Is Venture Funding A Good Thing For Australian Startups?

For those unfamiliar with the Australian startup environment, we have had a massive funding issue in Australia for many years.
Anthony Sochan
December 11, 2015

For those unfamiliar with the Australian startup environment, we have had a massive funding issue in Australia for many years, this meant you had two choices; bootstrap or die. There are exceptions but we have numerous examples of successful bootstrapped companies that all raised big numbers as their first raise; Invoice2go ($20mill / Series A), Campaign Monitor ($250mill), Atlassian ($60mill), and 99designs ($35 mill). There are even some like Envato who have never raised. Each of these ventures was a ‘profitable’ business very early on.

Over the past few months there have been a number of super exciting announcements; capital is starting to unlock for the startup communityand government regulations are becoming more supportive. But if success for the last decade has been built on bootstrapping shouldn’t we continue in that vain? Surely by building into the DNA of the Australian startup community a bootstrapping culture is a great thing? The recent Atlassian IPO is validation that bootstrapping works right? Atlassian’s combination of growth and profitability is actually what sets them apart from other 2015 U.S. tech IPO’s.

All fair arguments right? Well lets flip the coin and look at what I believe is going to be Australia’s next (venture backed) billion dollar tech giant, Canva. Canva is an online design tool that makes designing easy it was recently reported they had 6million active users in 179 countures. Canva recently raised a $15 million round on a valuation of $165 million. Canva’s growth has been phenomenal to watch and I have no doubt they will be pushing upwards of 10 million active users early 2016. No doubt that without capital Canva is unlikely to have existed.

As we transition to a community that is better supported by capital, both Investors and Founders will need to start thinking about Growth in a different way. The type of Growth Canva is experiencing (users vs monetised) is not growth we have a ton of expertise with here in Australia (this is what makes Canva extra special). With this lack of expertise will come mistakes and failure, Founders will make the wrong decisions and no doubt Investors will also – there will be many cases of the blind leading the blind for the next few years.

So is venture funding a good thing? Yes, in fact it is a great thing but as a community we need to be prepared for more mistakes, more failure but most importantly a ton of valuable lessons. We must embrace this failure over the next few years as learning if we are to grow as a community!

Anthony Sochan

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