This Week in Australian Startups #90, 27th October 2024

We are back to our regularly scheduled programming after about 2 months of Last Week in Australian Startups. If you have strong opinions about keeping it to Monday’s let me know and I’ll take into consideration for 2025.

So this week’s biggest news pieces have been…

1. WiseTech founder Richard White embroiled in scandals finally resigns

I’ve counted, on average, ~5 articles per day been written about this entire scandal. Not to mention the past few weeks with several articles being written across major news outlets.

This investigative piece on The Age is worth the read to understand the full timeline and exactly what’s happened, and how. The tl;dr

• Richard White, the billionaire founder of logistics software company WiseTech, has stepped down as CEO amid revelations of misconduct and inappropriate behaviour
• White was accused of bullying a former board member, buying a house for an employee he was in a relationship with, and making inappropriate advances towards several women
• The WiseTech board was unaware of many of these issues until recently, raising questions about the oversight and disclosure by long-serving directors
• White will remain at WiseTech in an advisory role, but the company faces an uncertain future without his leadership.

InnovationAus has also reported that White has resigned from his position on the board of the Tech Council of Australia, which they have accepted effective immediately.

Other articles worth reading if you’d like to go deeper:

• WHITE OUT: WiseTech founder resigns as CEO and from Tech Council board (Startup Daily)
• Why billionaire Richard White finally quit WiseTech (The Australian)
• ‘Why would they stay?’ Women leaving tech to avoid harassment (The Age)

2. Canva passes $2.5B ARR and adds 1,000 employees in the last 12 months

The path to IPO continues, and the PR team at Canva certainly deserves a raise. It seems a thing of the past, that Canva was dealing with allegations of their own about their former CFO. Every news article since has been a glowing review of how incredible the business is doing.

And that certainly does seem to be the case, now crossing $2.5B in ARR with 5,000 employees. That puts them at $500K in revenue per employee, in comparison Tyro is sitting at $807K per employee, and REA Group is $492K according to TradingView.

That’s not a completely fair comparison, but the main point I’m trying to make here is that employee count/growth is often a vanity metric and doesn’t really mean much without the broader context of the actual ability and opportunity for revenue growth.

A more reasonable comparison would be Xero which is sitting at an $367K revenue per employee, with a market cap of $22.5B. Canva’s last valuation was $26B earlier this year. These sorts of metrics do become more important once a company becomes public.

Metrics that are impressive and indicate strong growth is that Canva has added 115M users in the last 2 years, surpassing 200M MAU. The biggest question mark is that can Canva truly take on Adobe who still has such a stranglehold on the design market.

Firstly - Adobe’s revenue in 2023 was $19.4B with ~30K employees putting their revenue per employee at ~$647K. Now that’s in a reasonable range to Canva.

Secondly - my personal view is that Canva is only really beginning to take on Adobe now. Canva for a long time has focused on on the SMB market, and has entered the race of becoming the ‘everything app’ alongside other platforms like Notion. Canva Docs is the biggest foray into this space, but the acquisition of Affinity is a direct move into Adobe’s market share.

This twofold approach makes Canva a much different company to Adobe, and in many ways it’s shortsighted to say Canva’s main competitor is Adobe.

This announcement comes alongside it’s “Droptober” update in which it’s announced;

• Launched Dream Lab, an AI image generator powered by Leonardo.AI
• Introduced new features for the Visual Suite (Docs, Whiteboards, Websites, Presentations, Video)
• Added branded captions, AI-powered organisation tools, and interactive polls/quizzes
• Expanded chart types and mockup creation capabilities
• Integrated with more workplace apps like Google Workspace, Hootsuite, and Mailchimp
• Expanded content library with diverse stock photos, popular music, and video assets

There’s a lot of context to take in, but I’m of the firm opinion Canva still has plenty of growth and an increased TAM ahead of them. No reason why Canva can’t be bigger than Adobe if it’s able to execute on horizontal and vertical product strategies.

Reading list if you’d like to go deeper:

• Canva has crossed $2.5B ARR and says it has added 1000 new employees in the last year alone (The Age)
• Canva touts revenue leap, new AI tools after Leonardo buy (AFR)
• Canva unveils Leonardo.Ai-powered Dream Lab (Capital Brief)
• Leonardo.Ai begins a second life under Canva (Capital Brief)
• Revenue hits $2.5B but Canva in no hurry to float (The Australian)

Top News

• NSW government to explore central AI office (InnovationAus)
• Paloma Capital is raising $25M for its second fund (The Australian)
• Fleet Space and Rio Tinto partner to explore lithium in Argentina (Capital Brief)
• Global Switch Australia will be acquired by asset manager HMC Capital for $2B (InnovationAus)
• Medtech darling Vaxxas launches $100M raise to fund trials (AFR)
• Starting in 2025, Climate Salad will scale back to a more streamlined model — an online community, newsletters, and webinars (Startup Daily)
• Tutoring startup Stella AI gets acquired after just nine months of being founded (BNA | Simran Nandan | Alisa Wu)
• Jason Pellegrino will step down as CEO of Domain after 6 years (Jason Pellegrino | BNA)
• $55M in CRC-P grants for AI, hydrogen storage and MedTech (InnovationAus)
• Data centre operators to invest an extra $26B in local assets (The Australian)
• x15 Ventures celebrates first major 'exit' as Unloan graduates into CBA division (Capital Brief)
• ANZ's venture arm 1835i plans to step up investing pace after fintech winter (Capital Brief)
• Bigtincan targets $409M Nasdaq listing in joint venture with US alternative asset manager Investcorp (BNA)
• Disrupt Radio, the media startup about startups, is hoping to stage a live comeback next month (Startup Daily)
• SunCable has received Conditional Approval from Singapore’s electricity regulator, the Energy Market Authority (EMA), to import green electricity (SunCable)
• Jess Walker has joined Wollemi Capital Group as their Venture Investment Principal (Jess Walker)

Funding Rounds

• BuildPass, construction safety software for businesses of all sizes, has raised a $7.5M Seed round from Carthona Capital, Saniel Ventures, Preston-Werner Ventures, Recursive Ventures, Horizon VC and Massive Tech Ventures (BNA | Startup Daily | Matt Perrott)
• Conflux Technology, an ultra-high performance and lightweight heat exchange technology, has raised an $11M Series B round from Breakthrough Victoria, AM Ventures and Acorn Capital (InnovationAus | Startup Daily | Breakthrough Victoria)
• Settle Easy, end-to-end property conveyancing platform, has raised an undisclosed amount in an equity-for-media deal from the Scaleup Mediafund (BNA)
• Naked Life Spirits, a low- and non-alcoholic cocktail company, has raised an undisclosed amount in an equity-for-media deal from the Scaleup Mediafund (BNA)
• Esper Satellites, the startup focusing on collecting hyperspectral imagery from micro satellite constellations to supercharge industries with environmental data, has won a $1M investment subject to due diligence from the Paspalis Corporation (InnovationAus | Shoaib Iqbal)
• Nexobot, which makes affordable warehouse parcel sorting robots helping small warehouses compete with the multi-million-dollar robotic systems being deployed by incumbents like Amazon, has raised an undisclosed amount from Skalata Ventures (Skalata)
• Graphics et al., which is building the Canva for Medicine - enabling healthcare professionals make complex medical information more accessible and understandable for patients, has raised an undisclosed amount from Trampoline (Jason Ming)