After pivoting to focus on a tech-enabled solution, Newcastle-based workforce-management platform Pegasus has bagged $28 million in funding to take its product overseas.
The funding comes from Accel-KKR, a Silicon Valley tech-focused investment firm, and principal Joe Porten is set to join the board of the startup.
Founded in Newcastle in 1998, Pegasus doesn’t exactly have a traditional startup story. Chief executive Adam Boyle tells StartupSmart for its first 20 years, it was a straight labour-hire company.
Then “the big boys came to town” and the team realised a pivot was in order if the business was to remain competitive.
The team developed a tech-enabled workforce-management platform allowing contractors to pre-qualify for jobs. It also uses peer review and site review systems to make sure the right contractor is secured for the right role in the first place.
Now, the startup has a workforce of more than 100 people, and has some 300 blue-chip companies on its books, including the likes of BHP and Woolworths.
Since 2013, it’s seen profits increase 25% year-on-year, Boyle says.
Crucially, the chief executive says the new solution is scalable.
There’s a “huge sales pipeline” in place in Australia, he says.
“While we’re probably the biggest in our market, there are still a lot of organisations that don’t have a product or strategy like ours.”
But also, he’s thinking globally here, working with world-class Aussie businesses that can give Pegasus a foothold in international markets.
“That’s one part of the global strategy.”
The business is also looking to grow through strategic partnerships and acquisitions, Boyle says. In fact, there are already acquisition processes underway.
“We’re looking at some key relationships and key partnerships in other parts of the world, so we can tap into their client user base,” he explains.
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A spotlight on regional business
A $28 million cash injection is a significant win for the regional Aussie startup, made even sweeter by the fact it’s from a prominent Silicon Valley investor.
For Boyle, one of the best things about closing the deal and making the announcement has been to see the reaction of staff members and people who work with Pegasus.
“We’ve had to ask for a lot of trust and support from a lot of people over a period of time to get to where we are today,” he says.
“It’s a lot of hard work.”
However, this news also presents an opportunity to “showcase some of the Newcastle-based talent, globally”, he says.
He hopes shining a light on a regional Aussie business will help attract tech talent outside of the hubs of Sydney and Melbourne.
“We’ve already had a lot of contact with others in the same space asking for support, or even just to catch up for a coffee,” he says.
People don’t tend to associate Silicon Valley investment dollars with Newcastle, he says, thinking that money belongs with bigger businesses in bigger cities.
But, Safety Culture, which was founded in Townsville in 2004, and raked in $60 million in Series B funding in 2018, stands out as an example of regional startups making it big, Boyle says.
He hopes the Pegasus story shows that wasn’t a one-off.
“It probably encourages people to seek a little bit higher,” he says.
“It’s nice to think that we could be one of those companies that inspires others.”
You’ve got to live and breathe it
Although Pegasus isn’t quite as fresh-faced as many other startups approaching a raise, the raising process didn’t run quite as smoothly as Boyle would have liked.
“It hasn’t been easy,” he says
“It took a little longer than we expected.”
However, it was a process of finding common ground with the investor, and building a trusting relationship. It was important to the chief exec to make sure the two organisations were compatible.
“They’re very similar in values and how they operate. They’re a very client-first organisation,” he explains.
“That was a big deal to us.”
For other regional startups, he says the secret is in believing in yourself and your business, Boyle says.
“When we first started talking to all of these PE firms, the conviction we had in selling our story and what we wanted to do in the future was something they really liked,” he says.
“You’ve really got to live it and breathe it for a little while. It’s hard work … you’ve got to really prove it.”
And when you reach the stage of seeking investment, “the people you surround yourself with are critical”, Boyle says.
It’s OK for founders to admit they don’t have the expertise to navigate a capital raise process, he says.
Pegasus bought specialist chairman Craig Jones on board, he says. He knew the team would need additional insight to manage the process.
“Try and find somebody who has a bit of experience,” Boyle advises.
“I thought I knew most things about our business until I met Craig,” he admits.
“There’s a whole new way to look at things.”