Queensland startup RedEye has raised $10.4 million in Series B funding, and while co-founder and chief executive Wayne Gerard will use the funds to expand overseas, he’s not straying from his Brisbane roots.
The funding was led by US firm Energy Innovation Capital, and also included repeat investment from Advance Queensland’s Business Development Fund, along with a cohort of public and private investors.
Founded in 2012, Software-as-a-Service startup RedEye provides cloud-based data management and digital engineering solutions to any businesses operating critical infrastructure, including in the construction, mining, power and infrastructure spaces.
Speaking to StartupSmart, Gerard said the time is right for a Series B raise.
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In 2016, the startup secured a $250,000 grant from Queensland’s Ignite Awards Fund, while before that — in 2014 — it raised $4 million in Series A funding.
“We felt we were too small back then to even take that,” Gerard says.
“We had early traction, but we didn’t have product-market fit.”
Since then, however, RedEye has expanded to offer its services to more industries, as well as opening its US headquarters in Las Vegas in 2017, when it secured a contract with the Southern Nevada Water Authority.
This year, Gerard and the team started to realise the startup was “at a point where we were beyond proving that we had a real business.” he says.
“We were really in a position to be able to scale.”
The $10.4 million in funding will be used to help RedEye expand further, both in Australia and the US.
The startup has grown from eight people a few years ago to 75 today, and Gerard plans to add 70 more jobs in the next 12 months, the majority of which will be in Australia.
RedEye is also “very close” to winning a major client in New Zealand, Gerard says.
Success starts at home
Although the round was led by a US fund, the ongoing support of Queensland’s Business Development Fund is important for Gerard, who puts a lot of RedEye’s success down to the local government.
“I just can’t comment enough on how effective I think the Queensland government has been,” he says.
The level of government support available means the state is “really leading the world in terms of building startup ecosystems”.
The people running Advance Queensland, the government’s innovation initiative, “really get it”, Gerard adds.
“They’re not bureaucrats — these people are experimenting, trying, testing, learning,” he says, just as startups are.
The Brisbane startup ecosystem is sometimes overlooked, with hubs in Sydney and Melbourne taking favour.
However, Gerard argues the Queensland government “understands the potential of the startup community”.
“There are a lot of great startups in Queensland — they’re definitely growing, raising money and employing lots of people,” he says.
And, the startup community is slightly different in the Sunshine State, with entrepreneurs tackling problems in spaces ranging from healthcare to enterprise and manufacturing.
According to Gerard, startups here are solving problems that help traditional industries to innovate.
“That creates jobs in traditional industries,” he adds.
Getting a US investor on board was also important for Gerard, partly to help RedEye scale in the States, but also to attract the attention of a large US investor to Queensland.
“The objective of the Business Development Fund is to attract investors to invest in Queensland startups,” he says.
“I wanted to play my part.”
When RedEye established it’s US headquarters, the team selected Las Vegas as its base primarily because that’s where its main customer was.
“Being located with them is a demonstration that we’re customer-focused,” Gerard says.
However, he never considered setting up shop in Silicon Valley, saying that’s a “stupid idea for Australian startups”.
It may be the most famous tech hub in the world, but “software resource pricing and rent are ridiculous”, Gerard says.
“And, unless you’re selling to tech companies, that’s probably not where your customers are,” he adds.
As RedEye scales further in the US, Gerard is opening offices in Denver and Houston, while also considering an office on the East Coast. Although — for similar reasons — not in New York.
Aside from location considerations, one of the biggest lessons Gerard has learnt when expanding overseas is not to rush things.
Over the past few years, RedEye has had a lot of interest from investors. But, for Gerard, it was important to find investors that were growth-oriented, and “really understand how we operate and can add to the opportunity”.
At this stage, it’s less about the money and more about the time and resources a partner can contribute, Gerard says.
“It’s more about the partnership than it is about the money. You can get money from anywhere, quite frankly, if you’ve got a good business,” he adds.