The team behind Upstock (from left): Foxton Fizz MD Matt Watson, and foundation Xero crew Philip Fierlinger and Duncan Ritchie. Photo / File
Three startups to watch in 2022:
It seems counterintuitive that a hospitality startup could prosper during the pandemic.
But that's been the case with Wellington-based Upstock, which offers an app that lets cafes, bars and restaurants restock food and drink with a few clicks. Large organisations like the Ministry for the Environment and NZ's biggest game developer, PikPok, are also using Upstock - in their case to make sure staff lunchrooms are replenished.
Co-founder Philip Fierlinger says the example is simple: as with so many sectors, the pandemic has spurred hospitality to digitise as it looks for more efficiency and ways for managing from anywhere.
Bars and restaurants have traditionally used a medieval mess of pen and paper, faxes, phone calls and emails for restocking.
"It served them well enough for a long time," Fierlinger says. "They didn't have any motivation or incentive to change. Now we're seeing it completely change overnight. They need to cut costs, they need to save time, and they need to reduce wastage."
Upstock was ready and waiting to take advantage of the transition with its app, which includes frills such as saving past orders, managing multiple locations, and setting which staff can order what.
Fierlinger says the move to digital ordering typically allows a chain to free up one full-time staff member, who can then be reallocated to a more productive area like sales.
Like all good startups, it was founded to solve a real-world problem. The company was founded by Foxton Fizz director Matt Watson, who found it difficult to field wholesale orders from the hospo sector, which got lost in garbled texts, phone calls at all hours and emails hidden in his spam folder.
He started the Upstock app as a side project but as interest took off he roped in his friend Fierlinger to run the venture full-time.
Fierlinger knew his way around a startup. In 1994, the American co-founded Turntable Media, one of the first companies that helped artists, and the corporations that signed them, grapple with the internet's impact on the music industry. The Beastie Boys, Eric Clapton and Warner Bros were on its client list.
In 2006, after immigrating to NZ, he became one of the co-founders of Xero. And at Upstock, he soon brought on another Xero alumnus, Duncan Ritchie - who as the cloud accounting GM of operations then chief product and platform officer ran its engine room as it grew from a handful of staff to more than 1700.
In July 2020, Upstock raised $3.5m from investors including Icehouse Ventures. The startup could have brought in $7m with the over-subscribed raise - but Fierlinger says he chose to cap it at half that amount in keeping with his "dream big but start small" philosophy to keep things manageable.
"Everything I do, the first question I ask is, 'What's the ultimate dream come true?'. And I think to myself, 'Somebody's got to do it so why not me?' And I think the trick is thinking big but starting small; to break things down into small problems that are easy to solve but constantly visualising that ultimate dream come true."
At the time of its $3.5m raise, Upstock had hundreds of hospo customers, including the likes of Mojo and Best Ugly Bagels. Today, as it fields offers from wannabe investors keen to participate in its new funding round (which is already 50 per cent committed), it has thousands of users (cafes, bars and restaurants can use a basic version of Upstock for free; wholesale suppliers pay a fee to supply them via the app).
Upstock has established a partnership with Foodstuffs (which it also competes with, in some contexts) and recently launched into Australia, where White Whale Coffee Roasters, a major vineyard and a Byron Bay distillery are among early customers, and where a sales team is being hired. The situation across the Tasman is different in that there are already established competitors, but Fierlinger says his company is winning clients from the incumbents.
The privately-held company has not released any financials, but Fierlinger says, "We're experiencing phenomenal growth - 1000 per cent over the past few months. We're currently experiencing 10 per cent week-on-week growth in orders."
If Fierlinger's name sounds familiar, it could be because the Herald recently profiled his son Emory, who won backing from Apple to develop Roadtrip, an app for calculating petrol costs.
Venture capital investment in Kiwi startups hit an all-time record in 2020. And while the final tally is still being totted up for 2021, all signs are that it set a new benchmark.
