Six things that have changed (for the better) in Australian startupland
This article was originally posted on Smart Company
It’s hard to believe that ‘startup’ was barely a word eight years ago. Our startup community in Australia has grown enormously in that time.
Fishburners was one of the first organizations to the party on the Australian scene in 2011, thanks to the foresight of a team of entrepreneurs including founders Mike Casey and Peter Davison. I had the privilege of being employee number one. As we gear up to celebrate our 8th anniversary, this piece is a reflection on what’s changed since that time as our start-up economy has undergone its most significant transformation.
1. The Rise of Bootstrapping and Alternative Funding Models
One of our most significant areas of change is how our successful startups have approached funding. In the early stages of the startup economy, bootstrapping was considered a last resort for many founders. Yet the stats from the latest Startup Muster Annual Report show that founders’ own cash contributions actually topped the funding mix — favored by 64.4% of startups. Private equity in Australia came in second at 29%, with accelerator or incubator investment third at 15.9%. It’s definitely true that today’s startup founder take pride in bootstrapping or self-funding.
By relying on bootstrapping in the early stages of building their companies, founders can prove their worth to VCs and potential angel investors. Venture Capitalists are also expressing a preference for this fund-raising model because it reduces investment risk for VC’s by allowing startups to demonstrate traction and product-market fit for a longer period.
Crowd-financing models have also entered the scene in recent years, with legislation changes in Australia making this more of a viable option for many startups. Again, this funding option is not mutually exclusive of more traditional venture capital, it is often complementary and also provides a fantastic marketing opportunity for startups wanting to deeply engage more of their customer community.
A great example of a successful bootstrapping startup is Code Camp who was recently named the third-fastest-growing SME in Australia with $6.2million in revenue last year. Two of the founders (Ben Levi and Pete Neil) actually met at Fishburners by sitting next to each other, working on their previous ventures! In fact, Gradconnection — one of Fishburners first ever startups — just announced a huge win with an acquisition from job posting giant SEEK; they were also bootstrapped!
2. The Rise of the Non-technical Founder
Programmers and engineers dominated the founder space in the early years. In 2019, it’s refreshing to see that founders can come from any background and coding is no longer a prerequisite. Most commonly, founders are solving their own problems when they build a business and many have a deep understanding of their customer. This has opened the path for more female founders, as there are currently not as many women in tech — although this is changing. Students and entrepreneurs from all walks of life are looking to startups to turn a dream or side-hustle into a reality.
The past few years have also seen a real growth in confidence for the notion that technical skills can be taught, and we’ve really looked to establish this at Fishburners by teaching members business essentials. Non-traditional founders bring a breadth of skills to the table and, in many cases, have highlighted a problem in their industry that needs solving.
For example, Jenna Leo and her husband, Matthieu Bertrand, of HomeCare Heroes began their entrepreneurial careers in the fitness industry. However, when Matthieu’s parents fell ill and relocated from Montreal to Sydney for care, they realized that many aged and disabled people suffered from social isolation and decided to build the platform HomeCare Heroes. Now, young people can connect with those subjected to loneliness for companionship including new mothers and elderly. Similarly, online logistics company, FreightExchange, was co-founded by Cate Hull who identified a lack of an affordable online marketplace in the Australian freight community from thorough research conducted into the industry.
We’ve also found a lot of co-founders actually meet at Fishburners — with technical founders recognizing the impact and importance of the perspective and skills their non-technical counterparts bring. A great example is Danny and Ian who founded driving optimization app, GoFar — Danny was an engineer and met marketer Ian (who was sitting next to him). Recently, GoFar successfully raised $1.3 million in funding which will be put into product development, talent hire and global growth. We try and put members next to each other with complementary skills as we know many early-stage ideas will pivot or evolve and at the end of the day, you’re most likely to engage with the person next to you!
Building a successful startup is just like building any other business. Creating the product is just one part of it. What non-technical founders usually lack in coding ability they make up in determination, business experience, and marketing potential.
