OpenAI’s Sam Altman says hai

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

Sam Altman says hAI, a message to the disc-AI-ples:

On Friday OpenAI’s Sam Altman touched down in Australia – the final stop in his 28 city world tour, where he’s been meeting with industry experts, influencers, prime ministers and regulators on AI over the past four weeks.

Altman started the day meeting with Science and Industry Minister Ed Husic, where he agreed to give Australian researchers new access to OpenAI’s models when future versions are developed.

He then flew to Melbourne for a fireside chat with 2,500 people. His message:

• AI is a global reset for everyone – everything will be different now.
• The innovation potential in front of us is exciting. Don’t worry about the past. All the rules have changed and everyone’s at the same starting line, providing opportunity for those who embrace the new tech the fastest and deepest.
• The whole world needs this technology. Productivity growth will be phenomenal, e.g. engineers will become 20-30x more productive, and output will skyrocket.
• Experiment with APIs. Try and see what works and adapt as you go.
• We will never run out of problems to solve. Our capabilities will increase as our tools improve, but our expectations will too, and that’s exciting!

Thanks to the Startup Network (fka StartupVic) for facilitating the talk. We loved being there, but what was with the classic car quiz 🧐?!

Will to survive (or not)

The AFR accurately summarised the current state and sentiment in Aussie startupland this month:

the divide between the weak and the strong is growing. There is an increasing number of “zombie” companies staggering along, hoping their stronger peers can bring them back to life, or at least survive the tech winter, according to industry insiders.

What’s the consensus?

• We’re seeing a host of VC-backed startups dwindle and cut costs. Many wont make it.
• Later stage startups have limited funding options, particularly now that international heavyweights like Tiger Global Management and Softbank have significantly reduced their tech investments.
• Those with robust balance sheets are taking advantage of the moment with M&A and new product investment.
• Early-stage, sub-$5m funding rounds remain resilient.
• Debt financing is filling a funding gap, e.g. Partners For Growth (PFG) has deployed over $50m in the past three months.

Here’s how that’s playing out in recent local news:

Early-stage goals. One Future Football (1FF), a Melbourne-based startup, has launched what it claims to be the world’s first global digital soccer league. The virtual league, which uses CGI technology to create virtual soccer players and teams, aims to attract first-time soccer fans. It has received $3m backing from Blackbird, Nick Kyrgios, Naomi Osaka, Steve Smith and others.

Same, same, but different. Woolworths bought the Milkrun brand name. As SmartCompany put it, it’s “just startup cosplay” – Milkrun brand + Woollies stores + Uber delivery. Digital healthcare venture studio Eucalyptus—which recently raised $50m to expand its weight-loss offering, Juniper, in the UK and Germany—acquired the digital assets of Jenny Craig Australia.

Pruning. Linktree cut more than a quarter of its staff (mostly in ANZ), citing a move to facilitate growth in the US following Instagram’s threat to its main product. The founders will remain in Melbourne to lead the business, which it says it is “growing faster than ever” with 40,000 sign-ups a day. In the same memo, Linktree announced it had acquired Sequoia-backed German rival Bento, which also provides “link in bio” services. Terms of the deal were not released.

Bootstrapped payday. NZ-based edtech Education Perfect acquired Essential Assessment, in a deal worth around AU$40m. Former maths teacher Andrew Spitty founded and bootstrapped the startup to address the lack of consistency in assessing students’ understanding of the curriculum across schools. Spitty and his team will join Education Perfect, and the acquisition will enhance the company’s teaching content and data analytics capabilities.

Better together. Other M&A happenings:

• Telehealth startup InstantScripts will be acquired by retail giant Wesfarmers through its subsidiary, Australian Pharmaceutical Industries (API), in a deal worth approximately $135m.
• Online booking platform for tours and activities, Rezdy sold to a US private equity firm for over $100m.
• Humanforce acquired ASX-listed HR tech firm IntelliHR at a $77m valuation.
• Melbourne-founded office tenant experience proptech Equiem acquired SpaceOS, a Dublin and Warsaw-based company developing software supporting flexible workspaces. The deal is rumoured to be worth “north of $10 million.”
• Hospitality payments startups Mr Yum and me&u have appointed investment banks to advise them on a potential merger.

Investing for growth. Design tool Canva, which recently surpassed 135 million monthly active users, unveiled a suite of new developer tools – software development kit (SDK), new APIs and an app marketplace. It is launching a new $50m developer fund. Despite this growth, one of its investors T. Rowe Price has further marked down the value of its investment. T. Rowe Price values the unicorn at US$13bn, down from US$40m in September 2021.

HR, payroll, and employee engagement firm Employment Hero announced plans to expand aggressively after launching its latest product, Swag – a consumer app for employees that provides job ads, payment features, and a discounts and benefits program.

Alt-Plastic fantastic

ClimateTech is still hot

Brisbane-based startup Earthodic raised $1.85m for its bio-based coating solution, Paperbarc. The waterproof coating enhances the water resistance of paper and packaging while maintaining recyclability, potentially replacing wax or plastic-coated packaging.

Samsara Eco, which is developing a plastic-eating enzyme tech that breaks down plastic to its base molecule to make it infinitely recyclable, announced a new partnership with Lululemon to create the world’s first infinitely recycled fabric from apparel waste.

