Think & Grow partner, Hugo, chats to Adam Said, CFA - Investment Manager at Octopus Ventures, to get expert advice for Australian founders looking to expand their start-up into the UK market. Whether you’re set on the UK as your first expansion destination or you want to know more about the UK’s opportunities and market, this article shares need-to-know tips and insights.
Why should Australian start-up founders look to expand globally?
Many start-ups in Australia will hit a limitation when it comes to the TAM as far as whatever end market they’re looking to sell to.
The quality of product innovation from Australia has been really impressive driven by the level of buyer-readiness in Australia from enterprise and the SME / mid-market. So, when it comes to competing abroad, their product has been well-tested already, just due to the product generation required to serve this buyer readiness in Australia.
We’re seeing more Australian companies be ambitious. The torchbearer stories that have been told from the likes of Canva and Atlassian have given rise to a whole new generation of global start-ups and founders, many of which see the UK as a really obvious region to increase their TAM and grow internationally.
Why is the UK an appealing first location to expand to for Australian start-ups?
For me, the UK is the most advantageous location for an Australian start-up to expand to for a few reasons:
I couldn’t agree with you more on that personally. What’s your perception of Australian businesses and their success in the UK from a tech perspective?
There is still a significant amount of awareness that needs to be built to educate Australian entrepreneurs about the opportunities that the UK presents. I make that point because so many Australian founders see the US as the market they should tackle right away. We admire the boldness shown to enter the US as early as possible, however as a London-based investor, through our own experiences we actively look to counsel our companies to absolutely nail the UK (and Europe) before putting all the focus into the US. I think some of this same logic could be applied to Australian businesses looking to expand internationally, but have done very little to date, whereby for the reasons above, the UK may be a more obvious choice as a first step.
In terms of our perception of Australian entrepreneurs we have met with over the years, we have noticed how inherently thrifty and entrepreneurial they can be. I think this has largely come from the need to be very prudent about how cash is managed since until recently, there has been less equity capital available to prop up early-stage start-ups. It’s not a coincidence we’ve seen many Australian companies run in a more capital-efficient way.
What would you say a typical initial first ‘landing’ team in the UK should look like?
It depends on the customer profile, e.g. SME vs Enterprise, B2C vs B2B, sales-led vs marketing-led, which will guide the availble go-to-market options that make the most sense over the next 18 months, it’s important to be optimal about how you deploy boots on the ground to avoid irrational burn. Here are a few pointers:
What foundations should a business have in Australia before expanding to the UK?
To give you an example, we had a business that was close to taking capital from us in early 2021. They were generating a couple of a million in revenue at the time with around 60 enterprise customers in Australia, but they (wisely) chose to take capital from a local fund over us.
In hindsight, taking capital from us would have meant expanding to the UK a little too early. Raising capital locally meant that they could obsess over their domestic operation, enhance their commercial team and invest further in product. I’m not trying to guide whether you’re ready based on revenue – you might be ready at sub $1m revenue because you have a product that fits the UK market and is super dynamic.
However, my advice would be get your house in order so you can show the global investor community that you can dominate ANZ with a scaleable business because the fact is, it’s harder to feel conviction of that promise when local traction is limited. In short, you need to find a way of giving evidence that you can become a big player in Australia whilst expanding into new markets like the UK without jeopardizing your existing ANZ market profile too dramatically.
Another important point is that if you don’t realise there are nuances to selling a product within different sectors, you will see a lot of time wasted. Customers will have expectations that your product can’t deliver on. The result is salespeople on the phones trying to sell to the local market without the product being ready for who they’re selling it to.
The solution: market test your product in the local market before ramping GTM efforts too significantly so that you’re deploying your resources more effectively.
How can an Australian start-up secure local talent in the UK without the brand presence?
I have a few shortcuts to share, but there is no substitute for founder graft. Strategising how you’re going to build the network before you even land, then spending time and effort building that network within the relevant spaces. Tell them your story, keep them informed of your progress.
There are great ways to do this:
My interpretation of it is how do we become a strategic partner to the business to solve the go-to-market problems, answer those product questions and build a roadmap with people who are interesting in the UK space?
Thanks to Adam Said, VC Investor at Octopus Ventures and Hugo Bieber, partner at Think & Grow.