‘Double unicorn’ start-up SafetyCulture losses spiral to $62m

Most recently valued at more than $2bn, SafetyCulture’s losses have tripled but its founder says his company is still on track to be the next Atlassian or Canva.

Luke Anear, founder and CEO SafetyCulture.

SafetyCulture, the workplace software start-up widely tipped to be the next Atlassian or Canva, has spiralled to a net loss of $62m – nearly three times that of the previous year – but its executives and investors are adamant the tech company is on track to fulfil its potential of becoming one of the nation’s largest technology companies.

A rare ‘double unicorn’ start-up, most recently valued at $2.1bn, SafetyCulture famously began life in the Townsville garage of chief executive Luke Anear and has since expanded in to a $38m ultra-modern headquarters in the Sydney suburb of Surry Hills, alongside offices in Amsterdam, Paris, Kansas City, Manchester and Townsville.

SafetyCulture – which counts Atlassian co-CEO Scott Farquhar, Morgan Stanley executive Paul Kwan and Blackbird Ventures managing director Rick Baker as advisers – posted a loss after tax of $62m for the year ended June 30, according to documents filed with corporate regulator ASIC seen by The Australian. That’s up sharply from a loss of $23.1m last year.

The Sydney-based group posted annual revenue of around $92.4m, up from $74.5m, a figure dwarfed however by the company’s expenses across research and development, sales and marketing, and administration which sent the company to an overall loss.

Investors in high growth privately held technology start-ups, of which SafetyCulture is one, are typically OK with a company losing money as long as its unit economics are strong, and they see a path to profitability.

The 'breathing tree' in SafetyCulture's Surry Hill's office.

SafetyCulture chief executive Luke Anear said SafetyCulture indeed swung back to profitability in July, and described the current period as one of ‘consolidation’ for his company. He said he’s managed to avoid lay-offs in what’s been a torrid period for the local start-up sector at large.

“What we’ve done this year is just consolidate, and I said to everybody “right, let’s make sure that we’re investing in key areas for growth but at the same time reducing [cashflow] burn and running things efficiently,” Mr Anear said.

“We’ve finished our Sydney office, and that took longer than we expected, but we’ve got a great home there now, and we’ve upgraded our offices around the world as well. So there’s been some infrastructure spend, and at the same time we’re saying ‘let’s run everything as lean as we can’.”

Opened in March, SafteyCulture’s Foveaux street headquarters boast a state-of-the-art gym with Peloton bikes, a commercial kitchen with on-site chefs providing free breakfast and lunch, and a ‘breathing tree’ with its own active bio filtration system. The start-up also is home to Boston Dynamics’ ‘Spot’ the robotic dog, which detects temperature changes or anomalies in the workplace.

As a precaution, SafetyCulture has also tapped a $20m debt facility arrangement, which “will be used for continued growth and to strengthen the capital position of the group,” according to the documents.

“SafetyCulture, right from the beginning as a company, has been debt free,” Mr Anear said.

“We never really spoke to banks because we didn’t need to, but the way the market has gone we thought it was just good practice to lock in some of that debt funding, as we think about acquisitions and opportunities coming up, as opposed to selling equity all the time, which is the most expensive form of money that you can get.

“So it’s our first foray into that, and I think we’ll continue to look at new ways to capitalise the business over the years ahead. There’ll be some really interesting ways that we can capitalise the business instead of just doing traditional venture capital.”

In April, SafetyCulture acquired SHEQSY, a cloud-based lone worker safety app, for $6m, and in June it pumped $3m into Sydney-based internet-of-things software maker Inaurio. Its flagship app, iAuditor, has hundreds of thousands of paid customers globally and is an inspection checklist application for industries that require safety audits and inspections.

Mr Anear said he wants SafetyCulture to be a household name when it comes to quality and excellence in the workplace.

“We are on that mission as much as ever, and we continue to increase our impact around the world,” he said.

“The nature of venture capital is that you’re investing in a future outcome, and that’s what allows tech companies like ours to create world-changing products in a relatively short period of time compared to traditional businesses.

Blackbird Ventures partner Rick Baker.

“Burning cash is actually normal, and it’s more about how we’re going forward in terms of the year we’ve had and the investments we’re making in the different parts of the business.”

SafetyCulture was most recently valued at $2.1bn, when it raised a $99m funding round led by Index Partners and with participation from existing investors Tiger Global, Index Ventures and Blackbird.

“SafetyCulture was last valued at $2.2bn in a funding round for which terms were set late in 2020,” Mr Anear said. “Although we do not need to raise any additional funds in the immediate future, we would expect any future valuations to take into account the significant growth we’ve seen in both users and revenue since 2020.”

Blackbird Ventures co-founder and partner Rick Baker is on SafetyCulture’s board and said he’s happy with how the company is tracking. He said the start-up is on track to be one of Australia’s most significant technology companies, in terms of size and broader impact.

“SafetyCulture is marching ahead really beautifully at the moment,” Mr Baker said in an interview.

“What we’ve seen both through Covid and through the first half of this year is that their customer base is really sticky; the customers embed SafetyCulture’s tools and their way of working into their organisations. The things that everyone loves about SaaS [Software-as-a-Service], SafetyCulture has that.

“What’s really interesting is their next phase as they start to bring in new tools. They acquired a company called EdApp a while ago. And only a small percentage of an organisation actually does the sorts of audits and checks that SafetyCulture offers, but everyone in an organisation needs to be trained. So what we’re starting to see is much deeper penetration into organisations by SafetyCulture, and I’m really happy with the way they’re going.”

Originally published as ‘Double unicorn’ start-up SafetyCulture losses spiral to $62m