What you need to know:

• Australian automated econometrics start-up Mutinex has struck a funding deal with specialist B2B SaaS VC firm Equity Venture Partners, which values the firm at $37m with expectations for a valuation approaching $400m in the mid-term.
• Mutinex is growing fast because finance teams accept the methodology, which attributes marketing and media activity to business impact above baseline sales.
• Global comms holding companies and consulting firms will license the platform similar to CX and martech cloud platforms like Adobe and Salesforce rather than build rival tech products because they’re not “software and engineering companies”.
• The US market is Mutinex’s biggest challenge and focus to become a global player via US-domiciled multinationals.

Marketing analytics platform Mutinex has secured funding that takes its valuation to $37m – and brings venture capital backing from a Sydney-based B2B SaaS specialist VC eyeing a 10x valuation lift in five years for its new investment.

EVP currently has around $280m under management via “40 portfolio companies that look and smell and feel almost identical – all we do is invest in B2B software businesses,” Partner Justin Lipman told Mi3. The VC has form for getting in early, backing the likes of SiteMinder, Deputy and Shippit. 

“We see around 2,000 companies a year,” said Lipman, “and last year we invested in six.” In terms of product, customers and runway, he said Mutinex “ticks all the boxes of what a great B2B software company in the early stage looks like.”

Not ‘shelf-ware’

“We're very much looking for industry insiders solving their own problem almost in their own world,” said Lipman, adding that conversations with Mutinex’s big brand customers formed a key plank of EVP's due diligence. 

“We look to invest in mission critical, almost infrastructure-like tooling that organisations rely on to run their business day-to-day and certainly [from those client conversations] Mutinex would fit that bill,” said Lipman. 

“[Brands told us] they had changed internal business process around the software, how they have come to rely on it internally – from decisioning around [marketing] spend allocation through to internal reporting functions, and then obviously through getting value and uplift based on the recommendations the software is providing,” he added.  

Plus, it is finance departments as much as marketing that are driving the sign-ups. Mutinex’s methodology is sufficiently robust and predictive that CFOs accept the contribution the model attributes to incremental business impact from marketing activities on baseline sales – including brand building.     

“That really got our attention. We see a lot of businesses selling into enterprises where it’s almost akin to ‘shelf-ware’: It’s a great promise, an interesting idea that gets purchased by mid-level management but then never gets used and doesn’t drive any value,” said Lipman. “Unfortunately, there are a lot of those software solutions in corporate Australia and globally. What we saw in our due diligence [for Mutinex] was the opposite.”

EVP Partner Allen Zhu said the fact that “one customer had posted a job ad that specified an ability to use the software spoke to how critical it was becoming”.

Meanwhile, the “caliber of logos and the 'reference-ability' of the customer-base this early was an important signal that it is actually driving value”, per Lipman. Mutinex lists Intuit Australia, Youi Insurance, ING, Bendigo Bank, ME Bank, Asahi Oceania and Samsung Australia as customers. “In our experience it can be a much slower process to get that kind of traction with brand names,” Lipman added.

Plan A: 10x growth

Hence EVP targeting a 10x return – if Mutinex can become one of the top performers in its portfolio. Lipman, now a board member, says the median is around 5x, but he has high hopes for the business.

“Our ambition at Mutinex is that Henry and Matt build one of Australia's generationally strong technology businesses. … Plan A is liquidity [cash out and take profit] at the back-end, year seven to ten. Plan A is growing to the US market etcetera,” said Lipman. “To be honest, if you continue to delight customers, continue to serve them well, liquidity exit opportunities take care of themselves.”

He cites EVP’s investment in rostering and timesheet software firm Deputy as a template.

“We first invested in them when they were 16 people and $4m in revenue. Six years on they are 500 people and just over $100m in revenue,” said Lipman, with the likes of Hnry, Mission, SiteMinder and Shippit also powering. 

“Australia demonstrable success stories and lots of examples of very strong B2B software companies scaling very quickly globally,” added Lipman. “So it's definitely possible and that's plan A. No pressure Henry and Matt.”

Either way, Mutinex founder and CEO Henry says he’s not getting hung up on a valuation.

“I think the better way to look at it is what's the size of this market? How many companies are actively going to need this type of software – there's at least 2,000, 3,000 enterprises [globally]. They're all spending millions of dollars currently with consultants or using old school solutions, or PowerPoint," said Innis. "If we get the infrastructure right and if we work with partners like EVP and we attract the right people solving the right problems ... we will help these companies transition from what is a really static and problematic approach. So there's no reason we can't take that market and build up to a $100 million ARR [annual recurring revenue] B2B software business.”

Holdcos, consultants as resellers?

Innis and CCO Matt Farrugia think communications holding companies and consulting firms will help drive that growth. Once considered a possible competitive challenge, the co-founders note a fast flip in sentiment. 

