Sydney-based IoT startup Morse Micro has raised $23.8 million in Series A funding, with the backing of a veritable who’s who group of Australian investors.
The round was led by Ray Stata, founder and chair of NASDAQ-listed semiconductor company Analog Devices, who is also joining the board of the startup.
Blackbird Ventures has become a repeat investor, along with Main Sequence Ventures, who’s partner Mike Nicholls is also on the Morse Micro board.
Additional investors include the CSIRO Innovation Fund, Right Click Capital, Uniseed, the Clean Innovation Energy Fund and Skip Capital, the private investment fund owned by banker Kim Jackson and her husband, Atlassian co-founder Scott Farquhar.
Founded in 2016 by Andrew Terry and Michael De Nil, Morse Micro builds WiFi chips for IoT devices, allowing devices to connect at a lower cost, at long-range, and with longer battery life.
The co-founders met when working at a large US company’s Sydney office, where they realised chips designed for phones and PCs were being used in IoT devices.
They were “completely unsuitable”, Terry tells StartupSmart.
“That wasn’t working very well.”
The pair saw an opportunity to create a new kind of chip specifically for the IoT revolution.
Now, they have attracted industry experts onto the team, including John Sullivan, inventor of the technology that underpins WiFi, and Neil Weste, founder of the first company to commercialise WiFi chips.
Having completed the Startmate accelerator program and raised an initial $4.5 million seed round, Morse Micro has grown to a team of 24 people, and completed R&D for its first-gen product, Terry says.
“We’ve got customers now that want it,” he says.
“They want to see it in mass production.”
The funding will be used to fuel growth of the team, with plans to hire production engineers and operations staff and ultimately double the startup’s headcount.
It is also pegged for financing the tools required to get the product into the market, and towards expanding the business in China and the US.
“Every day we get people reaching out to us, desperate to get their hands on the product,” Terry says.
“Now we need to ramp up the production and sales and marketing … so we can start selling millions of these.”
A little help from my friends
Morse Micro has got a whole host of high-profile investors on board, but Terry says attracting them was a gradual and relationship-based process.
“You look around at the investors you would like to have, and then you go out and speak to them, and build a relationship with them,” he says.
Through Startmate, the founders met “high-quality investors” and kept in regular contact with them.
When it came to pitching them, “we weren’t coming at them fresh — they knew who we were”, he says.
On our first fundraising trip to the Valley together, @mattallen and I shared this room with the @MorseMicro founders. They’ve come a long way since then. https://t.co/WBYFHdwGxQ pic.twitter.com/69u5TAtfdF
— Nick Crocker (@nickcrocker) May 27, 2019
“We had a track record of delivering what we told them we were going to do.”
Still, getting the investors they did is a “tremendous validation”.
Stata is an “absolute legend in the semiconductor industry”, and having him choose to invest, and become a board member means a lot for Terry.
“Then, of course, getting some of the most prestigious and best Australian investors around the table as well is an enormous confidence boost.”
Terry advises other founders at an earlier point in their journey to make those connections in the startup community, wherever they’re based.
“There are a lot of people that are willing and able to help with a lot of good experience,” he says.
“There’s no better way of working out what to do than talking to and leaning on people that are a few years ahead.”
For Morse Micro, going through the Startmate program was a huge help, speeding things up for the startup “by about a year”.
Both the founders come from a technical background, and have been learning to manage the business side of things as they go along, Terry says.
“We knew we would need to learn about funding and VC, and business growth,” he explains.
However, they not only got a crash course in starting a business, but they also built a network of mentors, people who have experience in their space, and ultimately angel investors.
“We’ve been able to lean on our investors and advisors … which has been very helpful,” he says.
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