SmartCompany caught up with AfterWork Ventures’ Alex Khor about the current startup landscape, and the great success stories that are now funnelling talent and ideas into a new generation of leading Australian and New Zealand businesses.
In early September, Khor joins the judging panel at the Pitch. In the lead-up, he helps us understand how his outlook is shaped by current market forces.
We’re in an ongoing pandemic and faced with economic uncertainty. How do you describe the current startup and venture capital landscape?
We spend a lot of time thinking about the macro environment and if there have been big movements. There’s geopolitical uncertainty surrounding Europe, supply chain issues have been ongoing throughout COVID-19 and, of course, inflation. They’ve all joined the pandemic as headwinds. While it’s undeniably related to those factors I just mentioned, the biggest event of the VC and startup landscape in Australia has been the reaction of the markets. And most specifically the public markets falling out of love with tech. In venture, we’re seeing that play out with a short-term slowdown in the pace of deployment from many funds and more scrutiny on valuations in particular.
How has this changed your outlook and how you respond to pitches?
We haven’t changed the principles that we apply in understanding and identifying the best early stage startups. While the markets might have reassessed the way that they value a business, our job has always been to focus on the part of the curve where short-term market aberrations have little or no relevance, and that’s the path where founders are creating something from nothing — going from zero to one. A founder’s ability to do that is the main driver of value, regardless of what’s going on in capital markets.
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Has there ever been a harder time for new startups? What are their biggest challenges right now?
This is an interesting one. As for whether there has been a harder time for new startups, I think it’s worth stepping back and saying: a lot of the overall factors that have led to the recent boom in startup and tech activity haven’t really changed at all. AfterWork has always believed that there is a self-sustaining cycle being created. A first cohort of founders and operators that have been on the great success journeys, from the likes of Canva and Atlassian, and many other Australian and New Zealand tech startups, are beginning to recycle their talent and knowledge into a second generation of iconic businesses, and that’s not going to change anytime soon.
The other side of the picture would be that, notwithstanding some of the short-term reactions mentioned, there are plenty of venture funds like AfterWork that have raised record amounts of capital that’s looking for a home. All of us are quite open about actively seeking opportunities for both new and follow-on investments.
What’s something from the last 12 months that has excited you in the space?
For us, it’s been really energising to see the collaboration and support that’s happened within the early stage startup ecosystem. In responding to some of these short-term challenges. A good example of that is within AfterWork, we partnered with another great ecosystem operator in Earlywork, and launched a project called Between Work, which is an initiative to connect workers who’ve recently been affected by layoffs in Australia and New Zealand, with companies that are hiring.
Want more Alex Khor? Don’t miss the Pitch, where he’ll be joining our judging panel.