Six Questions For Blackbird & Kiki/Girls Who NYC Based On Last Week’s Activity

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Jason Balchand
// The story around Kiki's pivot to Girls Who NYC may just turn out to be the most covered and talked about startup topic of 2024 and we're only a month into the year.

It’s been a massive week of activity in the startup world with Kiki.nyc announcing a “pivot” to a Girls Club in NYC, with no business model, no expectation of revenue in the foreseeable future, and a lot of commentary on social media about the entire situation. 

First, a little background information — bullet points for ease of digestion.

  • Kiki is a sub-letting app that started in New Zealand — then called Easy Rent — aimed at helping property owners and renters sub-let their homes at times like when they’re going on holiday. It’s kind of like an iteration of Airbnb — one of the most successful market disruptors. 
  • In August 2023, Kiki raised a Seed stage investment round totalling $9.5 million, with Blackbird Ventures participating with a $7 million contribution. For context, that’s the biggest Seed Round for a NZ startup and the second biggest cheque that Blackbird has written.
  • After launching in NZ, closing down in that market, re-launching in Sydney, then again closing down in that market, despite claims of proving product-market fit in both markets and being profitable, the claim was that they needed to own the large cities in what was perceived to be a winner-take-all market.
  • Months after launching in New York City, and claiming to have strong traction, Kiki has now shut down sub-letting in the NY market, announcing it’s pivoting to a new girls club called Girls Who NYC.      

Blackbird Ventures

This has been another round of negative PR for Blackbird Ventures, Australia’s largest VC fund. Earlier this year, Blackbird committed to invest in more female founders to help close the investment gap. This commitment came as several of Australia’s most prominent VC funds agreed to start reporting on data related to their investments in women-led businesses — Blackbird included. 

Following that announcement, it was revealed that Blackbird then made 11 consecutive investments in all-male startups — one of which was Kiki. 

Six Questions For Blackbird & Kiki/Girls Who NYC Based On Last Week's Activity
Screenshot of Blackbird’s original investment notes

Looking at Blackbird’s investment notes on its decision to invest in Kiki — which have since been edited — it cited one of those reasons as 23-year-old co-founder and CEO, Toby Thomas-Smith, flying to New York in budgie smugglers to drive awareness and engagement for the platform. 

More questions than answers

Firstly, for Kiki

The Kiki team — which includes a well-known Perth founder and startup-er — has likely learned a valuable lesson this week, driven by an onslaught of negative publicity and social media activity. And maybe it’ll eventually be revealed that this was all just a PR stunt to gain media attention. There’s no such thing as bad publicity, right?

What prompted such a radical shift in business direction so soon after raising a very sizeable Seed round?

The suggestion has been that it was driven by unique insights from the company’s first female employee. Now, anyone in the startup ecosystem would be fully aware that pivots in early-stage ventures are normal and often encouraged as they seek product-market fit. However, in this case, it’s more a fundamentally different business than it is a pivot. 

Kiki’s CEO had previously made public comments about the positive traction and level of bookings taking place through its platform. To rapidly change direction completely to an idea that the founders have stated has no business or revenue model seems to be irresponsible at best and lacking in leadership and experience.  

In a few weeks/months, when the dust settles, it will be interesting to hear what the Kiki team has learned from this experience and whether they would do anything differently if given the chance for a do-over.

For Blackbird

As Australia’s largest VC fund, that comes with a lot of experience — both in investing in startups and founders and in the operational side of taking a startup from idea to unicorn. Often it’s this advice and knowledge that holds more value than the actual investment, especially when you’re a young founder with little to no experience. 

What is the behind-closed-doors sentiment?

Publicly, Blackbird has backed Kiki’s pivot to Girls Who NYC. However, that’s to be expected when you have $7 million invested in its success. The deeper insight to be gained is in the behind-closed-doors conversations, both internally and with Kiki’s founding team. Is this a case of Kiki showing Blackbird that the “pivot” was a data-backed decision that was fully supported and agreed upon or is it a whim of a decision that Blackbird didn’t have the option to weigh in on?

How will this situation change the way Blackbird and other VCs invest?

Given the bright spotlight on the VC landscape, especially from a gender equity standpoint, will this week’s activity start to change the process and criteria by which investments are made in startups?

Blackbird generally is open and transparent about its investments and publishes Investment Notes on why they made the investments they have. Given this week Blackbird has edited its Investment Notes on Kiki, it suggests they potentially see errors in some of the reasons why they made such a large investment at a crazy valuation — like celebrating a founder for flying to New York in budgie smugglers. (Also curious to know how the airline allowed this.)

If the Kiki team had initially pitched Girls Who NYC to Blackbird, would they have invested?

If an all-female founding team with domain expertise and market experience were to pitch Girls Who NYC to Blackbird, would they invest? 

Is this an argument for stronger Board Governance for startups?

Early-stage startups often don’t have strong corporate governance practices in place and rarely have a proper board structure in place to govern for the good of the company. The argument is typically that the structure and process slow down a startup and it isn’t yet required at such an early stage. 

With a large amount of external investment capital being injected into its Seed round, one would assume that Blackbird, and some of the other investors who participated in the round, would have insisted on a board seat to ensure the capital was being put to good use. If that was the case, in this situation, was this a decision that went through a board decision process?


Featured image: Blackbird Kiki Investment Notes

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Picture of Jason Balchand

Jason Balchand

Jason has been in the WA startup community for more than a decade, from mentoring at Startup Weekends to volunteering as Chair of StartupWA. He's also a co-founder of So Media Group, on a mission to champion the best of Perth and WA.
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