From mentor to investor

Matū partner Ken Erskine’s side hustle is running the VentureLab incubator at Auckland University’s Centre for Innovation and Entrepreneurship. That involves working with the five winning teams from the centre’s annual Velocity $100k Challenge, a programme he helped kickstart in 2017.

It was through Velocity he met Isaac Cleland, Sunny Feng and Daniel Ge, the co-founders of RosterLab, which helps health providers solve staffing challenges with AI-powered rostering solutions. The trio won the 2020 challenge after Cleland, an engineering PhD student, made a last-minute entry to the competition.

The idea for RosterLab was based on Cleland’s research at Auckland University with Associate Professor Andrew Mason and Dr Michael O’Sullivan into developing new techniques for mathematically optimising complex roster models. The company is initially targeting healthcare clients such as hospitals and aged-care facilities where poor staffing compliance, and time and labour inefficiencies incur direct costs. 

VentureLab works with the five winning teams for six months, connecting them to industry leaders and a range of mentors and providing them with free office space.  

RosterLab gained a total of $25,000 in investment through the programme.

“We have moved from what was the theory and a few good conversations forward into a real-life business, which is what the guys are operating today,” says Erskine. 

When the startup went looking for seed funding in late 2021, Erskine thought it would be a good investment for Matū, though he says that was a separate decision from his mentorship.

The $500,000 seed round was led by Matū Fund, which has a 7.7 percent stake, with participation from Quidnet Ventures and the University of Auckland Investors’ Fund.

Caffeine talked to Erskine and RosterLab’s founders about how they make their relationship work.

How did you approach RosterLab’s initial seed investment?

Ken Erskine: I helped them get an investor proposition together and one of the companies they approached was Matū. While I run VentureLab, I’m also a general partner of Matū and I therefore excluded myself from that process. I helped them in terms of pitch practice and presentation but they needed to run the process with all of the investors that they were approaching themselves.

Daniel Ge: We did look at other VCs and Ken did say to us to do our due diligence to make sure he was being good and fair to us, which he very much was. We already had that established relationship with Ken, and the others didn’t really stand out in any way compared to Ken and Matū.  

This is the only VentureLab company Matū has invested in. Why this one?

Erskine: They are very smart and have a really good opportunity in front of them. They are world class. Matū really liked the team. Matū’s focus is deeptech and there is a significant technology involved in this and the algorithms that primarily Isaac has generated and created himself, so it fits within that guise. There was also an element of we were looking for a younger team that we could support and work with and RosterLab was one of the applicants for that.

Isaac Cleland: It was one of the quickest times to get funding from winning Velocity. I think a lot of that was through Ken’s help in preparing us to receive funds, being aware of the due diligence that would take place and preparing all that before we even started talking to investors, and also our pre-existing relationship with Ken. We knew Ken really well and when we met the other people at Matū we already had good rapport. A lot of them were academics  and a lot of them were PhDs, so with me having a PhD I think there was a really good fit, so it accelerated quite fast from there.

Were you a global player from day one?

Ge: We wanted to really get established here in New Zealand because it’s easy to get user feedback and the time zones make a lot of sense, but early on we hit that big roadblock of Te Whatu Ora emerging. We had to pivot a bit because we were thinking we would target New Zealand’s big hospitals and then they didn’t have any say in acquiring any new technology. We tried a bit of private [healthcare providers] and since then we’ve signed up Kensington Hospital in Whangārei and Bupa aged care as our flagship customers. Internationally there has been a bit of organic interest in automating rostering, so it hasn’t been a concerted effort to target overseas yet but we have had some success.

Feng: It is mainly around Asia-Pacific, including New Zealand, Australia and Hong Kong.

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Are you targeting just healthcare?

Ge: Rostering does extend beyond healthcare but we have a specific lens and understanding towards the nuances that make healthcare rostering so much more difficult than in other areas. It’s not quite as critical to make sure your McDonald’s roster is correct as for your doctors or nurses. That extra attention to detail is what we’re excelling at. 

