Here's how startups can crack the US market, according to Australian VCs | Equity Podcast

Here's how startups can crack the US market, according to Australian VCs | Equity Podcast

Australian Tech Sector Growth

  • Australian VC Dan highlights the exceptional growth of the tech sector in Australia, now accounting for 8.5% of GDP.
  • Fintech is thriving due to the country's profitable financial services industry, with successful startups founded by experienced executives from established banks.
  • Australian startups excel in product design, with companies like Canva, Deputy, SafetyCulture, Culture Amp, and Atlassian showcasing world-class products.

Global Mindset and International Expansion

  • Australian and Kiwi startups adopt a global mindset from the beginning due to their small domestic markets.
  • Founders are now building global businesses from day one, targeting the US market in particular, and considering global challenges and opportunities from the outset.
  • Australian startups should focus on building a global product from day one to scale internationally.

Maturing Startup Ecosystem and Access to Capital

  • The Australian startup ecosystem is maturing, with a large number of unicorns and scale-ups emerging in recent years.
  • Access to growth capital and foreign capital is improving in Australia, with more international funds becoming active in the country.
  • Recent valuation declines are a global phenomenon and do not indicate a reversal of Australia's startup growth.

Government Support and Skilled Worker Visa

  • The Australian government supports the startup ecosystem through initiatives aimed at attracting investment and developing talent.
  • A new skilled worker visa makes it easier for foreign skilled workers to come to Australia, particularly those sponsored by VC-backed startups.
  • Australia's strong economy, lifestyle, and security make it an attractive destination for skilled workers.

Climate Tech and Clean Tech Dominance

  • Climate tech and clean tech dominated funding and deal count in Australia in Q3 2023, with eight deals worth $116 million closed.
  • Australia's unique advantages for producing world-class climate tech include firsthand experience with climate-related problems, access to solar and wind energy, and a strong research ecosystem.

Deep Tech Investing and Main Sequence Ventures

  • Deep tech investing in Australia focuses on novel science and engineering innovation, often stemming from the country's strong research ecosystem and connectivity to sovereign industries.
  • Main Sequence Ventures, a deep tech venture capital fund, co-founds deep tech companies by bringing together venture founders, scientific institutions, industry co-founders, and CEOs with domain expertise.
  • The company sets specific milestones to achieve step-changing valuation through dedicated sprints.
  • Main Sequence Ventures has an advantage in finding technical talent due to its embeddedness in the research ecosystem and strong relationships with scientists and research institutions.

Challenges and Opportunities in Deep Tech

  • While executive leadership with high-growth scaleup experience is still a challenge in Australia, the ecosystem is maturing with federal and state-based initiatives to attract talent and fuel capital.
  • Early-stage funding in Australia's venture space remains robust, but late-stage funding has slowed down due to economic factors.
  • Deep tech companies may be less affected due to their longer runways.
  • The Australian market for deep tech startups has become more discerning, with late-stage investors applying a strong quality filter for funding.
  • Offshore funding for deep tech has dropped due to recession fears and macroeconomic strife, but deep tech in Australia has remained fairly consistently supported.
  • Many of the limited partners (LPs) behind Australian deep tech startups are from offshore and are interested in lead generation for their later-stage portfolios.

Climate-Focused Deep Tech Companies in Australia

  • The majority of deep tech companies in Australia have some sort of climate-focused problem that they are looking to solve.
  • Examples include Sundrive (solar cells), Hysata and Endure (hydrogen), MGA Thermal (working thermal energy), Neurea (rumin methane emissions), Regrow (regenerative agriculture), and LanzaTech (high-quality carbon removal).
  • Deep tech startups in Australia benefit from a rich education system and strong government support for the science sector.

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