Start-up hailed as next Canva loses $62m

Luke Anear, founded SafetyCulture – a workplace software start-up – in a garage in Townsville, and is confident the business is on track to reach an eye-watering valuation of $10 billion in future.

The company is already a rare double ‘unicorn’ with a recent valuation of $2.1 billion and has been tipped to become the next tech darling of Australia following in the footsteps of Atlassian and Canva.

It posted a loss after tax of $62 million for the year ending June 30, according to documents filed with corporate regulator ASIC and revealed by The Australian, up from $23.1 million in the previous year but Mr Anear insists it’s all part of building a global business.

He’s also quick to point out that the $62 million wasn’t drained from the bank accounts of SafetyCulture.

“We are in a fortunate position we are solving a problem in a unique way and we haven’t had lots of head-to-head competitors, so we had the time to invest in the right areas in product and our operations platform,” he told news.com.au.

“We will continue to post a loss for the next five years or more – it’s the nature of investing in high growth companies and it’s unrealistic to expect to turn a profit early while you’re investing in product development and acquiring customers everywhere.

“The other thing is every day people don’t understand that the $62 million loss is an accounting loss on paper – it’s not a cash loss – and not the amount of money we spent in a year, but it includes equity we issue so the value of equity is part of that loss.”

He added the company had swung back to profitability in July, although the ASIC documents did reveal SafetyCulture had also tapped a $20 million debt facility arrangement as precaution to continue growth and “strengthen the capital position of the group”.

Mr Anear, who has spearheaded fundraising more than $200 million for his company for the past decade, said the world of raising venture capital made running a business different in today’s world, with profitability not an initial priority.

“It’s a race for companies and the winner takes all and we want to get a global customer base as efficiently as possible and we don’t have 30 to 50 years, so when you take venture capital you are agreeing to invest in research and development to be able to capture a global customer base in 10 or 20 years,” he said.

The group posted annual revenue of around $92.4 million, up from $74.5 million, but the company’s spending on research and development, sales and marketing, and administration far eclipsed this, which drove it into loss territory.

But the 45-year-old founder said he hadn’t been forced to let go of staff, with the outfit currently employing 680 people, as the tech sector was battered and many of his fellow start-ups slashed their workforce.

“We have not been hiring at the same rate but we are still hiring, there is about 40 odd open roles,” he noted.

Back in March, SafetyCulture unveiled what was heralded in its publicity as a $38 million state-of-the-art, nine-story headquarters in Sydney.

It includes free breakfast, lunch and snacks cooked by chefs and immersive customer themed meeting rooms built by a set designer to replicate the workplace of customers such as Coles, Cathay Pacific, Toyota and Krispy Kreme.

It also featured a “world first” Junglefy Breathing Tree with its own active bio filtration system that removes CO2 and other air pollutants, an atrium with movable coloured glass panels, a games room with VR headsets and foosball table and a robotic dog, which detects temperature changes or anomalies in the workplace.

Mr Anear said the Sydney headquarters had been four and a half years in the making and did not contribute to the company’s losses in the past financial year.

‘There’s been a lot about it being a $38 million building, but we didn’t spend that – that’s not our building,” he explained.

“We are just a tenant, that’s what the owner spent and we contributed to the office fit out.”

SafetyCulture also has offices in Amsterdam, Paris, Kansas City, Manchester and Townsville.

The company’s losses were also part of a spending spree to invest in the business, according to Mr Anear, as it acquired a lone worker safety app called Sheqsy in April for $6 million and in June it put $3 million into software maker Inaurio.

He said this type of moves would merge everything from training, inspections, insurance and even buying work gear into one experience, but often the investments wouldn’t be seen for another three years.

The chief executive added the company had never “tried to raise at massive valuations” they couldn’t grow into in the coming years and always had sufficient cash levels.

“I think we will continue to grow and our valuation will continue to grow. I wouldn’t expect that to slow down too soon and in the not to distant future I think we will get up to a $10 billion valuation, that’s personally what I’m building towards,” he added.

But Mr Anear admits he is sometimes still surprised at SafetyCulture’s success from starting out in a garage to his vision of 100 million people a day using their products.

“I thought maybe we would get all the businesses in Townsville to one day use all our products and your ambition grows as your capability grows and then I thought we would have customers in Brisbane as well,” he said.

“But this is now a truly pinch yourself moment and you go back and go wow a couple of people in a garage in regional Australia have made something that companies all around the world use.”