Partly co-founder and CEO Levi Fawcett. Photo / File
Partly has raised $37 million at a $180m valuation in what it’s billing as the largest Series A raise in New Zealand history.
The Christchurch auto parts firm was founded in 2020 by ex-Rocket Lab engineer Levi Fawcett - and Fawcett’s ex-boss Peter Beck was one of the backers of an earlier $1.7m and $3.7m seed raise.
Partly has created a database of hundreds of thousands of different car parts, which manufacturers, retailers and online marketplaces can tap when they want to manage, source or sell parts. (That seems squarely in “Surely someone’s done that already?” territory, but it turns out not for some tricky data science reasons - see below).
The startup integrates with eBay and Shopify, and its customer list includes two un-named Fortune 500 companies and the UN’s World Food Programme - one of Partly’s largest clients by dint of the fact it operates in many undeveloped countries so has developed an in-house maintenance and repair operation for its 30,000-odd vehicles.
Fawcett says some the value of the auto parts being processed by its system has reached a monthly run-rate implying an annual volume of US$150m - and that it’s growing by 30 per cent per month. “Indirectly” an annualised $4 billion worth of product is being ordered through its system - a big number in itself, but still a small slice of the global auto parts market, which is put at $1.9 trillion.
Partly takes an undisclosed clip of the ticket. Subscriptions to its data management tool, Universal Vehicle Database and Global Auto Parts Catalogue and other services start at US$10,000 per year, and depend on the size of the customer and other factors.
With hypergrowth and no direct competitors, Fawcett says Partly could become the largest NZ-based largest tech firm within five years. His marker is Wellington-based Xero, which has a market cap of around $12 billion.
His ambitions are global. The new funds will be used, in part, to double headcount to just over 100 over the next year. The founder says many of the new hires will be offshore, particularly in Europe.
“But New Zealand will always be our engineering hub,” he says.
“We have a large customer backlog and are prioritising key customers mostly in Europe,” the founder says.
Fawcett says Partly makes money some months, but it will focus on growth over profit for the medium term.
He won’t reveal financials, but they were sufficiently attractive for a $37m raise at a time when much of the venture capital industry is battening down the hatches.
Fawcett says while his firm ultimately achieved a record haul, it was obvious that the level of scrutiny startups are under has tightened several notches.
“The due diligence that was done prior to getting a term sheet was almost as much as all the due diligence that was done in our last round,” he says.
The round was led by London-based Octopus Ventures - one of Europe’s larger VC (it says it invests around £200m per year), with support from three Aussie VCs - Square Peg Capital, Blackbird Ventures and Ten13 (headed by Steve Baxter - one of the sharks on Australia’s version of Shark Tank), the New York-based 12BF Global and locals Hillfarrance and Icehouse Ventures.
Was it the largest in NZ’s history? “Wow - I can’t think of a bigger one,” said Mark Vivian, a partner at Movac, our largest VC, said when the Herald put the sum to him.
“But definitions are getting blurred these days.”
While many in the VC industry are pulling their heads in - in part because it’s now so much harder to raise money from the investors that back their funds - Octopus executive Malcolm Ferguson recently told the Financial Times: “The first two years of a recessionary cycle are often some of the best to invest in a business.”
In many cases, valuations have fallen, driving keener deals.
But Ferguson had three broader reasons for backing an early-stage firm during a slowdown.
Companies have access to better talent as larger firms lay off staff, funding scarcity reduces the likelihood of a rival popping up - giving companies more breathing space, and incumbents are less likely to develop a competing product.
Fawcett is convinced his firm can be massive because it has no competitor. In most of the fields it operates, it’s challenging paper-based or at least creaky databases that can’t talk to each other very well - leading to slow, error-prone systems with lots of returns.
Why has it got the field to itself? By its founder’s description, simply because what it does is so hard.
“Partly was born out of a huge unsolved data problem,” Fawcett says.
All told, there are around four billion combinations of parts that can be ordered across different makes and models of cars.
That’s gnarly in itself, but it’s made thornier by different companies, and countries, using different descriptions.
Some are obvious. What Americans call a “hood”, other countries call a “bonnet”. But there are also thousands of other mis-matching name and numbering conventions.
Partly’s global team includes data scientists, engineers, and automotive veterans building algorithms that are extremely precise, letting buyers find all the correct car parts just by looking at a licence plate.
Partly has its own PartsPal software for selling auto parts, but also creates an API - or applications programming interface - that lets car manufacturers, online marketplaces, dealerships and dismantlers talk to each others’ databases using standardised parts descriptions that everybody can understand.
As the firm looks to double in size over the next 12 months, Fawcett is partly after people with automotive and e-commerce business experience. One of Partly’s early hires was Kiwi ex-pat Tony Austin, who headed Amazon Global across the Tasman. But mostly he’s after brainbox data scientists to join the company’s teams in NZ, Australia and Europe.
“We’re looking for the most outstanding software engineers globally who are excited about solving hard problems. We have a genuinely exceptional team across Australasia and Europe, and currently, we only hire around 1 per cent of applicants that apply, so the bar is incredibly high.”
Fawcett is already doing okay.
A November 29 Companies Office update had Fawcett as the largest Partly shareholder, with a 38 per cent stake - worth $68.4m at the $180m valuation used for the Series A raise.
But as in previous interviews with the Herald, he wears a down-to-Earth black T-shirt - recalling the de facto staff uniform at Rocket Lab.
He says he no longer talks to Beck once a month, but the Rocket Lab founder remains a mentor, and they’re in regular contact. (Beck has backed multiple startups, including smart cow firm Halter, which was founded by another Rocket Lab engineer, Craig Piggott).
And like Rocket Lab, he says Partly growing overseas but keeping it heart in NZ.
“There’s a very high chance we’ll end up with more employees in Europe and the US, just purely based on size of the markets,” Fawcett says.
”It won’t be possible for us to grow at a sustainable rate here, but I certainly still see New Zealand as being a core engineering hub for a very long time.
“We have a people who are strong generalists; that No 8 wire mentality, just knowing what needs to be done and figuring things out, knowing what needs to be done. I think that’s a superpower for a lot of New Zealand engineers.”
OPINION: December is often the month in which we spend money like it’s confetti.