Carbon accounting startup FLINTpro raised US$9m (AU$13.5m) to ramp up US growth. Its SaaS platform pulls together disparate carbon measurements into one visualisation tool. Customers such as the NSW Department of Primary Industries and the Australian Agriculture Company (AACo) use the tool to track emissions and measure the validity of sustainability claims.

Fresh monies

Local investor news

Giant Leap raised more than $45m for ‘Giant Leap II’ to support sustainability-focused startups. It aims to grow its portfolio of investments to 25 within the next five years. Its current portfolio boasts a 55% rate of women-led businesses.

Melt Ventures closed the first $15m of its planned $30m fund, which will focus on investing in advanced manufacturing and renewable energy hardware. Its initial investments include clean energy firms MGA Thermal, Allegro Energy, and Endua, which raised $11.8m last month for its hydrogen generation and storage technology.

Startup accelerator Antler has a new $425m fund to back the further growth of startups. Investors include Canberra Airport billionaire Terry Snow’s Snow Foundation, Flight Centre co-founder Geoff Harris’s family office, VC Roger Allen and Macquarie Private Wealth. Antler says it is also close to closing a separate $60m fund that aims to back 125 new companies through its program.

Time flies. It has been nearly a decade since Australia’s first VC funds, including AirTree, Blackbird and Rampersand, were created. The life of the funds were 10 years, so this milestone also means the VCs are now due to pay out investors. Each are now weighing up their options: exit their investments (eg by sale or forcing an IPO – not ideal given the market right now), ask investors to provide an extension or create continuation funds.

Mike Cannon-Brookes’ Grok Ventures is going all in on startups and decarbonisation, and completely shifting away from listed equities. Cannon-Brookes also teamed up with Quinbrook Investments to take control of the the Sun Cable project in the Northern Territory.

Raising? Jason Lemkin shared “10 Simple Suggestions on How to Make Fundraising a Smidge More Successful in 2023.” Worth a read if you’re planning on raising any time soon.

Local ecosystem wins

Melbourne climbed 6 spots in the Startup Genome Global Startup Ecosystem Report 2023, up to #33. Sydney remained steady at #20.

Winners of the Governor of Victoria Startup Awards were announced. Congrats to Mr Yum, Zeller, Willed, Nick Crocker, Rachael Neumann, Dr Elena Kelareva and Emily Casey.

FinTech Australia launched a free, self-serve Interactive Ecosystem Map.

Around the world

Spacial computers. Apple unleashed its new mixed reality headset (aka “spacial computer”), the Vision Pro at its World Wide Developer Conference (WWDC). The computer senses what you are interested in interacting with by watching your eye movement and then looks at your hands to determine what you want to do – no mouse or keyboard.

Australian AR startup, JigSpace featured during. the keynote, demonstrating how Alfa Romeo F1 Team Stake uses JigSpace to collaborate on the placement of brand sponsorships on its Formula 1 car.

In other Apple news, small businesses can now take payments on iPhones using an app, without the need for additional hardware like Square.

Welcome to the trillion-dollar club. Nvidia—which makes AI chips—became a US$1 trillion company fuelled by every man and his dog racing to add generative AI tools to their products.

a16z goes global. US-based Andreessen Horowitz (a16z) is opening its first international office in London later this year to be closer to the crypto coalface. The strategic move comes amidst an escalating climate of regulatory scrutiny towards crypto exchanges in the US (the S.E.C. is currently suing Coinbase). a16z’s announcement pointedly remarks that:

“The UK is on the right path for crypto regulation:

• Working with industry on unique attributes of blockchain tech
• Laying a foundation for future blockchain apps
• Innovative sandbox approach to regulation
• Outcomes-based regulation
• Consumer protection front-and-center”

a16z also announced that it led a US$43m investment in Gensyn, a U.K.-based startup that provides blockchain-based computing resources for AI platforms. The VC agrees with Sam Alman that AI will save the world.

Dissociation. Sequoia, the mega-VC behind investments in Airbnb, WhatsApp, Zoom and countless others, is splitting its China and India arms from the US mothership. It says the split was necessary to avoid ‘cross-border portfolio conflict’ and ‘market confusion.’ Hmm. Each firm—Sequoia Capital, HongShan, and Peak XV Partners—will establish its own infrastructure and investment strategy.

Kids love AI. Over 150 million people have used Snapchat My AI (a chatbot) in the first two months. That’s faster growth than ChatGPT. Snap is using My AI as a tool to gather more insight about individual user interests to improve Snap and its broader offerings, including Snap ads.

China loves livestream shopping… even for buying coal.

That’s a wrap! We hope you enjoyed it.

Bex, Gavin and the team at Ignition Lane

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Gavin and Bex make it their business to know everything going on in technology, startups and venture capital.

Gavin is the Founder and CEO of Ignition Lane. He has 25 years of experience in the technology industry across startups, corporates and venture capital. Gavin was a founding Partner at venture capital firm Square Peg, an SVP of Product and Technology at Experian, and was one of the first employees and CTO at Hitwise – a venture-backed startup that was acquired for US$240m in 2007.

Bex is a founding Partner at Ignition Lane. Driven by curiosity, her career is the epitome of unconventional – spanning technology commercialisation and operations, corporate law, IT delivery and more. Applying this unique mix of skills and experience, she now works with CEOs and their teams to solve problems, drive growth and move beyond the status quo.