Fight Club and Zombie VCs

25 March, 2024
Fight Club and Zombie VCs | News | Pause Awards
Ignition Lane Wrap monthly
Gavin Appel & Rebecca Eastwood
25 March, 2024

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

Ready? Fight

Employment Hero v Hostplus. CEO of $2bn employee management platform Employment Hero, Ben Thompson, started a public feud on the socials against mega super fund Hostplus. 

Hostplus, a default fund for hospo, has been lobbying Treasury to ban super fund advertising on platforms like Employment Hero, which provides employees a prompt to change super funds (alongside prioritised ads for other super funds) when they are onboarded during new employment.

Thompson’s campaign argues an ad ban “stifles choice” for Australians (it would also stifle millions in revenue for Employment Hero). Hostplus didn’t like that, accused Thompson of “erratic and unlawful behaviour” and tried to get him fired via its investor Airtree, which has received significant $$ for its funds from Hostplus. That put Airtree between a rock and hard place – back your founders and risk destroying your relationship with your biggest investor, or vice versa? For now it seems they’re doing a solid job playing the middle man.

Women v the system. IWD came and went. From the gender pay gap to startup investment, the data is showing snail pace/non-existent progress when it comes to women in Aussie tech. This prompted some tech firms like Octopus Deploy, Rokt and Atlassian to go on the defence: “Our gender pay gap is not a result of equal pay issues.” Cool, because that would be unlawful in Australia. But this is not what the gender pay gap represents – it’s a measure of women’s position in the economy, compared to men.

Meanwhile women-led organisations like Verve Super guided employers to take a pay gap pledge (e.g. uplift parental leave policies or review their hiring practices), Work180 celebrated the winners of its Equitable Workplace Awards, others shared tips for advancing gender diversity, and lobbied government on how to ‘Build an Inclusive Innovation Economy’. Applications for One Roof’s Inner Circle program for women entrepreneurs are now open (scholarships available).

Blue Sky v Glaucus. In 2018, billion-dollar alternative asset manager (and startup investor) Blue Sky became the target of a short selling attack, which ultimately led to its collapse. At the time, US-based Glaucus alleged Blue Sky was effectively a “Ponzi-like” scheme, with vastly overstated asset values, and directors who unduly enriched themselves. Cue, selling frenzy.

The ex-boss of Blue Sky has now filed a $445m lawsuit alleging that the short selling attack “was a “confidence trick” at the heart of a “conspiracy” designed to profit from its demise” involving Glaucus, brokers, a Sydney hedge fund, AFR columnist Joe Aston, his employer Nine Entertainment, law firm Gadens and others.

Musk v all. Elon Musk is suing OpenAI and its co-founders, alleging they breached their original contractual agreements to develop technology “for the benefit of humanity, not to personally benefit the individual Defendants and the largest technology company in the world.” They retorted:

“We’re sad that it’s come to this with someone whom we’ve deeply admired—someone who inspired us to aim higher, then told us we would fail, started a competitor, and then sued us when we started making meaningful progress towards OpenAI’s mission without him”

This comes as four former Twitter executives, including ex-CEO Parag Agrawal, sued Musk claiming they are owed over $128m in severance payments. Musk has also lost his world’s richest person title to Bezos, after selling $6.2bn in Amazon stock last month. Musk probably doesn’t care, he’s going “multiplanetary.”

p.s. Sam Altman, who lost his board seat in a power struggle months ago, is back on OpenAI’s board. OpenAI also announced that their new Text-To-Video model, Sora, will be available this year. Amazing & scary all at once.

Meta v news. Meta plans to shut down the news tab on Facebook in Australia and the U.S. next month, following similar moves in the U.K., Germany, Canada and France. That means no more money for media companies unless regulators intervene again.

Capital central

No buggie, no biggie. Bugcrowd, an Aussie-founded cybersecurity startup that relocated to the US, has closed one of the year’s biggest funding rounds so far – US$102m. CEO Dave Gerry says revenue has been growing at over 40% annually, approaching US$100m. In addition to bug bounty programs, Bugcrowd offers penetration testing services, attack surface management and hacker training.