But one area of the tech industry didn't share the love: video gaming, despite it being on track to becoming a $1 billion export earner.
The NZ Game Developers Association identified access to venture capital as a key pain-point, particularly for early-stage companies in the sector - where it's perhaps more tricky for investors to gauge if they've got a potential hit on their hands.
Big injections of funds have tended to come from trade investments (such as China's Tencent taking chunks of Rocketwerkz and Grinding Gear Games) or buyouts (such as Sweden's MTG buying mobile game developer Ninja Kiwi for $203m or American 3D gaming developer Unity buying Weta Digital's gaming arm for $2.3b).
But that's started to change with the launch of Alt Ventures, a new VC fund focused on gaming.
The startup's founder and managing partner is Chris Jagger, whose past roles include investment director at Crown VC agency NZVIF (now known as NZGCP) and manager, private investment strategies for the NZ Super Fund.
To launch the fund, Jagger teamed with advisers Tim Ponting (an angel investor and gaming industry veteran who heads the Government-backed NZ Centre for Digital Excellence in Dunedin), Pooj Preena (a successful tech founder, adviser and investor) and Arron Patterson (an Auckland-based angel investor whose day job is Asia-Pacific and Japan principal engineer and chief technology officer lead for Dell).
In mid-December, Alt Ventures announced its first three investments, two of which have been named: Mt Maunganui game studio Flightless, which developed the mobile game Doomsday Vault (one of the first titles to appear on Apple Arcade), which is now developing new titles, and Tauranga developer Phat Loot, which is developing a massive multiplayer online game called Untamed Isles, where players "tame, train and breed monsters for battle in a fantasy island environment". With Untamed Isles, Phat Loot founder Josh Grant is looking to ride the crypto craze. A twist is promised on the exploding "Play2Earn" genre - associated with bitcoin mining - where players can earn in-game rewards that can be converted to real-world cryptocurrency.
"Kiwis are also great story-tellers, innovators and outside-the-box thinkers, bringing novel twists to established game genres. But the sector has been overlooked by investors until now," Jagger says.
For many - especially the athletic -a big problem with earbuds is that they just don't stay in your ears.
Earshots solves this problem with a magnetic clip that holds its eponymous earbuds in place.
"I left my day job to run Earshots full-time in January 2020," says founder and CEO James Bell-Booth - who formerly headed a Palmerston North business incubator called The Factory.
"Four weeks later we are in lockdown and it was bloody tough to get our first model to market."
Again, we have an entrepreneur attempting to solve a real-world problem.
Bell-Booth launched a Kickstarter campaign for funds to develop a new type of earpiece after various brands of earbud kept falling out of his ears when he competed in the annual "T42" race across Tongariro National Park - an event that involves both trail running and mountain biking.
An earlier reviewer of its Bluetooth wireless headphones, T42 competitor and Discovery reporter Mike Kirkpatrick, praised the Earshots for not budging during a 21-minute run, but said the sound lacked depth.
But now things are looking up. Bell-Booth recently raised $2m from investors including ex-GoPro chief marketing officer Todd Ballard. When you're targeting people who are into the likes of mountain biking and trail running, it does not hurt to have an ex-CMO of perhaps the world's most successful sporty gadget as a backer.
And the second-generation Earshots will shortly be released, at $239 for early buyers.
"There was a big focus on audio quality, which we have nailed," Bell-Booth says, who forwarded the Herald a rave preview from Kirkpatrick (the new product will also be with the Herald shortly, and the technology editor will attempt jogging in a bid to review it. UPDATE: read Juha Saarinen's review here).
"We're also continuing to improve fit and comfort and taking connectivity between devices to the next level."
Bell-Booth says many earbuds need a full seal in your ear for best performance, which can be painful, especially when you're running.
He says with their magnetic clip and a choice of seven different positions for their buds, the second-generation Earshots solve this problem.
Financial Times: There are merchants, and then there is Walmart.