Welcoming Dataro to the Black Sheep Capital portfolio

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Black Sheep Capital

6 min readFeb 7, 2022

To start with, we want to give a shout out to Rohen at Reinventure, who first introduced us to the Dataro team. Thank you!

Think back to the last time you received a mailer from a nonprofit. Maybe it was from an organisation you’d previously donated to, or maybe one that you received without any context. Were you excited to receive it, or perhaps a bit annoyed that you’d gotten another flyer you didn’t want?

And finally: did it actually convince you to donate money?

If you’re like most people, the answer is likely “no”. In the US, direct mail outreach averages a response rate of 2.9% for prospect lists¹. In the world of nonprofits, fundraisers lack the time and resources to run successful fundraising campaigns. Between choosing which donors to contact and generating and analysing campaign data, overall returns from fundraising campaigns are still relatively low, with approximately 15% of charitable donations lost to fundraising expenses². Additionally, charities waste money on administration fees, mailed out flyers and other outreach tactics without properly targeting those who will be most likely to give.

You don’t need to look further than Australia to begin to see the scope of wastage in the charitable giving space. According to the Australian Charities and Not-for-profits Commission (ACNC), the recently published 2019 Annual Information Statement — a form required to be submitted by all Australian charities — showed that net profit margin averaged -1,575% for Australian Charities for the financial year ending 30 June 2019, excluding charities who did not report any revenue³. Of the 47,698 charities who filed reports with the ACNC, only 414 of these charities (approximately 0.87%) reported a net profit margin of greater than 100%⁴.

Introducing Dataro

Dataro is an AI software that helps nonprofits to maximise their returns from fundraising events by predicting the behaviour of every donor so that fundraisers know exactly who to contact, when and why. Campaigns using Dataro are created with results analysed in seconds by the AI, saving fundraisers significant time and raising more money for their nonprofit in the end. The core technology behind Dataro is the machine learning prediction model, which can accurately and quickly generate donation predictions for almost any nonprofit.

How does it work? Dataro integrates directly with the major CRMs used across the nonprofit sector; customers simply log in, enable access to their CRM and their donor records are imported and analysed. Based on your records, the Dataro tool will deliver propensity scores (essentially, a score that estimates how likely someone is to donate) so that a user can better tailor their donation campaigns. There are five modules that Dataro offers, ranging from Appeals, which helps determine who to send your Direct Mail appeal to, through to Stewardship, where the Dataro algorithm helps determine how likely a donor is to give over $5,000 in the next 12 months.

If you’re keen to see the solution in action, check out their 2-minute intro video here.

Meet the team

It is rare that we can say we’ve met a founding team as interesting as Dataro’s. The founders all met in high school in Sydney, and have been close ever since, undertaking some… unique activities together. CEO Tim and COO Chris once sailed a tinnie from Cape York to Papua New Guinea (and back). Chris and CTO Dave used to shred on their respective drums and guitar in a garage rock band called The Ripping Dylans in the late Aughts, and managed to produce a punk take on Fleetwood Mac’s Greatest Hits that apparently was heard by Mick Fleetwood himself.

Before founding Dataro in 2017, Dave and Tim realised they were both working in the data science field and decided to reconnect. This led them to participate in Reinventure’s FUELD Accelerator, where they were able to hone in on just how pervasive the problem of donor optimisation was across nonprofits.

CEO Tim Paris has a wealth of experience in data science, serving as the Principal Data Scientist at Bold Voyage Data Science in Sydney for four years. Before joining Bold Voyage, Tim was a PhD candidate at The MARCS Institute at Western Sydney University where he completed a thesis in the cognitive neuroscience of prediction.

CTO Dave Lyndon has a masters in computer science and is an experienced machine learning engineer. Prior to Dataro, Dave worked as a Data Engineer at Data Processors in Sydney for over five years, following a stint at Network Ten as a Business Systems Developer for nearly three years.

COO Chris Paver is a lawyer by training, specialising in privacy, communications and scale-ups. Before joining Dataro, he was a lawyer at DVM Law in Sydney for nearly five years. Prior to that, Chris was a Director at Survive Law for 3.5 years. He attended the University of Technology, Sydney, where he obtained a Bachelor of Laws and Bachelor of Communications, as well as a Graduate Certificate in Professional Legal Practice.

Why did we invest?

The Team

After that last section, I think you’ll have an idea of why we think this team is so stellar. Whenever we look to make our first investment in a company, the founding team is central to the analysis. In addition to ensuring the team has deep subject matter expertise and technical talent in-house, we like to see the cofounder dynamics between the team and how the group operates on the whole. Having known each other since high school, the Dataro founders have the kind of camaraderie and respect that takes years to build — and it absolutely shows in the way they approach problems, come together for strategic decision making and continue to grow the business so well.

The Traction

The Dataro team has helped over forty customers from the nonprofit and university sectors across Australia, NZ, Hong Kong and the UK on the Dataro platform. Since we met Dataro, they have consistently acquired new customers both in Australia and overseas, and had a 100% renewal rate from existing customers. The consistent growth we’ve seen from the team in acquiring new nonprofits, as well as upgrading existing customers on the platform.

After their recent UK launch, Dataro teamed up with Prostate Cancer UK to test out how their platform would perform in the Autumn Appeal. The results? Dataro’s selections increased their revenue from the Appeal by over £11,000 and attracted an additional 440 new gifts that otherwise would have been missed. We won’t get into exactly how the team did it, or the mechanics behind their sophisticated AI engine, but if you want to read more, check out the case study here.

The Customer Feedback

As part of our due diligence process, we spoke with several of Dataro’s customers to better understand how Dataro had helped them in their fundraising campaigns. The feedback was largely unanimous; although each customer used different modules on the Dataro platform, all had found it to be a massive value-add to their donor re-engagement and appeals processes. Notably, one of the customers said that “Dataro quickly pays for itself” because of how much time it had saved their organisation in knowing who to proactively re-engage. Customers are able to see the ROI after employing Dataro, and to demonstrate how many donors they have been able to re-engage or gain from leveraging the platform.

We’re excited to be working with the Dataro team

We’re absolutely thrilled to be welcoming the Dataro team to the Black Sheep Capital portfolio and can’t wait to support the team as they continue to grow their presence in Australia and internationally.

And — If you have a background in nonprofits (or are passionate about helping them!) or data science, take a look at Dataro’s job openings.