MAY 24 2022

Published in the Australian Financial Review

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Kim Jackson and Scott Farquhar’s Skip Capital has led a $20 million investment in critical infrastructure digital twin start-up Neara, as demand for its services surges thanks to increasing floods, bush fires and other natural disasters.

The business, which also has the backing of successful founders from SafetyCulture and Canva, enables utility companies to design, simulate and manage their assets (such as power lines) through 3D models of entire infrastructure networks, combining physics, engineering and machine learning.

The company was founded in 2016 by former Google software engineer Daniel Danilatos. In day-to-day usage, the models help companies optimise the operations of their networks, while in disasters they show which assets are under threat, whether anything needs to be disabled, and help inform the recovery efforts.

Speaking to The Australian Financial Review, Mr Danilatos said Neara’s revenue had increased about 500 per cent over a two-year period. The company has also now modelled 60 per cent of the country’s electricity grid, and counts every distributor in Victoria and NSW as customers.

“We surface the output and insights into easy, digestible, actionable information,” he said.

Neara’s customers include Essential Energy, Endeavour Energy and Ausgrid.

It has modelled 820,000 square kilometres of network, representing a land mass larger than California and Texas combined, and has 2.4 million total assets on its platform.

In the last year, it has expanded to the US and chief commercial officer Jack Curtis said the company had started to get traction earlier than expected.

Big fire issues‍

“The US west coast utilities companies have had huge issues with massive fires,” he said.

“We knew the platform would resonate well, but we under-appreciated how urgent their needs were. They had massive problems not knowing where assets were, and it created big fire issues.”

The latest capital raise follows a $7.3 million raise in April 2020. The fresh funds will support its push into the US, as well as a new use case for the platform – helping its customers move to, or integrate, more renewable energy sources.

It is also opening up the platform to contractors and engineering companies that service critical infrastructure.‍

Square Peg Capital and OIF participated in the latest raise, alongside Skip Capital.

Ms Jackson said it was Skip’s third investment in Neara.

“They’re one of the more technical teams in the Australian ecosystem,” she said.

“I’ve been on the boards of utility companies including Transgrid and ElectraNet. I know through those experiences that boards and management teams are keen to have visibility over their critical infrastructure assets ... but you’d be surprised how little data they have beyond someone physically going to look at a pole.

“Fires and floods are almost annual things now and this technology helps provide an answer to ... how to get a feel for the weakest link in infrastructure, what to replace first and where to switch off power first.”

Mr Curtis said when the company kicked off its funding round, venture capitalists were still unsure about how the listed tech sell-off would affect private valuations.

But the company’s focus on its underlying fundamentals was rewarded.

“While [the valuation pressure] is flowing down to private market sentiment and there’s another level of discipline and scrutiny, there has been a flight to quality,” he said.

“People are gun shy, but there is a tonne of capital that needs to be deployed.

“I’ve always thought in the past we didn’t get enough credit for being capital efficient and having sustainable financial metrics.

“People want us to grow quickly, and we do recycle a lot of what we generate back into growth, but we have a very keen eye on the underlying profitability of the platform itself.”