Ignition Lane’s Weekly Wrap: New Zealand’s investment boom, supermarketplace wars, Big Tech’s top dog

Welcome to Ignition Lane’s Weekly Wrap, where they cut through the noise to bring you their favourite insights from the technology and startup world. Ignition Lane works with ambitious business leaders to apply the Startup Mindset to their technology, product and commercialisation problems.

This wrap goes out free to subscribers every Saturday. Here’s their review of the week. 

Flourishing startups & growing ecommerce

A powerhouse Kami-ly. Digital classroom tool, Kami, took out top spot in this year’s Deloitte NZ Fast50 Index, with a staggering 1177% revenue growth over the past three years. In true kiwi fashion, Kami has punched above its weight since being founded in 2013. Backed by only small friends/family/angel funding until a NZ$1.5m VC round in 2019, Kami gained its first 6 million users without any significant advertising spend. This week the startup hit 30 million users, with a team (or ‘Kami-ly’) of just 53.

NZ startup investment up 80%. According to the latest Startup Investment report from PwC and the Angel Association, there were 66 recorded deals (up 60% YoY) and nearly NZ$60m (up 80% YoY) invested by early stage investors in the NZ startup ecosystem in 1H21. Of these, 76% were syndicated. 30% were structured as convertible loans, 43% as preference shares and 27% as ordinary shares.

Awards for days. Telehealth platform Coviu as enabled more than 65,000 health carers to deliver more than 4.3 million remote consultations around the country. Awards judges are starting to take notice of the startup’s impressive growth:

• This week it was named the Australian Technology Company of the Year, also taking out the Medtech and Pharma award.
• Last week AWS awarded it Social Impact Partner of the Year.
• At the end of last year Coviu was named a rising star in Deloitte’s Tech Fast 50, and CEO and cofounder, Dr Silvia Pfeiffer, was named Founder of the Year at the 2020 Women in Digital National Awards.
• Oh, and it is also finalist in the Medtech and Biotechnology and People’s Choice categories for InnovationAus’ 2021 Awards on 1 Dec.

Spaceship is rocketing. Spaceship Voyager’s investment portfolio has grown to over AU$1.25bn under management. Spaceship has won the hearts and wallets of millennials with solid returns thanks to in-house portfolio managers who actively select assets (usually rising tech stocks), rather than outsourcing the job to ETFs – a move that’s paying… dividends.

A permanent shift in buying behaviour. It’s official: ecommerce has gone bananas. A new GlobalData report into the state of Australia’s ecommerce market found:

• Covid-19 accelerated ecommerce spending by 17% to $53.5bn in 2020, then by a further estimated 13.4% in 2021, to $60.6bn.
• So far, payment cards accounted for 37% of all online transactions, while solutions such as PayPal, Afterpay and Apple Pay accounted for 43%. Afterpay alone accounts for 7.7%.
• Australian ecommerce growth is likely to surpass $90bn by 2025.

Logical logistics. All this ecommerce growth means business is booming for third party fulfilment players who warehouse and pack goods for brands. One of those is eStore Logistics, which provides services for Aussie’s biggest online retailers including Kogan, Temple & Webster and MyDeal. eStore has opened five logistics hubs in the last 14 months in order to capitalise on the growing demand for speedy fulfilment.

Back in the race. The twins behind activewear ecommerce site Stylerunner, Sali Sasi and Julie Stevanja, haven’t let its demise in 2019 stop them tackling new ecommerce frontiers. They’re set to launch Her Black Book next week. The ‘app for women who love to shop’ (but still get a good deal) provides members cash back, discounts and flash sales from over 300 brands.

Facing up to reality. Shopping mall owner Vicinity Centres has taken a stake in Click Frenzy owner Global Marketplace to grow its online capabilities and expand its omnichannel retail presence.

Supermarketplace wars. Coles is making a play in the online marketplace space launching Best Buys – internet only deals that look very similar to Aldi and Woolworths offerings of the same ilk. Customers can buy discounted products that you can’t nab in-store, delivered for free and shipped directly from suppliers. But will anything ever really rival a $15 Aldi crockpot?

Local raise round up

Trend of the week/month/year/decade: saving the world.

The bulk of the developed word has made a commitment to net-zero CO2e emissions by 2050. Australia included. Well, kinda. Many of the plans to reach these targets depend on new technologies. Under the Australian government’s new net zero plan* “The Australian Way”, for example, the government says it will invest more than $20bn by 2030 into the development of low emissions technologies.

Investors are realising that means money can be made and they’re now foraging for the next big thing in climate tech.

*Green tech investor and Atlassian cofounder Mike Cannon-Brookes says it’s no plan at all – “its not worth the paper I didn’t print it on.”

Liverpool Partners raised a new $350m fund, Impact Multi Strategy Fund, focussed on investing themes along the UN’s Sustainable Development Goals.

Sharesies raised NZ$50m for its online share trading platform, which is used by 450,000 investors to invest NZ$1.8+ billion. Aiming to entice novice investors, Sharesies has no minimum investment cap. It recently flipped from a subscription fee model to charge per trade – 0.5% for up to $3k, plus 0.1% for amounts above $3k.