Cleland: One of the reasons Matū was interested, apart from liking us, was that the research I had done in my PhD was in mathematical optimisation of, specifically, nurse rosters. Some of the work we had done with Waikato DHB [District Health Board], as well as finding the best rosters for the International Nurse Rostering competition. It turns out that research can apply to a lot of other rostered industries, but healthcare is one of the most challenging industries to make rosters for, so it falls into our niche.

Suuny Feng: Healthcare rosters are extremely complicated and a lot of parties get involved, including unions and different doctors, and usually it is senior nurses and doctors who are making their own rosters, which takes away a lot of their time. 

How have you nurtured your relationship with Matū since that seed round?

Cleland: We’ve built a very close relationship with Ken through weekly meetings and six-weekly board meetings. It has been really great to have him push us. He sets constant objectives and results that we must meet and really makes sure that we’re always focused on the users, the customers, getting more sales, and developing our business, going as fast as we possibly can to improve our chances of raising a really successful next round.

Erskine: We have a regular weekly meeting. It’s a young team and it is both rewarding and, to be honest at times for all parties, challenging in terms of there is quite a steep growth curve. A number of the sales that Daniel, Sunny and Isaac have mentioned are relatively important, long-term, strategic sells so they’re needing to work through a process – both with my experience and then bringing in other people as well. That’s a really important point. I am a board of four – Sunny, Daniel, myself and Mark Bregman from Quidnet Ventures. Isaac is an observer to the board.

Why as CEO did you choose not to go on the board, Isaac?

Cleland: When we started this company together, Daniel, Sunny and I already had a very close relationship; we’re extremely good friends. That has been a really valuable part of our journey, and the really critical part there is trust. I trust that they’ll make the right decisions for both the company and for me personally and professionally so it was not really a problem for me. I took up the CEO role, they took on the two director roles and we share responsibility within the company.

Erskine: At this early stage what any investor is investing is the team. This is a team that understands and knows each other very well. They have great trust, and the decision of who went on the board was not foisted; it was an organic decision. What I see through these early-stage ventures is that there is so much pressure lumped on the CEO that an approach and a team like this where they have trust and the capability to share those tasks around is really important and helps all of the team to grow in many ways.

Cleland: I would add that because we had built up a relationship with Ken before he invested in our company as part of Matū I feel there is more trust pre-existing. It feels like we can be a little bit more forthcoming and honest about our situation because it is such a challenging journey, he can support us in a deep way.

What will you look for from investors in your next seed round in late 2024?

Erskine: Obviously every startup has the desire to be supported and have follow-on investment from your existing investors, and that’s very much the plan. Then obviously as you grow, looking to extend that cadre and the guys have had conversations already seeding the seed round with local investors. The thought of overseas investors can be one that can be quite compelling [and] interesting but it can be much harder and more time consuming. The premise would be local with possibly some Australian stuff because there’s some business being done there so it makes logical sense to have some Australian investors as part of the next raise.

The three most important factors investor and founder relationships

The founders

Ge: 1. Trust: I think being able to trust them is very important – being able to have that open line of communication and say here’s something we’re struggling with and not expecting them to just run for the hills and think about protecting their investment, but rather help you work through it. That has been really crucial.

Cleland: 2. Specificity is really important, too. In terms of having someone who can help you and advise you, you need someone that really understands the startup space and the kind of sales you’re going to be engaged with. Ken having experience with these large, complex, enterprise sales has been really useful for us as he really understands what we’re going for and the specific problems we’ll be going through. 

Feng: Sincerity: Our investors are really trying to build us up and prepare us for the best. They know what decisions to make for the company’s best interests and they also care about our mental health and check in with us every board meeting and over text. It makes us feel like we’re not alone on the journey. 

The investor  

Erskine: 1. Responsibility: They take with great responsibility the fact they are representing people who have invested in them and to make the most out of that investment.

2. Coachability: These guys are really coachable, which again makes it most enjoyable to work with them. 

3. Teamwork: They don’t pay lipservice to being a team – they are a team. And they are honest with each other.