Quietly at play in little old Adelaide is Tanooki Ventures. With no website, it’s a little-known existence. But since starting in 2021, Tanooki Ventures has powered-up four select Australian companies.
The Tanooki name originates from the character Mario, in Super Mario Bros 3Mario Kart, dressed in a Tanooki suit—Tanooki mode. “This idea around Tanooki was really about acceleration. When Mario is wearing this suit he speeds up, accelerates and then he flies. We just want to help businesses move through those early stages much, much quicker,” says Luke Howes.
Luke and his team of Directors, Dallin Howes and Blair Murphy have put four companies in Mario Tanooki suits, powering-up Australian Fintech. To say that Luke’s a serial entrepreneur is a cliche. But once you get to know his drive and investment approach into the Fintech ecosystem, you see that it’s suited.
A Successful Exit Lead to Tanooki Ventures
Having gone through the startup process many times, Luke knows the line between success and failure well. He brings an advantage to high-achieving individuals who are founding companies for the first time. Luke, along with Dallin and Blair came together through Proviso which they built and sold to illion mid-2020.
Success from a startup doesn’t come easy. There are the highs and the lows of building one, but there's the thrill of finding product-market fit. Creating products, getting feedback, making adjustments and taking them back to the market again. It's a hell of a ride for the likes of Luke—“that challenge of finding product-market fit is magic.”
Upon their exit from Proviso, Luke, Dallin and Blair saw an opportunity to help other founders build their companies, investing capital, time and expertise for advisory.
Founders At Heart
Venture capital (VC) was perhaps an unlikely next step for the three entrepreneurs behind Proviso. For Luke, the biggest challenge in moving into VC is still wanting to be a founder. “I like seeing things grow… it’s great seeing things grow when they’re other people’s companies (...), but I do miss the thrill of it and the challenge of doing it myself.”
What the founders at heart see in VC is an opportunity to grow Tanooki Ventures as well as its portfolio companies. VC is perhaps becoming more common for founders when they can mould their own kind of it. This is an exciting prospect as it contributes to the broader FinTech ecosystem.
A Unique Approach to Venture Capital
Luke says that their approach isn’t “a spray and pray” approach. We want to work with companies where we really think we can add value. It’s something where we think we understand the space and we have the contacts that can make a difference.” Tanooki Venture’s’ four investments are: Wagetap [https://www.wagetap.com/], Sherlok https://www.sherlok.com.au/, JustFund [https://www.justfund.com.au/] and Rixon Capital.
Luke spent years building Fintech relationships at Proviso “we sold our bank statement data services to about 6000 mortgage brokers.” For WageTap, a lender, Tanooki Ventures passed on their expertise to develop an early credit model using their bank statement data.
Luke continues, “we know brokers and we know aggregators.” With Sherlok, a SaaS platform helping mortgage brokers manage clients, Tanooki could assist on both sides of the platform. They additionally provided expertise on best practices for user experience and positioning.
Tanooki’s most recent investment is Rixon Capital, a debt fund that launched in early September of this year.
Rixon Capital has been the most hands-on startup for Tanooki Ventures where they’ve partnered with Founder, Patrick William. They’ve been involved in launching the company and helping to attract investors and companies to fund. ”We were looking for something that was more income producing with some decent yield so we started investing in debt with a number of the lenders who we used to service at Proviso. We had a concentration risk, investing in five or six different lenders and so Rixon Capital is a debt fund with diversification of the companies it invests in… it's not just investing in lenders or credit,” Luke says.
A Beautiful Age For Australian Fintech
As an entrepreneur does, Luke has paved the way for the second wave of Fintech founders. In 2015 when Luke moved back to Adelaide from Sydney, there was a Fintech Meetup established and high energy around Stone & Chalk [https://www.stoneandchalk.com.au/] starting up. In Adelaide there was nothing, making it challenging to connect with people in Fintech. Luke has since started the Adelaide Fintech Meetup [https://www.meetup.com/en-AU/adelaide-fintech-meetup/] and now Stone and Chalk operate in Adelaide out of Lot14 Creative [https://lotfourteen.com.au/]. This has brought more like-minded people together.
Across Australia groundwork has been laid for Fintech and investors have evolved. Luke says, “I think that we’ve got a wave of entrepreneurs who started back when we did in 2013. Others may have started a year or two before or after. A lot of those founders have now exited and are coming back into the market as angel investors and VC investors with advice and experience. I think there's a lot of support both in capital and experience that’s coming into the market to founders.”
The Tanooki portfolio founders perhaps aren’t the pioneers or thrill seekers that Luke is. However they're high achievers, “Adam Grocke who runs Sherlok (out of Adelaide), had been a mortgage broker for 10 years so he’s very deep in that space,” Luke explains. “It is a big challenge (startups) and there's no guarantee of success… I’ve had plenty of failed businesses along the way as well.”
Tanooki portfolio companies may have first-time founders with limited startup experience, but Luke is able to guide them from his. He says that “they know what they want to do—let's just shortcut some of the issues or the errors.” There’s an opportunity now for founders who have expertise in Fintech. They can more easily connect and learn from the first wave of entrepreneurs in Australia like Luke, Dallin and Blair.
A Decade Turns for Australian Fintech
Typically Venture Capitalists look a couple of decades ahead, but not Luke whose goal is to give back during an interim period of his (serial) entrepreneurial cycle. “VCs get into VC because they decide that it’s the next twenty years of their life. I don’t know if this will be the next twenty years for us or not because we do talk about starting another company of our own at some point.” In 2022, 10 years after the first wave of Fintechs in Australia, the second wave brings a frontier that’s gaining momentum across Australian cities.
Luke says, “we’ve moved past competition with the banks and existing financial services providers and I think the next wave is—how can we really innovate and collaborate with Fintechs and existing financial institutions? That's not every company. There will be some that can create innovative pathways. But I think there has been a really combative approach to Fintechs cutting the bank’s lunch. People have realised that cooperation and collaboration is actually a much better way forward for everybody. I think doubling down on that is going to be key moving forward.” The future’s looking bright.