“However, like many technology companies, we have not been immune to the impacts of the external environment over the past 12 months. As a result, we have made the decision to reduce our cost base to ensure we can grow sustainably over the medium-long term,” a Willow spokesperson told The Australian Financial Review.
Willow makes “digital twins” of property and infrastructure assets for asset owners and managers to help with decision-making. Its flagship projects include digital twins for Dallas Fort Worth Airport and US retailer Walmart.
The start-up has drawn investments from former Macquarie Group boss Nicholas Moore (who is also the chair), ex-Brookfield property bigwig Ric Clark, property investor EG Funds Management and fund managers Perennial Value Management and VGI Partners.
Willow was one of the few board seats Nicholas Moore accepted leaving the banking giant. Natalie Boog
Technology juggernaut Microsoft’s boss Satya Nadella cited Willow as an example of “exciting things happening in the cloud” on a trip to Sydney. Microsoft has since signed a cloud partnership with the start-up.
Willow raised a $US43 million “bridging round” in September 2021 at a valuation of $US170 million. Its latest one, which Willow closed in early December, brought in $US28.8 million from mostly existing investors.
Street Talk previously reported the December round was initially shown to local investors with expectations of a $US70 million odd valuation, which would have been 58.8 per cent lower than the $US170 million valuation it fetched just a year ago.
In a subsequent interview, Willow chief executive officer Joshua Ridley did not confirm the valuation cut but said: “We probably raised at the top of the market [last year], some would argue we’re now raising at the bottom of the market.”
There were signs of the start-up’s valuation drop earlier in the year. VGI’s investment in Willow was recorded as being worth $6.9 million in December but was slashed 69 per cent lower to $2.1 million in the June accounts filed by Regal, Financial Review’s Rear Window column previously reported.
It has been a similar story for several other start-ups, including Songtradr, Till Payments and Avenue Bank whose 2022 capital raisings were pitched with investor expectations of lower valuations than the highs from previous rounds aka the dreaded “down round”.
With Willow funded to 2024 with the recent capital raise and staff overheads reduced, it is shifting its focus to its core sectors of real estate and smart facilities.
“We view this raise as a vote of confidence from existing investors, and it emphasises the critical nature of digital twin technology for built assets. Raising these funds was predicated on Willow moving to a more profitable model,” the Willow spokesperson said.
