When Australia’s hospitality sector has made the news in recent years, it’s often been because one of the underlying problems facing the sector has reared its head.

A recent wage scandal in a network of Melbourne bars is one such example.

But it’s those kind of problems that the founders of Supp hope to solve with their app-based solution for hospitality procurement.

After running their first pilot for the project back in 2017, Supp now has a user-base of 4,000 workers across 500 hospitality business in the Melbourne area.

Now, it’s ready to scale up. CEO Jordan Murray says the company is raising funds to build out app functionality and expand interstate.

And to do so, Supp will become the latest company to engage with investors in Australia’s nascent crowd-sourced funding (CSF) market.

The company is taking expressions of interest on the Birchal platform until the end of May, targeting a maximum raise of up to $1 million.

Sharing the gains

Recent data shows Australia’s CSF sector raised a total of $8.7 million in the March quarter.

So it still represents a small amount of the total capital pool in Australian private markets, but the early growth rate has been strong since the September 2018 legislation which saw crowdfunding laws extended to proprietary companies.

And in that time, one recurring theme has emerged among companies who see the appeal of CSF; the opportunity for customers or working communities to invest in products and services that they’re already engaged with.

Speaking with Stockhead, Murray said that factor was particularly relevant for Supp.

“The attraction of CSF is that we view ourselves as a community, and the people in that community are really the backbone,” he said.

“We’d like to give them the opportunity to co-own the platform alongside us so that when it’s successful, they’re sharing in the gains.

“Because of all the black market activity and wage underplaying in hospitality, there’s a growing rift between workers and hirers.

“If they own part of the same platform together, we hope we can close that rift and align everyone’s interest so we’re moving as a community towards the same goals.”

Murray said the company sided with Birchal after finding that it was particularly informative and transparent about how the process works.

“So far in the EOI phase they’ve been very good at collaborating with us. Their platform allows retail investors to invest alongside professional and VC investors, so it’s also a way of streamlining our investment all in the one place.”

Driving industry change

Supp’s core premise is to offer a fast and effective platform for workplaces in the fast-moving hospitality sector to fill shifts.

The app bundles “worker profiles, recruitment, payments, employee ratings and workplace admin all in a few taps”, Murray said.

Supp makes money by charging the workplace a 10 per cent service fee based on the value of each shift.

The company says it’s generated more than $400,000 worth of shifts since launch, with a compound monthly growth rate of 20 per cent.

Know your product

Supp was the brainchild of co-founder Kate Reid who was struggling to quickly fill staff shortages at her award-winning Lune Croissanterie shop.

The company ran a trial for the ST. ALi specialty coffee stores run by Melbourne hospitality luminary Salvatore Malatesta, who came on board as an early investor and remains as an advisor.

And his involvement may offer a lesson for other young startup companies looking for seed capital.

“What we learnt from ST. ALi investing is that a user-investor was a lot more powerful than just a normal angel investor,” Murray said.

A key feature of the app is its rating system, which is familiar to other tech companies such as Uber and AirBnB — but with a slight twist.

“With Uber, you don’t really care who rated who 1 or 5 stars. Whereas hospitality, if it’s a specialty cafe their rating would carry more weight than, say, a generic coffee shop,” Murray explained.

“So Supp is customised for hospitality — it’s more of a bespoke peer review system.”

The number one priority for the company is to develop the functionality of the app, based on early feedback from users.

Of primary importance — providing a service that can suit large hospitality groups such as pubs and cafe chains, in addition to smaller operations.

That means building a product which allows for companies to scan individual worker profiles and choose multiple engagement at once, across multiple days.

The company also wants to build a geo-location feature before it embarks on an interstate expansion, with Sydney next on the list.

“The idea is Supp will be a network across all Australian cities and potentially global. But to launch in Sydney by the end of the year, we’ll need complete some more product development,” Murray said.

And looking ahead, he said the company’s value-add will stem from its capacity to offer a simple compliance solution, with both sides of government pledging to crack down on black market activity in the hospitality sector.

“Customer feedback shows the compliance side of Supp is very valuable to them, so we expect compliance will be a nice tailwind that we’re going to focus on.”