Six things that have changed (for the better) in startupland, according to Fishburners’ Pandora Shelley

Pandora Shelley

Fishburners chief executive officer Pandora Shelley. Source: Supplied.

It’s hard to believe ‘startup’ was barely a word eight years ago. Our startup community in Australia has grown enormously in that time.

Fishburners was one of the first organisations to the party in 2011, and I had the privilege of being employee number one.

This piece is a reflection on the startup economy’s significant transformation.

1. The rise of bootstrapping and alternative funding models

One of the most significant areas of change is how our successful startups have approached funding. In the early stages of the startup economy, bootstrapping was considered a last resort for many founders. Yet the stats from the latest Startup Muster report show founders’ own cash contributions actually topped the funding mix, favoured by 64.4% of startups. Private equity in Australia came in second at 29%, with accelerator or incubator investment third at 15.9%. It’s definitely true that today’s startup founders take pride in bootstrapping or self-funding.
By relying on bootstrapping in the early stages of building their companies, founders can prove their worth to VCs and potential angel investors. Venture capitalists are also expressing a preference for this fundraising model because it reduces investment risk for VCs by allowing startups to demonstrate traction and product-market fit for a longer period.
Crowd-financing models have also entered the scene in recent years, with legislation changes in Australia making this more of a viable option for many startups. Again, this funding option is not mutually exclusive of more traditional venture capital, it is often complementary and also provides a fantastic marketing opportunity for startups wanting to deeply engage more of their customer community.

2. The rise of the non-technical founder

Programmers and engineers dominated the founder space in the early years. In 2019, it’s refreshing to see founders can come from any background and coding is no longer a prerequisite.
The past few years have also seen a real growth in confidence for the notion that technical skills can be taught. Non-traditional founders bring a breadth of skills to the table and, in many cases, have highlighted a problem in their industry that needs solving.
This has opened the path for more female founders, as there are currently not as many women in tech although this is changing. Today, students and entrepreneurs from all walks of life are looking to startups to turn a dream or side-hustle into a reality.

We’ve also found a lot of co-founders actually meet at Fishburners, with technical founders recognising the impact and importance of the perspective and skills their non-technical counterparts bring.

Building a successful startup is just like building any other business. Creating the product is just one part of it. What non-technical founders usually lack in coding ability they make up in determination, business experience and marketing potential.

3. Startups are born in co-working spaces, not garages

A decade ago, one of the most powerful myths surrounding entrepreneurs was that a startup journey begins in a humble garage. But the startup journey today looks very different to a young Mark Zuckerberg working away in his garage. Instead, we’re seeing a significant rise in urban innovation districts globally where founders can share ideas.

Innovation districts are not solely resigned to incubators or accelerators. The term includes all physical and virtual spaces that build on the ‘community’ aspect that so often drives innovation and success. This includes solutions labs, universities, co-working environments and even public spaces.

At the end of the day, entrepreneurs are those who have the greatest need to be able to learn from others. I believe gaining access to groups of like-minded entrepreneurs is the biggest reason startups have left their garages behind.

In fact, a lot of founders come to us with one idea but leave with another because of this interaction. They meet someone and team up, or they join a team. When you put talented people together, who are all willing to take risks and are innovative, then magic happens. It’s the IKEA effect: people place more value and care more about things they’ve helped build, that’s what’s so crucial to building a community.

4. Most startups are born global

We used to talk of Australian entrepreneurs ‘making it’ overseas and the ‘boldness’ that came with this. Today, I find most startups that come through our doors are incorporating global intentions as early as the ideation stage. As the power of technology continues to amaze, it’s only natural that its applications are becoming globally applicable.

I guess the strength of the ‘national-first’ mindset used to be in the development of strong local skills and financial strength before going abroad. However, startups now are realising this internationalisation process is pretty slow and is only viable for big companies.

And what’s more, when expanding overseas, the US is not the only market founders are looking at. A whopping 95% of the world’s people live outside of the United States.

It’s awesome that thanks to technology, many successful startups (think Atlassian and Canva) are able to drive global businesses from Australia. Another myth busted!

5. Founder exits are slower

In the early days of the startup ecosystem, there was a sense that startup founders had failed if they didn’t create an exit opportunity within three years.

This was largely driven by investment interests and the need to pay back investors quickly.

As the community globally recognised the best outcomes are achieved over a longer time frame, with growth and sustainable profitability holding equal importance, founders are staying with their startups for much longer and working with longer (and more realistic) timelines for growth and success.

This is good news for everyone, enabling founders to build companies in a more robust way. Hopefully, it will also improve the success odds for many startups.

6. More integration and support from corporates

The ‘us’ and ‘them’ attitude that prevailed between established corporate brands and disruptive startups has changed a lot in recent years. Startups are more of a learning, partnership or acquisition opportunity for larger companies particularly in Australia as our companies need to scale-up to take on world markets.

And from the startup perspective, there is greater recognition that corporates and enterprise brands are more likely to be the customer or the investor than the enemy.

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