18 May 2022

CLEARING THE FIELD IN ENTERPRISE SOFTWARE

There are few companies we meet that bootstrap to multi-million-dollar recurring revenue businesses, profitably, while growing 100% YoY. Clear Dynamics is one, and that is only part of the reason we are so excited to be partnering with the team in co-leading their $35 million Series A to scale the team and drive growth internationally.

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THE PROBLEM AND SOLUTION

Most people have heard of the disasters of the ‘SAP / Oracle’ three-year implementation costing multiples of what was budgeted, which only ends up failing. Largely, this is because the software and code base is monolithic (meaning that any change to very small pieces of system such as a pricing change in one department, has to be tested across the entire organisation) and the process of backend software upgrades have been done through a ‘big bang’ approach, which is fraught with issues. Similarly, while the Salesforces of the world have great point applications (which solves for some of the above), it is very difficult to make changes to the out of the box solutions and requires full time ‘delivery managers’ embedded within organisations, with six month wait times.

Clear Dynamics is an Australian software firm pioneering the next frontier of back-end software engineering for large organisations, called ‘composable software development.’ Through composable architecture, Clear Dynamics lets organisations use automation to build modular tech systems that can be put together and reused like Lego bricks.

The beauty of the platform is that Clear Dynamics don’t require organisations to replace systems on day one, as they integrate into existing tech stacks. Composable software development allows organisations to pick off specific applications that require customisation and more flexibility in a very short time to value, such as customer origination platforms, pricing systems, billing systems, and the list goes on. This allows organisations not have to worry about ‘big bang’ migration and work within their tech roadmap, to prioritise business outcomes.

Using their proprietary artificial intelligence-enabled enterprise operating system – aieos – Clear Dynamics uses AI to automate the software development process, reducing the time to outcome to weeks, and all at a fraction of the cost of incumbent offerings. The end result is a software solution that can replace expensive engineers or multi-million dollar spend on existing platforms such as SAP and Oracle.

aieos is currently being used across 10 industries including financial services, energy, government, and healthcare, by customers including Bank of Queensland, Cargill, Latitude Financial Services, Radian Energy, and Scoot Education in the US.

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INVESTMENT THESIS

AS USUAL, IT IS ALWAYS THE FOUNDERS AND TEAM FIRST

We were introduced to Clear Dynamics two years ago and were immediately impressed by Dan Beaty, founder and CEO of Clear Dynamics. With over 25 years’ experience in innovating, commercialising, and delivering technical enterprise solutions to Australian banks and Governments, it was clear that Dan, who built the software himself, had both an understanding of the space from a technical perspective as well as from a buyer’s lense in large organisations. In addition, he and executive chairman, Ian Basser, had demonstrated their ability to manage business growth combined with driving profitability.

Over the last 12 months, the Clear Dynamics team has grown from 48 to ~150 employees from 30 different countries with women comprising over 45% of the workforce, and 42% of employees in technology roles. Notwithstanding the tough hiring market, the team have managed to recruit extremely high-quality executives including Jeremy Cooper as the Global Chief Marketing Officer, who previously directed global marketing efforts at Google and LinkedIn. We are confident that Clear Dynamics can continue to recruit top tier talent as the business hits the next stage of revenue growth.

COMPOSABLE ARCHITECTURE – THE WAY OF THE FUTURE

It is clear to us that ‘composable software development' will usher in the next wave of back-end software flexibility and cost efficiency– and it is only just beginning...

Gartner recently released their 2022 CIO and Technology Executive Survey which underscores this. It indicated that while six percent of executives have already invested in composable enterprise solutions, another 60 per cent said they expect to do so within three years.

We believe that Clear Dynamics’ step-change improvements in flexibility, cost, and time to implement, entrench their competitive advantage in market. The low-code approach allows business users to implement their own software instead of relying on code-literate IT professionals, or large software providers. 

CONSISTENCY OF EXECUTION

Within 4 years, the team have won over 40 enterprise customers, some with multi-million dollar contract values. These customers operate across 10 industry verticals, demonstrating the large market need for their product. Additionally, Clear Dynamics have demonstrated their ability to ‘land and expand’ and deliver significant success across several use cases with average existing customer revenue growing by over 4x within 3 years. With a partner ecosystem including McKinsey & Company, BCG, Deloitte, and N3, we know that Clear Dynamics will continue executing on delivering a needed market solution at speed and scale. Ultimately, the combination of new customer acquisition, partnerships with system integrators and existing customer growth will exponentially grow the Clear Dynamics business.

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WHERE TO NEXT

We believe that Clear Dynamics technology has the potential to materially disrupt the enterprise software market. As the world moves from configuration to composability, Clear Dynamics will revolutionise how enterprise software is created. We could not be more excited to support their journey.

There's a number of open roles at Clear Dynamics, make sure you explore the latest opportunities.