In the eight days between September 13 and September 20, 2021, we reported on more than $1 billion in funding announcements for Australian startups.
Okay, so technically that’s a little over a week, but the sheer amount of money flying around in such a small space of time is still staggering. In my three years of reporting on Aussie startups, I haven’t seen anything like it.
The tech sector is growing, and starting to make a measurable contribution to the economy.
And these businesses are paving the way for others like them — showing them what’s possible, opening up avenues for growth, and even providing new sources of funding.
Many are also approaching business through the lens of impact — something that will influence the generation that follows them.
These raises I’m talking about include:
Sep 13: Scalapay: $210 million
Sep 14: Who Gives a Crap: $41.5 million
Sep 14: SiteMinder: $100 million
Sep 14: Mable: $100 million
Sep 14: Prospection: $45 million
Sep 15: Canva: $270 million
Sep 15: Immutable: $82 million
Sep 16: Delegate Connect: $10 million
Sep 16: Alex Bank: $20 million
Sep 20: Airwallex: $276.5 million
In total, that’s $1.16 billion.
The list is non-exhaustive, and only includes round of $10 million or more. I haven’t included Verve Super’s $2.6 million raise, for example.
But this week of activity follows a string of other big-ticket announcements. V2food raised $72 million in August, for example, while in July we saw Culture Amp raise $135 million, Go1 secure $270 million and Skedulo raise just over $100 million.
Coming of age
There are likely a few drivers for this uptick in high-end funding activity, as Right Click Capital partner Benjamin Chong explained last week.
First, we’re simply seeing Aussie startups growing up. Businesses that were founded between five and ten years ago, and secured investment, are now well established, making money and employing thousands of people.
At the same time, persistently low interest rates mean more money is flowing into venture capital and private equity funds, meaning there is more cash available to deploy.
Finally, Chong noted that we are well and truly in the ‘information age’, watching the technology revolution “play out before our eyes”.
More people are using more tech products. That tech is starting to change whole industries and sectors, he added.
All in, this mammoth billion-dollar week is indicative of a startup scene that’s thriving, growing, and coming into its own.
Speaking to SmartCompany, Giant Leap managing partner Will Richardson says we’re seeing “a real coming of age” of the Australian tech ecosystem. And he expects we will only see more capital pouring in over the next few years.
“I wouldn’t be surprised if the current milestone would be broken sooner than we expected.”
Blackbird co-founder and partner Rick Baker also suggests all of this proves the VC model works locally.
“For years, the startup and venture capital model has only been proved out in select parts of the world, such as Silicon Valley and Israel,” he tells SmartCompany.
“These recent rounds prove the success of this model in Australia.”
Still, he says it’s less about the amount of money raised, and more about the impact these businesses are having on the Australian innovation ecosystem, and the economy more broadly.
Canva alone has created some 2,000 new jobs in Australia — 1,000 in the past year alone.
Focus on philanthropy
One of the biggest news stories of the week was Canva’s $270 million raise, giving the scale-up a valuation of $55 billion.
What caught many people’s attention, however, was not necessarily the numbers, but co-founder Melanie Perkins’ announcement that she and co-founder and partner Cliff Obrecht would be donating the “vast majority” of their wealth to charitable causes, via the Canva Foundation.
The pair own 30% of Canva, which is now worth about $16.5 billion.
Who Gives a Crap’s $41.5 million raise, while on a smaller scale, also proved interest from both traditional and impact investors in a business that donates half of its profits to charity.
We’re seeing more founders determined to use business as a force for good in one way or another.
“Our thesis is that incorporating impact into a business’ DNA will attract and motivate the best talent,” Richardson explains.
“It will mean that these companies outperform their peers.”
Both Canva and Who Gives a Crap have received a lot of press for their business-for-purpose approaches.
Particularly in the case of Canva, that attention will only influence others to follow in their footsteps, Richardson adds.
And we’ve seen this happen before. Chuck Feeney, founder of General Atlantic, which led the investment into Mable, was one of the first US billionaires to donate almost all of his wealth to charitable causes, Richardson notes.
He inspired Warren Buffet and Bill Gates to do the same.
“He’s had a lasting impact that has influenced others for decades,” he says.
“No doubt, this next generation will influence others for decades to come as well.”
Startups breeding startups
They say you can’t be what you can’t see. Seeing startups succeed can help those in the difficult early stages to visualise what’s possible in Australia.
“Seeing the success of companies that are able to start here, raise capital here and build their teams here gives new founders the confidence that they can also do it,” Baker says.
But success breeds success in more ways than that.
Over the past few years, we’ve also seen an increase in later-stage founders using their own wealth to invest as angels.
Founders from Adore Beauty, Linktree and Culture Amp all invested in Who Gives a Crap, along with Canva’s Cameron Adams. And in June, a group of local entrepreneurs clubbed together to create the Australian arm of angel group The Fund.
Investment from founders, as well as VCs is “critical” in building on the momentum in the startup sector, Richardson says.
It means more money for early-stage ventures, but also gives new founders access to advice and mentoring from people who have been in their shoes.
“This type of activity is what’s essential to create the conditions for success for the future,” he adds.
“It’s a really positive sign.”
Baker adds that it’s important for VCs such as Blackbird to continue backing businesses at the early stages.
Blackbird was one of the earliest investors in Canva, before the founders even had a product, and has contributed at every stage since. Needless to say, that investment was a smart one.
“There is now a vibrant community in Australia that can give these founders the support that they need to get started, enabling a whole new generation of companies to make an impact on the world,” Baker says.
“There’s never been a better time to found and grow a startup in Australia,” he adds.
“The community is growing, the ecosystem is maturing and there is more capital flowing through.”