Start-ups test buoyancy of venture capital
Ask Melanie Perkins whether it's hard for Australian start-ups to find investors and she can only laugh - she's just closed a $3 million funding round before even launching her product.
Her firm, Canva, based in Sydney's Surry Hills, plans to unveil an online do-it-yourself professional-looking graphic design platform in May.
Australian entrepreneurs like Perkins are starting to find they can raise funds for their ideas without moving to the US.
"The funding climate for Aussie entrepreneurs has improved dramatically over the past few years," said Perkins.
One of Canva's investors is Blackbird Ventures, a new Australian venture-capital fund comprising capital sourced from 35 successful Australian tech entrepreneurs and other investors.
It is looking to place $2 million to $5 million bets on Australian technology companies that have the potential to go global.
Niki Scevak, co-founder of Blackbird and start-up incubator Startmate, said he was looking for the next Atlassian, BigCommerce and 99Designs - Australian tech firms that are the best in their field globally.
As well as Canva, Blackbird has also invested in Ninja Blocks, which aims to connect every object to the internet.
Paul Bassat, one of the founders of Seek, said his relatively new Australian venture-capital firm, SquarePeg Ventures, had made nine local investments so far: Budge, Binu, Canva, Ninja Blocks, ScriptRock, ImageBrief, Shipping Easy, Glide and Bellabox.
Online group booking start-up TheBestDay, founded by student Whitney Komor in the University of Sydney Incubate program, raised $1 million at the end of 2012, half from Sydney Angels and half from Australian venture-capital firm OneVentures. She has hired four employees.
"I feel very fortunate to have the opportunity to keep chasing the dream," said Komor.
Perkins, who previously launched yearbook provider Fusion Books, got the ball rolling on her investment round by attending the invite-only MaiTai event in Hawaii, where investors and entrepreneurs can network while kiteboarding.
"Prominent US investors are starting to see Australia as a hot place to invest," she said.
Laurence Escalante, founder of Perth-based online gambling firm Virtual Gaming Worlds, revealed last week he had raised $2.5 million from Triple C Consulting, a West Australian boutique investment brokerage firm.
Despite the launch of several new Australian venture capital funds, Matt Barrie, chief executive of Freelancer.com, said Australia's venture capital industry was still in "dire straits". He said aside from Southern Cross Venture Partners' $200 million renewable energy fund, just $40 million was raised by Australian venture-capital firms in 2012, down from $80 million in 2011 and $160 million in 2010.
"This is in the middle of the greatest technology boom of our time," he said.
Barrie and 50 others in the Australian tech entrepreneur community have launched Startup Australia to develop policy designed to create a thriving technology industry in Australia.
Phil Morle of Pollenizer said the availability and quality of early stage capital had increased in Australia but there was "still a conflict of whether a company should move to the USA or Asia earlier to access more capital and bigger markets".
Michelle Deaker, managing partner with OneVentures, said more institutional investors were needed in the technology sector but she believed the "value investment window" would stay open for only another two to three years. "The concern I have is that the institutional investors will return to VC when the markets have turned and again they will invest at the peak of the cycle."
Frequently Asked Questions about this Article…
Yes — the article says seed funding for tech companies is plentiful and that the funding climate for Aussie entrepreneurs has improved dramatically in recent years. Early-stage capital availability and quality have increased, though some founders still debate whether to relocate to the US or Asia to access larger pools of capital and markets.
Canva founder Melanie Perkins closed a US$3 million funding round before even launching the product, attracting investors including Blackbird Ventures. That early success signals strong investor interest in promising Australian tech startups and shows local founders can raise meaningful seed rounds without immediately moving overseas.
Blackbird Ventures is a new Australian venture-capital fund backed by capital from 35 successful Australian tech entrepreneurs and other investors. According to the article, it looks to place bets of about $2 million to $5 million in technology companies with global potential and has invested in firms such as Canva and Ninja Blocks.
Paul Bassat’s SquarePeg Ventures had made nine local investments mentioned in the article: Budge, Binu, Canva, Ninja Blocks, ScriptRock, ImageBrief, Shipping Easy, Glide and Bellabox.
The article highlights mixed signals: while a few new funds have launched and some startups raised significant seed rounds, overall Australian VC fundraising declined — about $40 million was raised by Australian VC firms in 2012, down from $80 million in 2011 and $160 million in 2010. Matt Barrie described the industry as still being in “dire straits,” despite pockets of optimism.
Not yet at scale. Michelle Deaker of OneVentures said more institutional investors are needed in the technology sector and warned that the current ‘value investment window’ may only stay open for two to three years. Her concern is institutions will re-enter VC late — potentially investing at the peak of the cycle — which matters for valuations and exit timing.
Yes. The article cites TheBestDay, founded by student Whitney Komor through the University of Sydney Incubate program, which raised $1 million at the end of 2012 — half from Sydney Angels and half from OneVentures — and went on to hire employees. This shows investors will back compelling early-stage teams, including student founders.
Founders are networking at international events and building relationships with US and global investors — for example Melanie Perkins kickstarted her round by attending the invite-only MaiTai event in Hawaii. The article notes prominent US investors are beginning to view Australia as an attractive place to invest, helping some startups raise funds while staying based locally.
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