Ignition Lane’s Weekly Wrap: BNPLs dive, VCs raise, employee share scheme changes & Lush drops social media bomb

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Story by: Gavin Appel & Rebecca Eastwood Startup Daily

This wrap goes out to subscribers every Saturday for free.
Here is her weekly recap.

The startup ecosystem: level up

More startups; more money; more government lobbying (better policies – keep your fingers crossed); more outputs; learn more; more support; more startups; more money. All indications indicate that Australia's startup flywheel is leveling one notch higher.

VC cannot be seen yet. It looks like 2022 will be the biggest fundraising year ANZ has ever seen. Blackbird, AirTree and Square Peg are slated to plan mega fundraising early next year, which could add more than $ 2 billion to the ecosystem. Rumor has it that SecondQuarter Ventures, which provides secondary funding (a means for early investors and founders to get some liquidity early on), is also raising a large new fund. And new players come into the fight – for example, the artist management company behind Vance Joy and Illy, the Unified Music Group, is expanding into early-stage startup investments.

More fuel. The German retailer Schwarz Group (Lidl and Kaufland supermarkets) acquires the Israeli cybersecurity startup XM Cyber ​​for 700 million US dollars. That means Australian investors Macquarie Capital and Our Innovation Fund are in the money. Exits like these are great because they encourage investors to reinvest and invest more in the local ecosystem.

Fix ESOP (slow). Everyone's favorite topic: taxes! In an attempt to make ESOP tax rules less “complicated and restrictive”, new rules are being tabled in the Australian Parliament that will mean that employees will no longer have to pay taxes on their employee shares when they leave the company. The existing tax regime makes no sense – taxes should not deter people from giving up their employment. Lots of early employees are not well suited to later operations and we've seen lots of examples of ex-Canva, Linktree, Atlassian, etc. then creating other incredible startups and mutual funds. The cap on shares offered to employees is also expected to increase from $ 5,000 per employee per year to $ 30,000. Baby steps.

Founder knowledge bombs. Leigh Jasper shared his tips on global orientation (especially in the US) based on his experience in scaling Aconex.

A must if you are planning to build a global empire.

Key to take away:

Location: Don't assume the US should be your first geographic expansion. Great Britain, other countries in Europe, hubs like Dubai and Singapore as well as some large Asian countries can also be attractive for expansion.
Invest: Building a US presence takes longer and costs more than you think. Make sure you understand where your investment, time, and effort are going to be focused.
Objective: Avoid Aconex's early mistake of trying everything – be selective and specific about your target segments to make sure it's a market where you really stand out from your competitors. Understand customer differences and localize everything.
Team: Move leaders and teams to help Australian employees understand the international market / think globally, ensure knowledge transfer to the newer local team, and help build a common global culture. Bring everyone together (in person). Bring US experience to your board.

Listed la la land

Snoopy. Life360, an ASX-listed family tracking company, is purchasing Tile for up to $ 170 million plus up to $ 35 million in loyalty rewards. Known for its lost item trackers, Tile also has valuable partnerships with over 50 different third-party devices, from wireless earbuds to laptops to dog collars. Tile has sold over 40 million devices to date and has over 425,000 paying customers. Life360 plans to create a unified platform where users can stay in touch and track their family members while also keeping track of things like wallets, keys, and remotes.

Powershop is sold out. News of the $ 729 million acquisition of Powershop by Shell and ICG got the tweeters going. Powershop has won tons of customers thanks to its status as a green, ethical energy company. Plus, the gamified app and power buying experience was pretty new when it hit the market at the time. However, the acquisition by Shell (NZX / ASX listed Meridian Energy) means that Powershop's profits will flow back to a company that is expanding its fossil fuel investments. This could be a huge win for disruptive renewable energy retailers like Enova Energy and Amber Electric.

BNPL problems. BNPL shares keep falling (except afterpay), reports The Guardian:

Shares in Australian listed companies that buy now and pay later have fallen an average of about 80% from their highs last year, driven by rising losses and less than expected consumer interest in the product.

Deal fatigue continued. After the British online retailer MySale Group raised its floating plans a few weeks ago, it abandoned its ASX listing and announced that it would reconsider its options in 2022.

Kogan's two blows. Investors are not satisfied with Kogan. The e-commerce giant received a 41.7% vote against its compensation report at its annual general meeting this week – that's two "strikes" (a vote of more than 25% against) in two years. Ruslan Kogan is reportedly the sixth highest paid executive in Australia, bringing in $ 8.99 million. Kogan's share price has fallen from its high of $ 25 in October 2020 to around $ 8 after significant inventory and inventory issues impacted earnings. Gross sales increased 19.2% to $ 432.7 million in the first four months of FY22. Kogan is aiming for 2.3 times this run rate in order to achieve gross sales of USD 3 billion by 2026.

Splash for CaaS. FirstWave Cloud Technology, listed on the ASX, plans to take over network management and IT audit software provider Opmantek as part of an all-stock deal worth around $ 60 million. Opmantek, which targets telecommunications and managed service providers, had revenues of 4 million for the year ended June 30 and is repaying an Opmantek loan of $ 1.5 million.

Cash for IaaS. AUCloud, which is listed on the ASX, collects $ 35 million, with the data center provider NextDC already pledging $ 12.4 million. AUCloud plans to expand its Infrastructure as a Service (IaaS) to Brisbane, Melbourne and Adelaide and expand its customer reach beyond government / defense to the security conscious enterprise market.

Summary of the local raise

Trend of the week: chic fintech

SimPRO raised $ 350 million (A $ 485 million) from K1 Investment Management using existing investor-level equity. The Brisbane-based field management software company was on an acquisition tour – it acquired ClockShark, a US-based time tracking and scheduling platform, and AroFlo, an Australian provider of job management software.

Openmarkets Group (OMG) raised $ 17.8 million for its technology platform, which provides the infrastructure, the trading platforms (e.g. SelfWealth and Superhero) and traders with Australian markets, investment vehicles and Advice connects. OMG is also acquiring stock market technology and API developer Cannon Trading for a valuation of $ 12.5 million.

Till Payments added an additional $ 15 million to its $ 110 million collection in September under the direction of Touch Ventures. Till gives companies a platform where they can accept payments anywhere, anytime – online or in-store. This week Till secured his acquiring license in New Zealand, making him only one of five non-bank merchant acquirers in the country.