Affinda Group, a 13-year-old Melbourne artificial intelligence software company, has made its first acquisition, buying out AI consultancy and training firm Pathfindr in a $15 million deal.
The all-scrip deal will see Pathfindr’s founder Dawid Naude, a former Accenture managing director, continue to run the company as part of Affinda’s expanding operations. Its co-founders, Tim and Ben Toner, say Affinda has the potential to become a globally significant AI firm.
Affinda’s Draftable software is used by law firms, including Allens, to compare documents and rapidly note and mark up important changes, while the flagship Affinda product is a document-processing platform that parses huge numbers of documents, and organises unstructured data in a usable and uniform way.
Recruitment firm Seek uses Affinda to process résumés in multiple languages.
“When we look at corporate Australia, it feels like we’re at an inflection point where investors are increasingly asking for evidence of AI working in businesses, with practical applications that solve actual business problems,” Tim Toner said.
“We’ve been watching Dawid and Pathfindr over the last 12 months and they have been growing even faster than we are.
“The AI training and enablement services they provide are exactly what a lot of companies need because the fastest way to create value from AI is to give everyone the tools and the training to give them superpowers.”
Pathfindr was listed as one of The Australian Financial Review’s Most Innovative Companies of 2024, when it was building software to automate the early stages of consulting assignments. Naude said last year that its Sparky AI software would take a typical consulting engagement, give it a fixed price and deliver twice the outcome at a fraction of the cost.
However, he said OpenAI had launched an updated version of its AI platform that underpins ChatGPT – known as GPT-o3 – that could do 95 per cent of what Sparky did. Instead, Naude decided to focus its business on providing consulting and training to big organisations including Coles Group and the Victorian government.
“It was a real inflection point for us, we realised the space is moving so fast that you can literally get an award for an innovation one day and the next day there’s a tweet from Sam Altman about a new feature, and all of a sudden you’re eliminated,” Naude said.
Toner said Pathfindr would fit naturally alongside its existing business lines, allowing it to better service companies that want to learn how to properly deploy AI and expand the variety of AI products they could sell.
Affinda had been self-funded until it raised $12.9 million at a pre-money valuation of $60 million in 2022, this valuation increased to $120 million before it raised another $10 million in June 2024.
Its investors include the family office of Toll Group founder Paul Little; Ellerston Capital co-founder Ashok Jacob; former MYOB and REA Group CEO Greg Ellis; fund manager Craig Bingham; and Armitage Associates managing director Mark De Ambrosis.
Its co-founders are cousins of Helen Toner, who was on the board of OpenAI, before leaving in the aftermath of a failed bid to oust Sam Altman as chief executive.
After the acquisition of Pathfindr, Toner said the combined companies now had an implied valuation of $195 million. He said the company would grow to about 100 employees, and was forecasting annual revenue of $20 million to $25 million. This was continuing to grow at a rate of 100 per cent year-on-year, he said.
“We’ve got more than 2000 customers in 80-plus countries around the world, so that speaks volumes in terms of the value of the products that we’re building,” Toner said.
The perception of quality of AI use in the consulting sphere has taken a battering in Australia in the past week, with Deloitte Australia under pressure to provide a full refund for a $440,000 report that was revised due to artificial intelligence-related errors in its initial version.
Naude said the saga, which suggested Deloitte consultants were using generative AI without checking the accuracy of the content, was not a death knell for the use of AI in professional services. Rather he viewed it as an opportunity to win more business from companies keen to make better use of AI.
“High-level issues like inaccuracy and hallucination are so phenomenally solvable if you actually have a deliberate purpose of how you’re using AI,” he said.
“There will still be way more of these big mistakes in the next couple of years, but the evidence of successful case studies where people use AI properly will also be there. It is going to be about bringing your AI use out of the shadows in a company and leaning into it.”
