Once again, the entire list is too extensive to be included in this newsletter without overstepping the word count limit for Substack so I have put all of these funding announcements sorted by stage here.
There are however a few trends that I wanted to dive a little deeper into…
1) The time is now for Climate tech startups
It seems timely given that COP26 is currently taking place that we have seen more of a spotlight and activity in a sector that provides one of the biggest challenges in our lifetime - climate change.
This hasn’t just happened overnight, but it does feel like we are at an inflection point where both founders are looking at solving these large problems and this is being matched with investors with the capital and conviction needed to back these founders.
This month alone we saw Mike Cannon-Brookes and his wife Annie turning their private investment firm, Grok Ventures, into the country’s first $2 billion venture capital fund with a pledge to invest that figure into climate change-focused companies.
Alongside this, ReGen Ventures announced that it is raising US$50 million (A$67m) for its first fund as it looks to back startups with a focus on regenerative technologies. The fund has completed its first close of US$20m on the $50 million target.
So how does this increased funding translate into actual investments in the ecosystem?
In October, although Fintech was the clear leader in total funding amount, with 143M (32.7%), the Climate/Sustainability sector was the next highest with 81.48M (18.6%)
The focus on backing founders focused on tackling climate change/sustainability is even more pronounced when focusing just on Seed stage investments with 25% of all Seed stage deals being focused on Climate/Sustainability focused startups and accounted for 31.2% of the total capital raised for seed stage investments this month.
This is only looking at data from a single month, however these results would have seemed unlikely just a few short years ago.
This feels like an inflection point rather than an outlier…
Exciting times ahead!
2) Hybrid funding options
Speaking of changing landscapes, I wanted to highlight one particular fundraise this month and that was the $11M raised by Zero Co.
Zero Co is a start-up that makes reusable and refillable household plastics and cleaning products. Earlier this month, they kicked off their fundraising by announcing that Square Peg had provided $6M in funding to the company.
The next day, they launched their equity crowd funding campaign and managed to shatter records (and “break the internet”) raising $5M from 3,082 new investors from their community within 6 hours 😮
The incredible fundraising achievement aside, I think that ZeroCo’s hybrid approach to raising capital is going to be a more common occurrence moving forward.
Founders now have more choice than ever, particularly as we see more options like ClearCo launching in Australia with $100M adding to local players like Tractor Ventures and Birchal etc providing alternative financing solutions for founders.
The best companies will always have no shortage of funding options, but with potentially lower capital allocation on offer through segmented or split funding rounds, VCs and Angels will have to have clearer value props and point of difference to win their way into the best deals.
The Stash:
Every month I’ll share a few resources that I found useful.
📰 VC news:
ClearCo launches in Australia with $100M war chest. More info here
Tidal Ventures launches Tidal Expert Network program. More info here
Mike Cannon-Brookes announces pledge to invest further $1.5B in climate tech startups. More info here.
Startmate ramps up valuations and investment. More info here
ReGen Ventures raises $67M to back startups with a focus on regenerative technologies. More info here
Liverpool Partners, a new Impact Multi Strategy Fund, has hit its first close with $350M in capital. More info here
📚 Books:
The Dumbest Guy at the Table: How I founded Australia’s First Unicorn by David Shein. Link here. Ps check out my podcast with David here
📝 Blogs:
“B2B SaaS benchmarks: What metrics do VCs look at for signs of Product-Market Fit (PMF)?” by Andrew Yeo @ AirTree VC. Lifting the curtains on benchmark metrics for B2B SaaS companies when AirTree assesses investment opportunities. Link to blog here
And that’s time (and word limit 😬) on Issue #2! Thanks so much for reading The Playbook Deal Flow and for making it all the way to the end.
I would love to hear from you to see how I can make this newsletter more valuable for you:
👂I would love to hear feedback on what you loved, what you wanted to see change/improve and what you would like to see in future issues of The Playbook Deal Flow. If you have a spare 3mins, I would appreciate it if you could fill out this brief survey.
👋 Feel free to reach out if you want to connect. You can find me at rohit@startupplaybook.co or on Twitter & LinkedIn
❤️ If you enjoyed this newsletter, I would love for you to share it so others can benefit from this resource as well. Ps don’t forget to subscribe to this newsletter if you haven’t already!
See you at the next issue at the end of November!
Cheers,
Rohit Bhargava, Playbook Deal Flow