​Sydney AI-focused fintech startup readies for AU$23m ASX listing

Flamingo is taking the road less travelled by startups, waving goodbye to the venture capital model and instead becoming a publicly listed company before the month is over.
Written by Asha Barbaschow, Contributor

After raising an oversubscribed AU$3 million, Sydney-based customer experience automation startup Flamingo will list on the Australian Securities Exchange (ASX) with a AU$23 million market value.

Based out of Sydney's fintech accelerator hub Stone & Chalk, Flamingo deals with conversational commerce, delivering what founder and CEO Dr Catriona Wallace described as a Software-as-a-Service intelligent online guided selling platform for large financial services companies.

After watching large financial services providers pump millions of dollars into trying to improve the online customer experience and getting nowhere, Wallace told ZDNet she put her background in customer experience, design, and market research to good use, to first work out where they were going wrong, and second to determine how she could fix that.

"Humans are based on behavioural models and business is based on industrial models so the two things were actually never designed to work together well," she said. "I saw that as an opportunity to develop a software platform that better connects these two models."

As humans interact with each other through conversation, Wallace said the online environment needs to have this capability as well in order to be successful.

Flamingo launched its first product in 2014 in Australia and landed the National Australia Bank as its foundation client, which saw Wallace and her team use the platform to onboard small-to-medium business customers into the bank.

Following the immediate success of Flamingo, the board made the decision to flip the company and make it a US-based firm, moving the commercial team to New York where they have stayed since.

The development team and the data science team work out of Stone & Chalk, despite Flamingo being almost too big for the startup-sized space.

"Technically we could be in our own office somewhere but the value that the co-working environment provides us far exceeds being in our own office space and the real points of value here are definitely access to potential clients, the access to mentors and advisors, and being next to other startups," she said.

"There's always politicians and government officials walking through and it just keeps us up to date with everything that's going on in the fintech community, not only in Australia but globally.

"It's really hugely valuable."

After spending some time in the United States, Wallace is impressed to return to a thriving Australian fintech market, even overhearing at a conference recently that Australia is on par with Israel when it comes to financial technology innovation.

"The Australian market is very different to what it was two years ago. We've got financial services companies coming to Stone & Chalk really seeking out the fintech players. It's 100 miles ahead of what it was two years ago," she said.

"For Australia to ever be classified in the same genus as Israel in fintech I think is a great thing."

In particular, Wallace is impressed with the eagerness of financial services companies to engage with local startups.

"We've seen a lot of the banks try and set up their own innovation labs and doing an average job with that. I think there's almost 300 fintech staff working in Stone & Chalk now, this is the absolute heart of financial services innovation happening here and we've seen most of the big financial services companies have a relationship with Stone & Chalk which should supplement what they're doing with innovation themselves," Wallace said.

"It should be on the agenda of all financial services companies that are looking at innovation"

Currently waiting on the nod from the ASX, Flamingo is expecting to be listed by the end of October, following a reverse takeover of Perth-based oil and gas exploration firm Cre8Tek.

After following the traditional venture capital (VC) path in the US, Wallace said she was keen to do it differently in Australia after experiencing a dramatic change in the market.

"The US tech market started to check and a lot of criticism about overvalued unicorns and other technology companies started to mean that the VCs were scaling back their investment in early stage companies and really only wanting to invest in companies that were further down the track," she said.

Wallace was close to signing on the dotted line to hand over 10 percent of Flamingo to a US-based insurance company and a VC firm as well. Looking well placed to raise in the US, Wallace was approached by Cre8Tek who had 30 years of ASX experience and an alternate investment strategy.

"As a startup founder I spent 50 percent of my time for the last two and a half years trying to raise capital. We've been very successful at that but it takes a huge amount of time to do," Wallace said.

"For me now in this new environment, a capital raising will be taken care of by the market and by the success of the company. I don't have to be spending 50 percent of my time raising capital -- I can go and build the business and run the business like I should be."

Flamingo joins an ever growing list of Australian-based startups that have found themselves on the ASX, with more than 100 technology companies debuted on the ASX in the past two years, particularly through a wave of backdoor listings.

In May, video technology development company Linius Technologies appeared on the exchange after a reverse takeover of Firestrike Resources which saw Linius raise AU$3.5 million at a AU$25.6 million valuation.

Digital identification and verification firm TikForce finalised its reverse takeover of Palace Resources in April, with the Perth-based company launching on the ASX after raising AU$4.5 million to complete the backdoor listing. TikForce has a market capitalisation of AU$9.4 million.

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