G’day and welcome to your weekly edition of Overnight Success - your download on all the important things that have happened in the Aussie startup ecosystem. 🚀
👀 Headlines 👀
📉 Cut Through Ventures’ 2026 Q2 report is out, with $1.7B invested across 64 deals. The main takeaway is that deal volume is down across the board, but a few companies have landed massive rounds. To put that in perspective. 70% of Q2’s VC cash went into just two deals. Firmus and Airwallex.
Sub-$5M rounds fell to 31, which is their lowest count in over six years, and every cheque-size band thinned. Meanwhile, median deal sizes hit record annual highs at every stage (Seed $4.0M, Series A $18.6M, Series B+ $41M).
The investment cycle is starting to look more like a barbell: investors pay up at entry to get access and again for the few that reach the growth stage, with a squeeze in between.
AI-first, AI-enabled and AI-infrastructure companies took ~75% of capital and two-thirds of deals (up from 64% in Q1). AI featured in 81% of Seed deals.
Vertical software is the AI safe haven; horizontal is in the firing line. Vertical SaaS took 94% of software capital ($822M, 39 deals) while horizontal all but collapsed ($48M, 10 deals). Investors see vertical's workflow depth and domain lock-in as more defensible against AI disruption.
In positive news, 78% of investors rated their portfolio health as good or excellent, which is up from 58% two years ago. This is double-edged; it could be AI efficiencies bolstering the portfolio and enabling more to be achieved with less, or potentially some portfolio laggards have entered administration.
💰 Blackmagic Design, the self-funded Melbourne video technology company behind the Hollywood-standard DaVinci Resolve editing platform, is being sued in the Federal Court by co-founder Peter Barber, who alleges he was blocked for a decade from selling his stake and denied dividends for years. (AFR)
Barber claims CEO Grant Petty knocked back a 2023 approach from VC firm Five V that would have valued the company at between $900 million and $1.5 billion. Barber is asking the court to force a buyout of his stake at an independent valuation… or wind the company up entirely.
Blackmagic booked more than $550 million in revenue last financial year but posted a loss of almost $29 million, which the company attributes to heavy reinvestment to stay ahead of Apple, Adobe and Sony.
ASIC filings show Petty and co-founder Douglas Clarke each hold 35.8 per cent, with Barber on 28 per cent. Dividends flowed to all three until 2022 but have stopped since.
Barber, who exited Blackmagic after first trying to sell in 2016, is now CEO of ASX-listed video technology company Atomos.
DaVinci Resolve is the crown jewel software product that has become the industry standard for editing, colour and audio (Notable recent Hollywood examples include A Complete Unknown, Emilia Pérez, Alien: Romulus, The Brutalist, Oppenheimer, and Everything Everywhere All at Once). Blackmagic also designs and manufactures hardware including digital cinema cameras.
💊 🍺 Early Bird, a startup founded by a group of former Eucalyptus staff, has raised $2 million in seed funding for a capsule designed to soak up the toxic byproducts of alcohol, alongside a companion gut-health clinic. (AFR)
The round, structured as a SAFE, was originally pegged at $1.5 million but ran oversubscribed.
I haven’t included this in the startup retro as we’re still light on details, as Early Bird doesn’t yet have a website or product in market that we can find!
Angel syndicate Hyper Ventures has invested with angel investors including Scape Australia CEO Anouk Darling and Knightsbridge Wealth co-founder Thomas Lambert. Apparently, two VC funds have joined the round, as did Eucalyptus co-founders Tim Doyle and Benny Kleist.
Running the show is Dan Cable, who built Eucalyptus' men's longevity brand Compound, alongside ex-Macquarie manager Alex Debney.
👀 Perth-based R&D lender Radium Capital, backed by New York financier Brevet Capital, has paused new lending, sending some Australian startups hunting for alternative R&D loans (AFR)
Multiple industry sources say Radium told clients it would be temporarily unable to fund new loans. Radium is one of the oldest and biggest players in the sector, with over $100m deployed in the past six months and more than $1bn since its 2017 founding
R&D funding is a relatively young but fast-growing industry in Australia. The loans are secured against a company's future R&D tax incentive refunds, letting startups access the cash upfront instead of waiting months on the ATO or raising equity and are typically offered to early-stage software, biotech and deep tech startups
There are a few options for startups looking, including Dare Capital (backed by Vincents and Sturt Capital), Kashcade ($75m warehouse facility from Wingate and Fancourt Capital), Endpoints Capital (founded by medical entrepreneur Glenn Haifer), and Advanced (backed by ex-QIC principal Phil Cummins and Employment Hero director Adrian Bunter).
Venture debt providers like Tractor Ventures and Mighty Partners also offer R&D funding.
