JULY 2 2019

Published in the Australian Financial Review

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Seed investor and former chair of Aconex, Simon Yencken, has led a $3 million bet that Melbourne start-up Matrak can be Australia's next billion-dollar construction tech success, and improve building standards along the way.

Matrak offers a software-as-a-service tool that tracks the supply chain of commercial and residential construction projects, and has been used on 60 projects since its founding in 2013.

The $3 million is in the form of convertible notes which Mr Yencken,  who also led a $765,000 seed equity round in the start-up last year, said would likely convert from debt into a Series A equity round some time in 2020.

Other investors to pile into the round, which was originally slated for $500,000, include builder Hickory Group whose Chadstone Hotel is among the 60 projects of which Matrak has been a part since its founding in 2013.

It was joined by Simon's cousin Ted Yencken, a former group director at ProBuild, the first $50 million fund of Sydney venture capitalists Our Innovation Fund, and Super Seed Ventures, the venture capital arm of the Rich Listed Wilson family's Reece Plumbing empire.

Matrak was founded in 2013 by brothers Brett and Shane Hodgkins, after Brett's frustrating experience working on a building site for his father's business supplying windows and joinery.

He built an app to help keep track of where components were, to report defects, and to re-order components as soon as possible.

"Seeing it first hand, you realise how one small issue can cascade and cause massive delays," Brett Hodgkins said.

"If one external window gets broken, that entire building is not considered waterproof until it is fixed. The carpeters can't come in, the plastererers can't come in ... We had one client that on a previous project didn't realise a single fire safety door was missing, until they were about to hand the building over.

"They got fined $1 million a week for a month by the developer while they ordered that door from China and waited for it to be shipped over."

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Network effect

Mr Yencken said the same "network effects" which led to explosive growth for Aconex's construction collaboration software, culminating in its $1.6 billion sale to Oracle last year, had begun to kick in for Matrak.

"With Aconex they would sign up the general contractor on a job, so all the sub-contractors would start using it," he said.

"In Matrak's case, they win one builder and instantly the app is going to be in the hands of hundreds of suppliers."

An attraction of Matrak to the seasoned venture capitalist, who is also a direct investor in Canva, was that it had been translated into Mandarin and had been adopted by dozens of Chinese suppliers to the Australian building industry, who take photos and scan QR codes provided by the app to verify their work.

Simon Hodgkins said Matrak would achieve a $1 million annualised revenue run rate by December, and expected to double its current headcount of 13 in the next couple of months, as it set about automating more of its app's features.

It's not the only Australian construction tech start-up eyeing Aconex-like success.

Assignar, a software-as-a-service platform that helps subcontractors manage their workforce, assets, safety and compliance, last October raised a $9 million Series A round led by Seattle's Tola Ventures, alongside Matrak backer Our Innovation Fund, which also led Assignar's $3 million seed round.

Founder Sean McCreanor said Assignar would reach a "double digit millions" revenue run rate by the end of calendar 2019, had 50 staff in six locations which it expected to double in 2019-20, and clients which in Australia include Laing O’Rourke, UGL and Martinus.

Mr McCreanor could not reveal what valuation Tola's investment placed on Assignar, and statutory documents on the raise were not available as Assignar has now flipped up its structure into a US-based holding company.