Sydney startup Particular Audience has closed a $1.8 million seed round for its AI e-commerce tech, but for Brit founder James Taylor, the funding hinged entirely on the rarest of things: an entrepreneur visa.
The round was led by Carthona Capital, and Carthona investment director Damian Fox has also joined the board of the startup.
Taylor came to Australia to head up the Aussie office of Google Ventures company Yieldify. It was here, however, that he dreamt up the tech for Particular Audience.
“It was super resource-intensive … and there was so much I thought could be automated,” he tells StartupSmart.
He left his role, and started working on an AI-powered solution to help small e-commerce retailers to compete with the global giants.
“It’s basically a wisdom-of-the-crowd thing,” he explains.
The platform uses visual recognition to identify items from around the web that a consumer might be interested in.
“It’s something that can show you either complementary or alternative items, but completely automated and at massive scale.”
However, for Taylor, the opportunity doesn’t stop at personalisation and recommendations for shoppers. He’s also looking to create “a sort of decentralised Amazon”, he says.
“We want to become prevalent on so many websites that we see the same customer across different sites on the same day, so we can start to build patterns of what people are doing across different stores,” he explains.
“Which is what makes Amazon so effective.”
The funding round closed in March, and Taylor has wasted no time in starting to spend it.
The team has grown four-fold, he says, including the hiring of new chief technology officer Cubean Liu, former lead engineer at Aussie startup Hyper Anna.
Taylor has started building out the business development and sales teams, as well as an account management function.
The startup is also planning to open its London office within the next couple of weeks.
Initially, Taylor put about $250,000 of his own money into launching Particular Audience. He then completed a friends-and-family round, securing another $250,000 from former colleagues, family and “high-profile tech friends”.
His relationship with Carthona began almost by accident, when Taylor and Fox were introduced by a mutual friend at a surf weekend.
When Taylor talked about his vision, Fox “really bought into that”, the founder says.
“And the process really started from there.”
However, it wasn’t to be smooth sailing. The founder and investor met in July 2018, and by December, the term sheet was agreed and the documents signed, Taylor explains.
“Subject to one thing. And that was my entrepreneur visa.”
Taylor found himself in something of a chicken-and-egg situation. Carthona had agreed to the investment, but only if Taylor had the right to work in Australia.
However, to secure an entrepreneur visa, he needed to have raised $200,000 from one of a list of selected VCs. Although Carthona was on that list, they didn’t want to commit the funds without the security of the visa.
“You need a legally binding agreement on that money,” Taylor explains.
Eventually, he got sponsorship for the visa through the state government, and it was then sent to home affairs for processing.
It wasn’t until March this year that the visa was approved.
“The business literally had $14,000 left in its bank account at the time we got the visa,” Taylor says.
“The money from Carthona arrived a day later.”
Although it was initially heralded as a new way to attract talent to the Australian market, the entrepreneur visa has since been criticised for its restrictive funding requirements.
In its first year, there was only one applicant for the visa scheme. Last week, the Australian Financial Review reported that in the three years it has been operational, fewer than five people settled in Australia through the scheme — fewer than is required to actually record those arrivals.
Fox tells StartupSmart he views the visa as a “great initiative”, that could encourage entrepreneurs to choose Australia as a base for their business, as opposed to anywhere else in the world.
“While it is no secret that it is hard to get the visa, James Taylor has shown that the best entrepreneurs can get it — which, if you think about it, is actually a positive selection bias for the Department of Home Affairs,” Fox says.
“I simply encourage the Australian government to persist with the program, as we are witnessing a significant shift in the world’s perception of Australia as a place to start and run a business,” he adds.
Despite the challenges Taylor faced in securing the entrepreneur visa, and the relative few that have been handed out so far, the founder says Australia is “a really fantastic place for startups”.
He points to things such as the Acceleration and Commercialisation Grants, R&D tax credits, and ESIC grants for investors.
“These startups would be crazy to not make the most of that,” he says.
“It’s a fantastic incubation market.”
Taylor urges startups to take advantage of the opportunities available to them, and to bolster Australia’s ecosystem as a whole.
When he left London five years ago, the startup scene was starting to pick up, he says.
“I go back now, and it’s mental. There are shared spaces everywhere, and suddenly, everyone is in a startup,” he adds.
“Australia can definitely have that … there’s a lot in Australia to take advantage of.”
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