Introducing the Experts
- Bree Kirkham: Chief Commercial Officer of F5 Collective, specialising in investing in female-founded startups globally and with the broader mission of generational change for women.
- Jayden Basha: Investment Principal at Investible, an early-stage VC investing in technology companies globally.
- Terry Hilsberg: Investor with experience spanning various global markets, today focused upon making investments in early-stage web3 startups via Fork Ventures.
Overview of the Australian VC Ecosystem
- Emerging Market: The Australian VC ecosystem has witnessed significant growth in the past decade, with an influx of new funds and increasing fund sizes.
- Comparative Analysis: While Australia's VC investment as a percentage of GDP remains low (<0.5%), it is steadily evolving. However, it lags behind regions like Singapore and the US.
- Specialisation: As the VC market matures, the ecosystem is witnessing a trend towards specialisation, with funds focusing on niche sectors like crypto, defence, and female-founded startups.
- Tax-driven Investment: Many Australian investors are tax-driven, which influences their investment decisions and exit strategies.
- Limited Experience: Despite rapid growth, a significant portion of investment managers in Australia have less than five years of experience.
Strategies for Foreign Companies Entering the Australian Market
- Leveraging Current Investors: Engage with your existing investors who have networks in Australia to identify suitable local partners.
- Understanding Fund Structures: Be aware of fund structures like the Early Stage Venture Capital Limited Partnerships (ESVCLP), which in order to maintain their tax subsidy eligibility, have limitations on foreign investments (up to 20% of the fund), and explore alternative funding options such as family offices and corporate venture capital providers.
- Focus on Relevance: Tailor your approach to investors who align with your business model, values, and growth trajectory.
- Value of Local Presence: Establishing a local presence in Australia can be advantageous, especially if your target market includes Australian customers.
- Gateway to Other Markets: Use Australia as a testing ground before expanding into larger markets like the US, leveraging its similarities to Western markets.
Crafting a Compelling Value Proposition
- Identifying Investor Motivations: Understand the various investment hypotheses that appeal to Australian investors, such as investing in local subsidiaries of successful international businesses or supporting global day-one teams.
- Customer Focus: Highlight how your product or service addresses the needs of Australian customers, making it relevant to local investors.
- Testing Ground: Position Australia as a strategic testing ground for your product or business model before expanding into larger markets.
- Navigating Nuances: Acknowledge the differences between regions and educate investors on market nuances (especially when it comes to Asia) to tailor your value proposition effectively.
- Five Types of Value Propositions that attract Australian investors to international companies:
- Investing in Local Subsidiaries: Investors may seek opportunities to invest in successful international businesses entering the Australian market.
- Supporting Global Day-One Teams: Companies with global day-one teams, spanning multiple countries and regions, can attract investor interest, particularly in specialised domains like Web3 or gaming.
- Global Vehicle with Local Presence: Investors may seek to invest in global ventures while obtaining local distribution rights or involvement in the Australian market.
- Backing Australian Expats: Companies founded by Australian expatriates living abroad may attract investment, leveraging connections and expertise from both local and international markets.
- Tapping into Hot Markets: Investors may be drawn to companies operating in trending or high-growth sectors, offering significant return potential, such as cryptocurrency or emerging technologies.
Useful resources
- Airtree Ventures has created an open-sourced Australian VC list. See here.
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