Happenco founders ready to invest in AI and Saas start-ups

As one of the nation’s newest venture funds, this Sydney trio has closed $12m and wants to be the place start-ups turn to when bigger players get cold feet.

One of the nation’s newest venture funds has just closed $12m and has its sights set on becoming the fund start-ups turn to when the main players get cold feet.

Happenco, which started life as an advisory firm for start-ups and companies, began raising around four years ago, attracting investment from Michael Rennie, Jeeva Suresh and the O’Rielly, To and David family offices.

Behind the fund is former Deloitte Ventures staffer Ben Cheyne, former McKinsey and Google staffer Gideon Gut-Silverman and former Deus Ex Machina manager Omar Varts.

Of the $12m raised in Happenco’s first fund, about 60 per cent (or about $7.2m), has already been deployed, with a few million in reserve for follow-on investments.

Co-founder Gideon Gut-Silverman is a Stanford graduate who earned his stripes in San Francisco during the 2010s, which he describes as the city’s tech heyday. He was one of a cohort of high-performing young Australian Google staff who were able to transfer to the US.

“It wasn’t particularly well known, but I was part of that sort of high performing cohort of young people that went over there to find gold and grow their careers,” he told The Australian.

From Google he moved into the start-up world, founding Awayco, which began life as a surfboard rental business before pivoting into an e-commerce business with point of sale, rental and scheduling for retailers allowing them to sell new and second-hand products. In August, Awayco bagged $11m in a round led by Thorney Investment Group.

At Happenco, which also has a private investment fund, Mr Gut-Silverman has the role of executive director.

Gideon Gut-Silverman. Source: Supplied.

Happenco, he explains, has a particular focus on AI and B2B Software-as-a-Service (Saas) start-ups, having recently backed Neara, a green energy start-up which The Australian revealed had raised $15.25m in September. That raise was led by Prosus Ventures, Skip Capital and Square Peg Capital, with participation from Happenco.

The fund has invested in 16 start-ups to date, with the average investment ranging from $250,000 to $500,000. Of those, 12 are start-ups based in Australia, and three of the remaining four were founded by Aussies.

“We also are very bullish about Australia and Australian tech despite the pullback in funding,” said Gut-Silverman. “(Of our 16 portfolio companies) 12 of them are Aussie through and through and are globalising and serving other markets and three of the remaining four are started by Aussies in other markets in the US and the UK.”

The first investment was in a European start-up called Equip.app, which received $550,000 from the fund for its idea to offer sporting goods in public places.

The latest investment was in EdTripper, a start-up which has built a business around school excursions and event spaces, looking to create learning experiences from those spaces. EdTripper received $500,000.

Happenco had typically become the lead in most of its early-stage investments, Mr Gut-Silverman said.

“It’s funny, we didn’t set out to do this, but will almost always lead.”

The start-up world can often look like “a yellow brick road” with lots of stories about companies completing multimillion-dollar raises led by AirTree, Square Peg and OIF Ventures, he said.

“But not all great start-ups are like that, and there’s a long tail of companies that are great businesses and actually end up becoming like that in a series B and C raise,” he said. “There are a lot of companies that might need a lead investor and we can play that role.”

Of the remaining $4.8m in the company’s first fund, Mr Gut-Silverman said there wasn’t a lot left to deploy into new start-ups.

“In fund one, that’s almost entirely deployed, because a lot of that actually is in reserve for our follow on positions of existing portfolio businesses,” he said.

“There’s a small amount left that we will allocate among existing or new LPs (limited partners), but largely the dry powder is just going to support our existing portfolio.”

In other capital news, crowd-funding platform Birchal has reported its busiest quarter on record as it processes its 25th start-up raise in three months.

Birchal’s platform had grown by 40 per cent in the past 12 months and has deployed $190m in capital across the Australian start-up ecosystem.

Originally published as Happenco founders ready to invest in AI and Saas start-ups