3. Startups are Born in Co-working Spaces, not Garages
When I came on board at Fishburners one of the most powerful myths surrounding entrepreneurs was that a startup journey begins in a humble garage. The startup community today is very different to the age when a young Mark Zuckerberg was working away in his garage. Instead, we’re seeing a significant rise in urban innovation districts globally where founders can share ideas.
Innovation districts are not solely resigned to incubators or accelerators. We now include all physical and virtual spaces that build on the ‘community’ aspect that so often drives innovation and success. We can look to solutions labs, universities, co-working environments such as Fishburners and even public spaces.
At the end of the day, entrepreneurs are those who have the greatest need to be able to learn from others. We always say when people join Fishburners, there will always be someone one step ahead of you that you can learn from and someone one step behind who you can teach. I believe gaining access to groups of like-minded entrepreneurs is the biggest reason startups have opened the garage doors.
A lot of founders come to us with one idea but leave with another because of this interaction. They meet someone, team up, or they join a team. When you put talented people together, who are all willing to take risks and are innovative, then magic happens. It’s the IKEA effect — people place more value and care more about things they’ve helped build, and that’s what’s so crucial to building a community.
4. Most Startups are Born Global
We used to talk of Australian entrepreneurs ‘making it’ overseas and the ‘boldness’ that came with this. Today I find that most startups that come through our doors are incorporating global intentions as early as the ideation stage. As the power of technology continues to amaze, it’s only natural that its applications are becoming globally applicable.
I guess the strength of the ‘national first’ mindset used to be in the development of strong local skills and financial strength before going abroad. However, startups now are realizing this internationalization process is pretty slow and is only viable for big companies.
When expanding overseas, the US is not the only market that counts. 95% of the world’s people live outside of the United States. Fishburners alumna Natalie Nguyen, CEO & Co-founder of Hyper Anna, is a data analytics expert who co-founded Hyper Anna in 2016 with Sam Zheng. In 2017, the AI startup received $16 million in Series A funding from investors including Sequoia China to push along its expansion plans in the Asian market.
A global vision being implemented since the inception of startups can also give immense flexibility to its teams. Photzy is a photography education website originating from Fishburners, now with all employees working remotely to bring in-depth photography training to any photography enthusiast in the world. This website, earning a yearly revenue of $3 million, has now cultivated a community of 100,000+ members who share a passion for learning photography skills.
It’s awesome that thanks to technology many successful startups (think Atlassian, Canva, AfterPay) are able to drive global businesses from Australia — another myth busted!
5. Founder Exits are Slower
In the early days of the startup ecosystem, there was the sense that startup founders had failed if they didn’t create an exit opportunity within around three years. This was largely driven by investment interests and the need to pay back investors quickly. As the community globally recognized that the best outcomes are achieved over a longer time frame with growth and sustainable profitability holding equal importance, Founders are staying with their startups for much longer and working with longer (and more realistic) timelines for growth and success. This is good news for everyone, meaning that businesses are built in a more robust way and it will hopefully improve the success odds for many startups.
6. More integration and support from corporates
The ‘us’ and ‘them’ attitude that prevailed between established corporate brands and disruptive startups has changed a lot in recent years. Startups are more of a learning, partnership or acquisition opportunity for larger companies — particularly in Australia as our companies need to scale up to take on world markets. And from the startup perspective, there is greater recognition that corporates and enterprise brands are more likely to be the customer or the investor than the enemy. At Fishburners we have been grateful to many enterprise brands that have supported our ecosystem and community since inception — with Google, UTS, Optus and Chartered Accountants really standing out as corporate pioneers in this respect. Fishburners resident and anxiety-reducing app, Xceptional, has been supported by Google throughout its journey as a contestant, finalist and now winner of the Google.org Impact Challenge which has empowered the company to launch the app much further than anticipated and acquire more resources to positively impact unemployment in the autism community.
Six things that have changed (for the better) in Australian startupland
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