JUNE 21 2022

Published in The Australian Financial Review

Direct-to-consumer funeral disruptor Bare is the latest death tech start-up to defy the tech market slowdown, banking $10 million from institutional investors Perennial Partners and Ord Minnett Private Capital.

Founded in late 2019 by Cale Donovan and Sam McConkey, the company started out offering cremation services, which could also be prepaid. It has since expanded into a full suite of death products, including memorial packages, digital wills and probate services, and grief support.

The West Australian co-founders, who met at university, had seen friends and family struggle with funeral arrangements after the death of a loved one, dealing with time constraints, limited options and hefty price tags.

“Those traits are the hallmarks of industries disrupted by DTC [direct-to-consumer] models,” Mr Donovan said.

“We decoupled cremation from the ceremony, and that solved a lot of those problems. It gives people the time and space they need, and we also gave the ability for people to pre-pay many years in advance.”

Bare’s raise follows that of rival death tech start-up Willed, which banked $6 million from Thorney Investment Group, Ellerston Capital and Bell Potter’s Hugh Robertson this month.

Since launching, Bare has helped more than 15,000 Australians with funeral preparations or other end-of-life needs.

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Time to think

The COVID-19 pandemic was a catalyst for the business, as lockdowns pushed people to think differently about funerals and memorials and older Australians were forced to adopt digital technologies.

“While some of those decisions were forced upon people, when they realised the ceremony didn’t have to be tomorrow or next week, they were able to take their time and be more thoughtful,” Mr Donovan said.

The company has raised $15 million in the past three years. Its earlier backers include OIF Ventures, Athletic Ventures, Who Gives A Crap founder Simon Griffiths and former NBA basketballer Andrew Bogut.

While the fundraising environment for its latest round was significantly different to Bare’s earlier raises, Mr McConkey said the company had been rewarded for investing time in cultivating relationships with investors years before raising.

“We weren’t building these relationships in the last six months, we’ve built them in the last three years. That creates a different dynamic,” he said.

“While the valuation crash was around tech multiples, and we’re a digitally enabled DTC business, we’re also not a typical tech business. We have non-cyclical guaranteed demand, solving a human problem.”

The co-founders refused to share the company valuation, but Mr McConkey believed it would not have been materially different if the company had raised late last year, rather than this year.

“The heat has gone out of the market, and that’s true for every business, but less so for a core fundamental business like Bare,” he said.

The company’s users are split evenly between those organising a memorial for a loved one and those taking charge of arrangements for their own service.

If the company collapses, consumers who have pre-paid funerals are guaranteed to get their money back, thanks to Bare’s structure.

The business keeps the pre-paid funds in an APRA-regulated funeral bond. At the time of death, the money is released and the family can either proceed with the Bare memorial or get the funds back and use another funeral provider.

The capital raised gives the company a three-year runway, which it believes is sufficient for it to hit profitability.

Perennial Private senior investment and legal principal James McQueen said: “They are a high-growth company in a defensive industry.

“They have a clear path to becoming a dominant company in the death care space and their commitment to unparalleled customer experiences is truly unique. To the better of society, they’ve changed the game in a space that’s been ripe for disruption for years.“