Loam Bio raised $40m led by TIME Ventures, a venture capital fund run by Silicon Valley billionaire Marc Benioff, the CEO and founder of the software company Salesforce. Loam Bio has developed a fungal treatment that, when applied to crop seeds, builds carbon as stable sugars around the roots of plants; i.e. carbon is drawn out of the atmosphere, and trapped in the soil.

QuintessenceLabs raised $25m to scale quantum-safe data protection tools.

Superhero raised $15m for its online share trading platform to grow overseas and expand into crypto. It has raised $40m in the last six months. Superhero charges a brokerage of $5/trade, which is waived for ETF purchases and US trades (other US fees apply).

Travlr raised $6.7m for its white label ‘travel as a service’ platform.

Inspace raised $4m led by Our Innovation Fund (OIF) for its virtual property visualisation platform.

Renewtrak raised $3m for its tech that helps software and hardware vendors manage the end-to-end contract renewal process – a big boring pain point. Tidal’s investment notes.

Novalith Technologies raised $2.5m to commercialise its extraction process for lithium that sequesters carbon dioxide and eliminates the need for conventional chemicals processing (i.e. is more environmentally friendly).

Vertus Energy raised NZ$1.2m for its technology that makes green fuel from waste. Its technology processes waste three times faster and produces 60% more energy than rival systems.

IPO rumblings: Compare Club is planning a $65m IPO for its online insurance comparison business. Xpon is preparing for a $12.5m IPO for its marketing and customer experience tech. Australian bitcoin mining company Iris Energy filed for a $100m IPO and listing on the Nasdaq.

VC & money land

Giant Leap released its 2021 Portfolio Impact Highlights. One of the OGs (original gangsters) of impact investment, its portfolio companies GlamCorner, Switch Automation, Goterra, Full Cycle and Amber Electric have helped avoid 6,210 tonnes of CO2e emissions (equivalent to 1,351 cars off the road) and 575 tonnes of waste from going to landfill. Its other investments have helped:

$120k from Startmate. Startmate increased investment and valuation terms in its accelerator program. Founders will now get $120,000 (up from $75k). If you’re an ambitious founder wanting to tackle a big problem, apply for the Summer 22 intake by November 4th.

Money to grow skillz. Applications for grants of up to $3m under the Cyber Security Skills Partnership Innovation Fund are now open. The program aims to support projects that will boost the nation’s cyber workforce skills.

Around the world

Big Tech get bigger. Overnight (our Friday), with a market cap of US$2.49Tr, Microsoft surpassed Apple (US$2.48Tr) to become the most valuable company in the world! Its growth is not likely to stop, either. A new Gartner report forecasts enterprise software spending to increase another US$110bn in 2022.

Apple’s new iOS ad tracking policy might have slowed Snap and Facebook’s ad revenue last quarter, but certainly hasn’t impacted Microsoft or Alphabet’s (a.k.a Google) quarterly results:

• Microsoft revenues were up 22% YoY to $45.32bn. Azure up 50%. Operating income up 27% to $20.2bn.
• Alphabet revenues were up 41% YoY to $65.12bn. Google’s advertising revenue rose 43% to $53.13bn. YouTube ads rose to $7.21bn, up from $5.04bn a year ago. Operating income up 31% to $21.03bn.
• Meta’s (a.k.a Facebook) user growth and revenue were below analyst expectations. Revenues up 35% YoY to $29.01bn. 3.58bn (12% YoY) increase in monthly active users across its family of apps.In case you’ve been living under a rock, Facebook is now called Meta and will change its stock ticker code to ‘MVRS’.

Meanwhile, 11 years after listing, Tesla joined the US$1tr market cap club, along side MAAAM (Microsoft, Apple, Amazon, Alphabet, and Meta).

3 years ago, Elon Musk considered taking Tesla private for $72 billion.

Today, Tesla is worth $1 trillion. https://t.co/6o2HExafkp

— Jon Erlichman (@JonErlichman) October 25, 2021

Sequoia breaks the cycle. Iconic VC Sequoia is breaking with the traditional 10-year fund structure to instead funnel deals through a “singular, permanent structure” called The Sequoia Fund. This is great news for both founders and investors (known as limited partners/LPs). Traditionally, VC funds have operated under 10-year cycles, meaning that a return must be made to LPs in 10 years. This structure can force early exits for portfolio companies and see liquidation of holdings in public companies before they reach their peak. For example, Square’s market cap was just US$2.9bn at IPO (in 2015). Today it is worth over $120bn.

You get a holiday! After being bootstrapped (and hugely profitable) for 23 years, shapewear business Spanx is getting its first ever investment. Blackstone is buying a majority stake at an estimated valuation of US$1.2bn. Founder and CEO Sara Blakely celebrated the occasion Oprah-style, giving every single Spanx employee two first-class tickets to anywhere in the world and US$10,000.

In her toast, Blakely paid tribute to “the women that came before me, and all of the women in the world who have not had this opportunity,” noting that although 50% of entrepreneurs are women, only 2.3% of US VC funding goes to women. Hmm, sounds like a new Blakely fund might be in the making.

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

Bex, Gavin and the team at Ignition Lane