Deal. Octopus Deploy made its first major acquisition – Californian software company Codefresh for $42.6m. Arcus Partners, a growth private equity firm backed by the Besen family, acquired a majority of brand and automation software startup Sesimi. News Corp Australia acquired video content company Visual Domain. Accenture acquired martech consultancy The Lumery.

No deal. Website design AI startup Relume says it has knocked back multiple acquisition offers of $25-$35m. Weird flex.

Post-Covid casualty. Virtual events company Hopin (founded by Aussie-born Johnny Boufarhat), which once raised $1bn+ at a US$7bn+ valuation, sold its core assets to RingCentral last year for just US$50m. Now it is liquidating its UK holding co and flipping to the U.S..

ASX rallies. Kogan’s share price is up 30% thanks to a very well-received earnings report last month. Block shares rallied 17% on the ASX after Jack Dorsey said buy now, pay later was central to its strategy to lure banking customers to Cash App, which is used by more than 50 million people in the U.S..

ASX-listed takeovers. Japan’s Renesas will acquire Altium in $9b deal. Tech-enabled SME lender Propsa is being taken private by a Salter Brothers fund – “Some companies just shouldn’t list.” A U.S.-based rival has offered to buy software Task Group for $310m, which was more than double the stock’s last closing price. Minnesota-based rival Datasite (owned by private equity firm CapVest) has entered into an agreement to acquire virtual data room solutions company Ansarada for $263m. The deal excludes Ansarada’s cashflow-negative ESG, GRC and Board businesses, which co-founder and CEO Sam Riley has agreed to acquire for $500k. Ansarada’s revenue was more than $51m last FY.

Secondaries & zombies galore in venture land

Full circle. OneVentures officially closed the loop on its first fund from 2010, returning 4x* to its backers, including the federal government. OneVentures is currently in the market raising its sixth fund, no doubt asking those same early investors to double down.

*one of its portfolio companies is expected to close a transaction soon, which may increase that figure.

Westpac-backed VC Reinventure turned 10. Although, technically it isn’t making further new investments. It says the fund achieved 10+ exits and a Fund I Distributed to Paid-In (DPI) of 10, with half the portfolio still growing.

Canva’s second secondary. While IPO markets remain cold as ice (social media giant Reddit is the only big tech company expected to go public this year), one of the few ways investors/employees can cash out is via secondary share sales, where existing shares are sold to other investors in private deals. In the U.S., secondaries rose from US$35bn in 2017 to an estimated $138bn in 2023.

Adding to that growing pool, Canva is in the process of helping its shareholders sell up to $3.6bn worth of shares at a US$26bn valuation. In addition, Blackbird is rumoured to be selling $100m worth of Canva shares to Sydney-based private equity firm Quadrant.

This week Canva announced that it hit 175 million monthly active users, and revenue is still growing at 60% YoY. But it’s not all sunshine and lollipops. The design juggernaut hit headlines in Feb as CFO Damien Singh left his role after eight years, amid an internal investigation following anonymous messages on Blind, a workplace discussion app.


Don’t quote me. Lots of anonymous VC comments in The AFR, essentially saying:

  1. Smaller VCs who can’t capture institutional money are really struggling to raise their next fund.
  2. VC jobs will start to evaporate/consolidate. Side note, the CEO of Touch Ventures (Afterpay fund) announced he is leaving after four years in the role.
  3. Most startups are dreaming to think they’re not going to face a down round (raising capital at a lower valuation than previous rounds).

The key takeaway for founders. Beware of zombie VCs, i.e. those still in business, but with no money to invest – “Ask how many checks they have written in the past year and whether they are actively deploying capital.”

And isn’t it ironic, don’t you think? TechCrunch reports investors are clamouring to back startups that are helping other startups shut down.

Growth Hacking

Sean Ellis is coming to Melbourne and Sydney this month. Ellis led GTM at Dropbox, Eventbrite, LogMeIn and is considered the founder of the “Growth Hacking” movement. We have a special discount code for our Wrap readers – get in touch.

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

Bex, Gavin and the team at Ignition Lane

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.

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