Hunkered down in a New York hotel in 2018, Olivia Humphrey made a courageous move as the negotiating deadline loomed for a private equity investment into the business she founded, Kanopy.
Kanopy had started from a lounge room in Scarborough but had moved to San Francisco, due to its popularity as a platform used to stream independent films to university campuses and libraries.
But as Ms Humphrey prepared to sell a controlling stake in the company, the terms didn’t sit quite right, with uncertainty about her employment agreement to continue as chief executive.
So she called the investment banker to cancel the deal and turned her phone off for a while.
“I felt I was on a train, there was a lot of money, life-changing for my family,” Ms Humphrey told Business News.
“I still wanted to be very involved in the company.
“[A]t that point in time I felt I was a passenger in this journey, and I didn’t have to be.
“One of the great advantages of bootstrapping is that I could still call the shots because I still had effectively a majority of the company.”
The process had been overwhelming at points, she said.
“It just occurred to me, I don’t need to do this deal,” Ms Humphrey said.
Having switched her phone back on after breakfast and a morning coffee, Ms Humphrey continued discussions with the Californian private equity firm.
And with both parties much clearer about her ongoing role leading the business, the deal proceeded.
The process had damaged her enthusiasm, however.
That deal was one of three exits for Ms Humphrey, which she shared at a recent Spacecubed event and in an interview with Business News.
The first was in 2016, when she sold a slice of the company to billionaire US businessman Jahm Najafi, who became her business partner.
The business was profitable, but Ms Humphrey had wanted to reduce her stake and risk exposure.
“That was the game changer,” she said.
“That was where I learned the art of having a true business partner.
“We had the business at the centre of every discussion, but also this personal component, where we could talk at an emotional level and support each other.”
That strong relationship contrasted with her experience after the second deal, when she had sold down her stake to private equity.
“Private equity is designed to get a return on their investment in the shortest period of time possible,” Ms Humphrey said.
“For me, working through that friction of having such a missionfocused organisation, that really had objectives as important as generating profitable business, social impact … there was a friction there with the private equity.”
It wasn’t a great match. Ms Humphrey said she didn’t fit the male, Ivy League-educated mould of the firm’s other founders, and this led to a feeling of imposter syndrome.
“I looked different to what they were used to,” she said.
“At the time I didn’t understand it and I blamed myself.
“Only with the benefit of time I realised [that] these guys are used to, I call it, the Don Draper-type CEO.
“I couldn’t be more different from that.
“They really didn’t know what to do with me.
“If only I understood that at the time I wouldn’t have blamed myself.
“At the time I thought it was all about me not being right, me not being good enough, even though I was smashing my targets.”
The third and final deal was in July when KKR-owned Overdrive bought the business, with an estimated value of multiple hundreds of millions of dollars.
The Kanopy transaction was not the only startup exit in Western Australia this year, with TyreConnect sold to Carsales.com.au for a reported $19 million, and Agworld bought by Semios for more than $100 million.
The common theme from all founders who spoke on a recent Spacecubed panel was that finding the right investors was more important than the highest bid.
Agworld co-founder Doug Fitch said a big challenge was to stay true to a vision, while capital constrained, and not to chase big cheques.
TyreConnect co-founder Stephen Langsford said it was important to focus on who would be the best strategic fit for growth of the business
Olivia Humphrey recently spoke at West Tech Fest and Spacecubed Plus Eight events. Photo: David Henry.
Getting creative
Ms Humphrey’s passion for independent film will be central to her next mission: to help the state’s creative sector attract global attention.
“I love that it’s [independent film] entertainment; I love that it makes, generally, people happy,” Ms Humphrey told Business News.
“It can make people think in a different way.
I think it makes people realise we live in a broader world than the one we orbit in.
“You meet people you’ve never met before and probably [would] never meet; you learn issues and languages.
“You can also explore your own feelings.It helps you understand your own place in the world.
“And it’s something you can share in the community.
“I’m very passionate about film.”
As a first step, Ms Humphrey was an investor in a recent locally produced project.
But she told a panel audience at this month’s West Tech Fest she wanted to make the industry more investor friendly.
“I do think sometimes the funding, largely government funded, does lead to this mindset where filmmakers are thinking just about the requirements of Screen Australia or whatever the funding body is,” she said.
That meant less focus on the audience, particularly internationally.
For example, some regulations require a film to have a local distribution deal secured before it can be funded.