🕊 The sexual harassment case against Dovetail co-founder/CEO Benjamin Humphrey was resolved after nearly a 2-year court battle (AFR, Startup Daily
Brought by a former Dovetail legal counsel, and filed in Federal Court in Oct 2024, alleging Humphrey forced her into a non-consensual relationship from early 2022.
The case was withdrawn on Friday, having been "jointly resolved outside of the court process". Humphrey denies all wrongdoing, saying the relationship was consensual and disclosed to investors.
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⚡ Startup Retro ⚡
Lug+Carrie raises $18M in debt to fund US expansion of eBike subscription service
Founders: Daniel and Ben Carr
Lug+Carrie, a subscription eBike startup operating across Australia and the US West Coast, has secured an $18 million asset-backed debt facility to expand its fleet in both markets.
The non-dilutive financing was provided by Catalytic Impact Capital, a climate tech-focused boutique financier that has backed the six-year-old company for the past three years. Lug+Carrie expects the funding to put more than 15,000 people on eBikes across Australia and the US by 2028. The ebikes are marketed towards familes and commutters as replacements for cars.
Founded by brothers Daniel and Ben Carr, the startup runs subscription eBike services in Melbourne, Sydney and Brisbane, and operates on the US West Coast, in the Bay Area, Los Angeles and Seattle, under the brand Wombi.
CEO and co-founder Daniel Carr said the company deliberately opted for debt over equity, as it has hard assets that generate recurring subscription revenue. The team argues that the adoption case is similar on both sides of the Pacific, with many car journeys being less than 5 km. The team points to factors such as rising petrol prices, congestion, and investment in cycling infrastructure as shared tailwinds.
The company is betting the mass-adoption playbook seen in Europe can translate. Industry analysis shows that in Germany, 750,000 new company eBikes were leased in 2024, taking the total leased fleet to 2.1 million and generating more than $5 billion in turnover.
Due Diligence: AFR, Startup Daily
AO Ventures backs Scottish wearable technology company PlayerData and US sports media platform ScorePlay
AO Ventures, the venture arm of Tennis Australia and the Australian Open, has invested in Edinburgh wearables company PlayerData and New York media platform ScorePlay, taking its portfolio to six. Terms were not disclosed.
PlayerData builds elite-grade performance analysis at a grassroots price. Founded by former international archer Roy Hotrabhvanon and computer scientist Hayden Ball, its platform pairs miniaturised wearable sensors and connected smart balls with 8K, 190-degree video to track players and the ball far more cheaply than incumbent systems.
The company makes money selling its EDGE GPS hardware units alongside a subscription analytics app, a model that scales from professional clubs. It has worked with the USA Men's National Team at this year's FIFA World Cup, down to academies and community teams.
With wearables spreading into grassroots sport, the fresh capital is aimed at capturing that widening market. PlayerData's backers include sports-focused VC Hiro Capital, Bolt Ventures, Pentland Ventures and former Tesco chief executive Sir Terry Leahy.
ScorePlay is an AI-powered media and digital asset management platform that centralises, tags and distributes photos, video and live content for sports organisations.
It sells software on subscription to more than 200 teams, leagues and federations, has grown roughly threefold year-on-year and was profitable at its last raise.
Tennis Australia trialled the platform across the Australian Open 2026 before AO Ventures exercised its investment option, with funding earmarked for continued international growth.
Founded in 2021 by Victorien Tixier and Xavier Green, ScorePlay's US$13 million Series A was co-led by 20VC and Alexis Ohanian's Seven Seven Six, with APEX Capital and angels including Giannis Antetokounmpo, Alex Morgan, Nico Rosberg and Australian Test captain Pat Cummins.
Due Diligence: AO announcement
🚀 Wins 🚀
🤝 PsiQuantum, the Federal Government-backed quantum startup, has landed a US$125m DARPA deal, which is its biggest US government award yet
The contract falls under DARPA's Quantum Benchmarking Initiative, testing whether an industrially useful quantum computer is possible by 2033
Founded by two Australians in 2016, PsiQuantum uses photonics with chips made at GlobalFoundries in New York. The company then raised US$1bn at a US$7bn valuation last September, led by BlackRock, Temasek, and Baillie Gifford, with Nvidia's venture arm participating.
👃 🚴♂ Geelong recovery brand Dopamine Lab (founders Nick Allitt & Daisy McCulloch) got a global spotlight when yellow jersey-holding cycling star Tadej Pogačar wore its yellow nasal strip completely unsponsored during his Stage 14 Tour de France win, then again in the next day's time trial. (SmartCompany)
The strip reached Pogačar via teammate Adam Yates, who'd bought a pack at January's Cadel Evans Great Ocean Road Race. The exposure is now driving a wave of European orders and website traffic as the brand pushes to crack that market.
