Tech Pique (8 April)
Elon Musk acquired over 9% of Twitter and became a Director. It’s been a long-held view of fundies that Twitter is a) behind other social networks in terms of innovation and generally reactive vs. peers and b) under monetising it’s platform. The market reacted positively to the news with Twitter’s stock up over 20% after the announcement. Elon has pledged not to acquire more than 15% of the stock so it remains to be seen how much value he can add without control. His first point of business is asking users whether they would like an “edit” button, which is a bigger change than may be appear at first glance. More here.
Shein, the Chinese fast fashion company, has raised over a $1bn, valuing the company at over $100bn – more than H&M and Zara combined! This seems to completely fly in the face of the recent trend towards “recommerce” in retail and sustainability more generally. So, does Gen Z want fast or sustainable fashion? Shein isn’t the outlier here. There are a raft of fast fashion commerce startups (boohoo, Princess Polly, White Fox Boutique) that have gained popularity amongst millennials and Gen Z consumers over recent years. Recommerce seems to be taking a longer to gain widespread acceptance but is supported by big established brands (e.g. the Iconic’s partnership with AirRobe) and in my view, ultimately will be the winner. More here.
Fast, the Australian founded, US-domiciled 1-click checkout solution is closing operations. A quick summary by my friends at Letter of Intent is published here. From the outside it seems there was a huge disconnect between the amount of funding raised (and associated valuation) and the traction – the hype never lived up to the narrative. All start-ups raise on a narrative but at some point, they need to execute and the traction needs to catch-up. A reminder to investors that even though start-ups raise additional rounds of funding, that doesn’t fully de-risk the business, especially when it is still burning capital and reliant on additional funding.
NetApp has agreed to acquire Instaclustr for over $500m (although the official amount is undisclosed). A great reward for the founders, who started the business in 2013, and the investors on the journey, including local funds OIF, Bailador and a slew of angel investors. Exits are hugely valuable to the investors involved (obviously!) but more so to the ecosystem as a whole as it matures – the biggest detractors of VC in Australia note the lack of liquidity / exits, especially vis-à-vis markets like the US. Hopefully the tide is turning. More here.
Side Stage Ventures launched with experienced Australian angels – adding more funding into the early stage ecosystem. The syndicate invested over $2m last year. While there’s been a plethora of new investors in Australia over the last three years, the common view is that there is still room for more, especially when investors have a more targeted thesis than sector-agnostic ex-biotech. It’s now easier than ever to launch a syndicate - Sidecar is using Ten13’s platform and investors can also use Cheryl Mack’s recently launched Aussie Angles and Ed Hooper’s Startup Galaxy. More here.
Cut Through Ventures released their Q1 Australian venture funding report revealing a record quarter of capital raised – $3.6bn across 169 deals. While there’s been a correction in public market valuations of tech companies over the last four months, there’s an enormous amount of dry powder in the private markets. Great founders and businesses will raise capital…maybe not at the lofty valuations of 2021 but at more appropriate and long-term sustainable valuations. Ultimately, this works in the favour of founders and investors. Raising at too high a valuation puts huge pressure on founders to deliver, especially if there’s a correction in market multiples (as we have seen). No doubt we will see several down rounds emanating off the back of some of the raises completed in 2021. We are starting to see that in the US already. More here.
Lastly, but importantly, Three things you can do support Ukraine’s IT sector.