High-profile founders cash in as tech investor confidence returns
The tech firms of two high-profile Australian start-up founders, Jonathan Barouch and Alisdair Faulkner, have cashed in on returning confidence in the local investment market to close notable rounds for their companies, Local Measure and Darwinium.
The deals, amounting to $7.9 million for call centre software provider Local Measure, and $US18 ($28.2 million) for cybersecurity start-up Darwinium, come hot on the heels of the year’s biggest Australian raise by far, of $263 million by Employment Hero, which was revealed on Friday.
Jonathan Barouch’s company Local Measure has grown rapidly since a pandemic product pivot. Edwina Pickles
Call centre software start-up Local Measure’s round was led by returning investor Future Now Capital, and comes as its recently overhauled product gains traction internationally, thanks to a partnership with Amazon Web Services.
The company was originally a hospitality and tourism software business, but reinvented itself after COVID-19 crushed its revenue streams.
During the pandemic, Local Measure rebuilt its platform on top of Amazon Connect and last year signed a strategic deal with the cloud-computing giant which incentivises AWS reps to sell Local Measure’s software. Mr Barouch said its revenue has grown 250 per cent year-on-year, to be higher than pre-COVID levels.
“It’s fundamentally changed the trajectory of the company,” Mr Barouch said.
Existing shareholders, Mr Barouch, Local Measure’s management team and board, as well as family offices, also participated in the latest $7.9 million raise, which he said was done at the same undisclosed valuation as its previous raise.
Alisdair Faulkner has had no trouble raising at a good price.
Future Now Capital’s investment came from a fund that is being put together for follow-on investments in its portfolio companies. The firm has invested more than $100 million through its funds to date.
Employment Hero’s round last week came at a significantly raised valuation of almost $2 billion, highlighting that investors are starting to be willing to pay higher prices for quality companies again. Valuations have been languishing since the end of the first quarter last year, largely due to an interest-rate-led change in sentiment.
Darwinium’s founder has plenty of credit in the bank with investors, having sold his previous company, ThreatMatrix, for almost $1 billion in 2018. Mr Faulkner did not disclose the valuation for the series A raise, but said it was higher than the Sydney-based company’s previous round of $10 million last year.
“Multiples have fallen back to a rational point, but there’s quality money backing quality Australian technology,” Mr Faulkner said.
Mr Barouch said he thought the worst of the tech funding “winter” had passed, but that the industry had grown up, and would have less tolerance for growth-at-all-cost start-ups in future.
“We needed to be realistic on pricing, but we were fortunate that we’d always raised at reasonable valuations, even where we had been offered terms that seemed too good to be true,” he said.
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