🍾 Alcohol-free brand Heaps Normal has launched High Hopes, its first non-alcoholic prosecco and its first move beyond beer, after years of R&D — with Co-founder Andy Miller saying the team refused to launch until the wine cleared the same bar as its beer.
A key endorsement came from John Gledhill, former head winemaker at the Australian Wine Research Institute and a collaborator, who called it the best alcohol-free wine he'd tasted. Cheers John!
💰 M&A 💰
🤝 Brand-tracking platform Tracksuit has acquired Hall, a Sydney startup that measures how brands appear inside AI platforms, adding "AI visibility" (how a brand shows up across AI engines vs competitors, and how that shifts over time) to its survey-based brand health product.
Hall's full team joins, including founder Kai Forsyth, who'll lead AI visibility product direction.
The move pushes Tracksuit beyond survey data toward a multi-source view of brand health across two audiences, humans and AI, for its 1,000+ global customers. AI visibility rolls out to customers later this year with a waitlist now open.
Alongside the deal, Tracksuit completed its global executive team, headlined by new CMO Tom Mansfield (ex-Visa, Dovetail, Hatch) to drive international expansion, joining CEO Connor Archbold plus COO Dan Fleming, CPO Anne Dröge, CTO Cara Fonseca-Ensor, CRO Hamish Mathieson and CPO (People) Samantha Gadd.
🔎 People Moves 🔍
👆 EVP, the Sydney-based early-stage VC, has promoted investment principal Mark Velik to partner, its first new partner since 2019. (AFR)
Velik has spent seven years at EVP; his standout deals include allied health software Splose ($46M raise) and automotive data platform AutoGrab ($80M raise), both earlier this year.
He joins the founding partners Les Szekely, Howard Leibman, Justin Lipman and Daniel Szekely, taking the all-male partnership to five.
EVP backs 50+ software startups (SiteMinder, Hnry, EatClub) across six funds; it closed $120M Fund V (AI-enabled software) in March and is still raising Fund VI, an evergreen growth-stage vehicle for ANZ software with just under $45M under management.
📆 Notice Board 📆
👋 🍰 Reward and People leaders in Melbourne: breakfast is on Ravio in the Blackbird office this Tuesday morning. Ravio is running an intimate Breakfast Club for a small group of Reward and People leaders in Melbourne. Founders who are the hiring team are welcome to come!
This round's discussion: localised versus global salaries, and how teams are navigating the trade-offs. Join people leaders from Cuttable, Firmable, Me&U, Kasada, Boeing, Dentsu, Carsales, Xero!
This Tuesday, 28th July, 9:00–11:00 am in Cremorne. Register here.
🤝 In Great Company, a conversation series hosted by a friend of the newsletter, Jess Walker, kicks off its event series on 28 July with a founder breakfast featuring Alexey Mitko, who was Canva employee 23, the operator who scaled Koala from $10M to $100M, and co-founder of the recently $1.6B-acquired Eucalyptus.
The breakfast is on Monday, 28 July, from 7:30 am–9:30 am at the Pillars, Sydney CBD, with a light breakfast provided. The content is for seed-to-scaleup founders and investors. Register here.
🌱 South Australian founders with a product in market and early traction have a new path to investment readiness. ThincSeed is a 13-week program built for ventures that already have a working product, real customers or users, and early traction.
Selected founders work with facilitators, mentors and investors to strengthen commercial foundations and prepare for future fundraising conversations. Applications close Friday, 7 August 2026, 11:59 pm Adelaide time. 👉 Apply here
🧠 KaaS (Knowledge as a Service)
Will’s Pick: The Inference Shift by Ben Thompson from Stratechery
Ben’s main point is that the future of AI compute is going to be much more varied than just "buy more Nvidia GPUs."
He explains why GPUs have dominated so far: they're incredibly flexible. They handle model training really well because they've got fast compute, loads of high-bandwidth memory, and clever networking that lets thousands of chips act like one system. And that same setup happens to work for inference too.
However, Ben points to the shift from humans using AI to AI using AI, and the shift in speed required for response time. Humans need speed because we’re bored quickly, while agents are happy to wait for an answer.
If latency stops being the priority, then you don't need the fastest, most expensive chips and memory anymore — cheaper, slower memory like ordinary DRAM and "good enough" compute will do the job.
He reckons agentic inference will end up being by far the biggest market because it scales with how much compute you throw at it rather than being capped by human attention. He also points out some knock-on effects: China already has everything it needs for this kind of work even without cutting-edge chips, hyperscalers will like the lower cost, and it even makes data centres in space more viable. His closing thought is that "Moore's Law doesn't matter" as much anymore… the compute we already have is basically good enough.
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‘Til next time,
👋 Will