The pandemic has been tough on Australia’s startup community. York Butter Factory has sadly had to close its doors and we can expect more shocks to the startup ecosystem over the next few months.
But there is light as we hopefully begin to emerge from this long tunnel. At Harbour City Labs we saw first hand how the pandemic impacted revenue for startups, but today 85% of our teams are showing very healthy growth with the remaining 15% flat. Investment activity is strong and we believe it will accelerate this year — unless we are forced to lock down yet again.
We can tentatively call this the ‘recovery phase’, which is a critical period. We must focus on what the pandemic has reinforced as a key component of success: global ambition.
For Australian startups, to scale successfully has almost always meant moving into the larger and more fertile markets of the UK, Europe and US. Post-pandemic there is a very clear signal from investors that they want to see this ambition before they will invest. They will take particular notice if you have managed to win a customer overseas, or have investors with connections in one of those aforementioned markets.
Perhaps the most insidious effect of the pandemic for Australian scaleups has been the way it has frustrated these global ambitions and encouraged the pursuit of local investors and customers. The delay in opening Australia’s borders has been costly for our nation’s scaleups in a way that is very difficult to calculate, and they are now having to play catch-up. The danger is that many may not realise this yet.
My strong advice to founders who are serious about growth is to get on an aeroplane as soon as possible, visit those markets, build your networks and warm up your prospects. As one of my founders once told me: the risk is not in going overseas, the risk is in failing to go overseas.
Deciding whether you should be flying or Zooming is always tricky — there is no hard and fast rule. Helpfully, Deloitte recently produced a ‘why we fly’ matrix that is a useful guide. Is there a potential new sale, networking opportunity or client relationship building exercise on the table? Best to be there in person. Internal meetings, learning and development opportunities, and exhibitions and tradeshows on the other hand should be more closely scrutinised.
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In short, we have a lot of networking to do, but this needs to be effective networking. Growing your contacts in a strategic area will help you solve some of the toughest challenges the pandemic has remaining up its sleeve. Hiring tech talent is a great example of this.
Right now there is a pinch on tech talent in Australia and this is creating bidding wars between companies with deep pockets. How can startup founders compete? The answer lies in your network, and that of your current developers, to get you in front of candidates at industry events or post-work drinks.
You should consider yourself as ‘always-on’ in driving recruitment. If you can demonstrate that your business can give potential hires what they may lack — a good work/life balance, a great company culture, the power to make a real difference, a remote work policy and so on — you are laying the foundations for successful recruiting in the future.
A quick side note on this: recruitment announcements from the likes of Canva or Atlassian should not be cause for concern for startup founders. Their efforts make the Australian tech talent pool larger. An influx of new employees into an organisation will inevitably cause some churn, usually those from the more experienced cohort. The startups with founders who have done the ‘leg work’ of networking with this experienced tech talent will benefit from this churn first, as they will be top of mind for those who are looking for something different to the corporate world.
Personal interactions, connections and commitments between other founders, customers, employees and investors over the next 12 months will be of critical importance. Nothing — I repeat, nothing — can match meeting these various stakeholders face-to-face. There is a shared energy, a shared confidence and mutual assurance in a face-to-face meeting that cannot be replicated over Zoom.
Your team may well be remote, but for founders, the priority must be to get back out there and hustle. We’re making up for lost time.