Construction tech startup Matrak has secured $3 million in convertible note funding, raising more than six times the amount it had originally intended.
Co-founders Shane and Brett Hodgkins, along with early investor-turned-chief operating officer Simon Elliot, embarked on the funding round after several existing investors and customers requested to put more into the venture.
The team had originally planned to raise $500,000. This figure quickly increased to $1 million before tripling again to secure just over $3 million for the startup.
The round was led by construction company Hickory Group International and Aussie VC Our Innovation Fund.
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Former Aconex chair Simon Yenken, who led Matrak’s seed round and was an early investor in startup success stories Canva and Redbubble, was also a lead investor.
In addition, Superseed Ventures, a VC backed by Matrak client Reece Group, also opted to invest.
“It’s been an incredible 12 months,” Brett Hodgkins tells StartupSmart.
Currently, it’s tracking towards $1 million in annual recurring revenue by December this year, Hodgkins says.
“We’ve landed our first few projects with large Australian builders, but there’s really a lot of growth we can do with our existing customers,” he explains.
The startup has projects in the pipeline, and once the technology has rolled out to those projects and all the subcontractors involved, “it’s going to have a big impact on our valuation”, he says.
It’s a fast-growth startup, drawing attention from hungry investors, and backed by the former chair one of Australia’s most successful construction tech startups.
But, when asked if Matrak could be an Aussie unicorn in the making, Elliot is not getting ahead of himself.
“It’s a great thing to aim for,” he says.
“As long as we stay passionate about what we do, and we deliver for the industry, that’s absolutely something we would love to happen … It’ll come with time.”
A war chest
For Hodgkins, getting Matrak customers on board as investors was a big win for the startup.
Hickory and Reece operate in very different parts of the industry, he notes. The former is involved in tracking subcontractors, while the latter is a supplier.
“The fact that both sides of that fence can see the value in having much better communication between these parties … it’s a huge validation,” Hodgkins says.
It’s also encouraging that existing investors want to follow on, says Elliot, who was an early investor himself before joining the leadership team.
It was existing investors that really drove this round, he explains. They hoped to invest more in the business before the Series A.
“When you get to a Series A, you start talking to larger funds, the VCs, and it starts to block out smaller investors,” Elliot says.
Now, the $3 million puts Matrak in good stead in the runup to a Series A, which the team expects to be in about a year.
“Those funds will give us a war chest to find the right Series A partner, and only really make that decision when it’s right for the business, as opposed to having to go cap-in-hand.”
The funding will be used to expand the development team, and to build out the product and ensure scalability.
The startup is also starting to focus on other markets, viewing China as a potential channel to them. A lot of the Chinese businesses Matrak already works with also export into Europe, Hodgkins says.
The team will now focus on “building out those relationships and seeing which markets it makes sense to move into next”, he adds.
“Everything was right”
When it comes to achieving growth on a global scale, Hodgkins says most of Matrak’s success so far has come from “really strong relationships with our customers”.
The team spent a lot of time on researching clients and getting feedback on the product, he says.
“The support that we got … was on the back of us being responsive to their requests, their customer needs, and actually showing them designs and mock-ups for what we were going to build into the software,” he adds.
And, if you want to raise capital, it’s important to stay in communication with your early supporters.
“Keeping them involved in the story has worked really well for us,” Hodgkins says.
This is particularly true when it comes to Elliot, who says he “fell in love” with Matrak when he was going through the due diligence on his investment last year.
“[The Hodgkins’] are a couple of really smart brothers who were solving a real problem in an industry that was fit for growth,” he says.
“Everything was right.”
To secure investment, founders should be telling a unique story, working in an industry that has the potential to deliver strong returns, and have a connection to that industry, Elliot explains.
“It has to be an exciting industry that’s going through a transformation that you can be part of.”