The US remains one of our most compelling offshore opportunities.
With limited resources, focus is incredibly important when expanding offshore. So, where’s the first port of call?
Each business will need to weigh up factors such as target market, talent, funding and ease of migration (visas, language, culture), among others. However, my strong bet is for the majority of companies, the US will likely be at the top of the list.
The scale of the US is simply staggering. It is a country with over 326 million people, an annual GDP of US$19.4 trillion and one of the deepest pools of capital and talent. In total, Fortune 500 companies have US$12.8 trillion in revenues, US$1 trillion in profits, and US$26.6 trillion in market value, employing 28.2 million people worldwide.
In addition, the US has the benefit to Australian founders of being primarily English speaking, having an E-3 visa option for Australian citizens, and a strong cultural bond between Americans and Aussies.
If an Australian company ‘wins’ New York, California or Texas, they’re in a better position than if they won all of Australia across a range of economic and population metrics.
Alternatives to San Francisco
When considering a move to the US, San Francisco or the Valley have been the places for emerging tech companies to land and expand. It’s a compelling location, but more and more we’re seeing Australian B2B SaaS founders look elsewhere.
At Our Innovation Fund, six of our nine portfolio companies in our current $50 million fund are focused on capturing their global market opportunity and are actively attracting global capital, customers and talent. It is no coincidence portfolio companies such as Instaclustr, Enboarder, Go1 and Assignar have all raised recent funding rounds from top-tier US venture capital firms including Y combinator, Level Equity, Greycroft, Microsoft Ventures and Tola Capital.
We have founders and senior management from our portfolio companies based in SF, Boston, LA, Chicago, and Denver, each for their own unique reason. (Sean, Assignar’s founder and chief executive officer, swears Denver makes the most sense to cover time zones on both US coasts, but we still think he picked Denver for its proximity to some of the best snow in the world.)
In our experience, New York should feature very high on the list.
Here are six very compelling reasons founders should consider making New York the first port of call for Australian B2B SaaS companies.
1. It’s a massive market
New York has a relatively densely populated population of approximately 20 million people and a GDP of approximately US$1.5 trillion.
2. It’s the home of global enterprise (read: customers)
When you’re selling to large global enterprise, the chances are the decisions are being made in New York. This is especially true in the financial and professional services, media, advertising, real estate, fashion, and healthcare sectors. New York is home to 58 of the Fortune 500, more than any other city or state.
3. There’s strong access to venture funding
The Valley continues to dominate the VC landscape, but New York is catching up, and fast, ranking second in terms of funding value in 2017 and hosting top-tier venture capital and growth funds such as Union Square Ventures, Insight Venture Partners, Greycroft, Thrive Capital, and General Atlantic, among many others.
4. There’s strong diversity and talent
New York is a strong melting pot and attracts people with diverse backgrounds, and perspectives. Each area in New York has a rich and unique heritage and culture and this richness and depth of talent, interests, and culture make it incredibly compelling both from a company and personal perspective. New York also attracts top talent from the leading academic institutions of the US north-east, including MIT, Harvard, Columbia, Cornell and uPenn.
5. It’s time-zone friendly
Okay, so maybe not that friendly for Australia, but New York does allow reasonable overlap with Europe, North and South America, Asia and Australia.
6. It’s high energy
New York is a 24-hour city and has an incredible energy. This energy helps drive business opportunity as well as making for a rich and rewarding time spent enjoying what the city has to offer outside work. The drive in the city is palpable and this passion and energy has positive effects on individuals who spend time in the city and companies who hire in the city.
Between our own offices in Sydney and New York, we’ve witnessed the large global opportunity for Australian tech businesses firsthand. We work hard each day to add material value to help founders capture the large opportunities ahead of them be it through funding, hiring, strategic and tactical advice, mentorship, operational support, and key customer and strategic partner introductions across our Australian and US networks.
Australia’s tech landscape is rapidly shaping up to become a global powerhouse of successful innovation. We can take the lead from the impressive performance of many Australian tech companies already flying the flag globally to help our next generation of tech companies shine on the world stage.
Founders of Australian based technology businesses need to thoughtfully and ambitiously expand offshore, without being recklessly ambitious or recklessly conservative. Those who persevere thoughtfully can wake to find that because they’ve made it here in the US, they can make it anywhere.
This article first appeared in the StartupAus Crossroads report 2018. Read the full report here.