“Based on the discussions that we're having in market now with a number of them, the holdco market will move towards licensing the technology from us,” said Innis. “We are talking to two holdco groups around that very proposition. Holdcos will not stay in this space, because their expertise is strategic excellence, it's not building world class software companies. They're two really different areas to play in. Just like I couldn't attract great art directors to Mutinex, it's very, very hard for businesses holding creative assets or media assets to attract world class software engineers and data scientists.”

Consulting firms, holdcos and Mutinex are all fighting to attract and keep tier one talent, said the co-founders, but the type of capability each requires is markedly different.  

“We're explicitly trying to build an environment where software engineers, scientists and product managers can do their best work to build an amazing decision-led product,” said Innis. “That's the environment that we're going to cultivate for them – and that's why we'll win in that space.”

Farrugia said the licensing-based SaaS model Mutinex adopted for its automated market and media mix modelling [MMM] has already been adopted by consulting firms, many of which have hundreds of specialists in integrating systems like Adobe, Salesforce, Google or Microsoft as part of of broader customer and digital transformation programs they build for blue chips. Consulting firms have data analysts, scientists and econometricians – but they are not software companies.  

“We've been speaking to a lot of consultants over the years as well,” said Farrugia. “There's some similarity, if we wind back the clock 15 years, to when CRM and content management systems were entering the market at scale. So many agencies and consultancies started tapping into open source CMS and CRMs – they thought ‘yeah, we can build this, the markups would be huge and we operate our own tool’."

But it wasn't quite that easy.

"What they realised is it takes an entire new business model and resource profile to operate those systems, to service their clients and customers – and that just eats into margin. So that whole theme around CMS and CRM shifted to licensing and hence Salesforce and Adobe and the like is where they all sit," said Farrugia. 

Be it media agencies or be it the Big Four, the Big Five now in consulting, "increasingly our conversation with them is shifting to how can they license our product then upsell services to support and build out enablement," per Farrugia. "That's what we're exploring as well. In terms of the relationship with consultants using this product, we're absolutely open to that – and we’re supporting many of them who already are using our product with our shared customers.”

Dentsu moving early? 

Dentsu Media ANZ CEO Danny Bass stopped short of confirming a deal was close with Mutinex to license its platform, but backed the company's tech.

"We feel they are focusing on the right space in terms of what marketers are thinking, particularly with the uncertainty for the short-to-medium term and typically for the second biggest cost item on the P&L," Bass told Mi3. "Ultimately they're making a product suite easier, simpler and faster for marketers to make decisions, which aligns to the position we are taking."     

Killer app: US market

Pretty much everything about the global growth ambitions of Mutinex and EVP is hinged on the giant US market – the biggest cluster of multinationals are domiciled in the US, which means global deployments are likely to fast track after landing domestic contracts in North America. 

EVP’s US track record, too, bodes well for the Mutinex growth plan. 

Per Lipman: “Our portfolio has raised about $1.4 billion of follow-on financing almost exclusively out of the US venture market. And a lot of founders look to us as a bit of a gateway towards that network as well.”

Innis is likely to join US President John Sintras in New York in coming months.

“Fundamentally we have to win in the US market, because to our mind it's the biggest and best market to crack,” he said. “We've got a very good pipeline there at the moment, but it's obviously a market riddled with complexities. I don't want to talk it up because the challenge of entering that market is immense for any business. The market is different, it's more complicated. There are different routes in, there are specialist consultancies for selecting software vendors that now exist over there. So we're navigating a lot of that – and to my mind, how you solve market entry is a product question.”

By that Innis means the Mutinex product must solve three core enterprise pain points: "Ingestion and data management, having a real-time analytics and reporting model that is robust and accurate and being able to deploy cost efficiently and at scale.”

More broadly on EVP’s funding deal with Mutinix, Lipman would not confirm the VC’s precise holding but indicated to Mi3 it has taken a low double-digit percentage.

Original investors return for more

Early Mutinex investors and existing shareholders such as Bloomsbury Information Capital and individuals including iSelect and Endota Day spa chair Brodie Arnhold, former WPP COO Chris Savage and former PwC and current Sayers Partner and 3AW radio host Russel Howcroft also increased their position. Innis said 20 of the 24 original seed backers are investing again, nine of which shelled out for a bigger slice. 

“We weren’t actively looking to raise money,” claimed Innis. “But EVP had taken a look at us [during Mutinex’s previous seed capital raise] last year and we’d built a pretty strong relationship with them. They approached us with a pretty compelling proposition, we came to a great understanding and we decided to work with them.”

Innis said because EVP are B2B SaaS specialists, "they understand structurally the problems that we are seeing before we are seeing them ourselves, which has been incredibly valuable. They are known as one of the most disciplined investors in the market, which is a useful trait in the midst of the largest tech crash ever, and are renowned for getting in on good deals early. Their conduct has been exemplary. If you are getting into bed with someone for the next eight years, you want to do that with someone who gives you absolute good faith, absolute trust.”