If you ask Elli Hanson about the barriers facing Australian startups and founders in a US-centric VC world, she’ll tell you it has a lot to do with our humility and the social phenomenon known as tall poppy syndrome.
“Australian founders hold this incredibly profound quiet confidence, but don’t want to talk about the things that they’ve done,” Ms Hanson told Something Tech, part of Something Fest, in Brisbane.
“And what I’ve seen and witnessed for Australian founders is not being able to talk about their successes or their wins open and loudly like their American peers. [It] just puts them at a disadvantage, and it sucks.”
The Canadian-born industrial designer turned founder and investor who now lives in Australia is alive to this dichotomy as the principal investor at Sydney-based Side Stage Ventures.
Side Stage Ventures, which was only established last year, raised $15 million for a new $30 million seed fund aimed at early-stage companies and has already scored its first big win.
It was one of the backers of local AI design company Leonardo.Ai, which was picked up by Canva for a cool $370 million last month, making it one of the biggest startups acquisitions in recent years.
But the “famed Australian underdog story” also cuts another way and can be a “really great asset” to founders, setting Australian startups apart from their US competitors, Ms Hanson said.
“In America, it’s a dog-eat-dog culture of competition, whereas in Australia it’s an underdog culture of competition,” she told the two-day showcase of Queensland innovation.
“What does that mean? In America, you’ve got to beat your competition to survive or win. In Australia, you’ve got to beat the odds to survive or win. This is uniquely Australian.”
Ms Hanson is not wrong; the Tech Council of Australia last year found a significant – and growing – gap between the scaleup funding available to startups in Australia and the United States.
This is despite the survivability of early-stage companies founded in the last 10 years now on par with other leading startup nations the US, United Kingdom, Canada, Israel and Singapore.
Australia’s unique challenges, including geography and population density, as well as reduced capital investment relative to the US, don’t help. Startups founders are either more resilient or full of “self-pity and doubt” as a result, she said.
But these old, outdated tropes no longer hold weight as the capital and talent is flowing into Australia as a result of success stories like Canva, Atlassian and Afterpay, making it the “very best time to build ” here.
“Those little sapling [have grown] into these healthy, robust, vibrant plants, and now they’re pollinating this garden with talent and newly minted liquidity and all this capital. [It’s happening] in a, frankly, relatively small market. It’s an outsized opportunity,” she said.
“Venture capital dollars increased by 8,000 per cent in Australia [between 2012 and 2022]. Do you think that the number of startups in Australian increased 8,000 per cent. No.
“So, in terms of scarcity and access to capital, this market is incredibly exciting, especially for early-stage founders and startups. It also has a really diverse set of capital available to it.”
Australia is also a “perfect training wheels market”, allowing startups to “go out and actually test and iterate and cross that trough of sorrow that you might have heard about and find product market fit”.
Ms Hanson challenged Australian startups to set “bold, punchy, ambitious goals” with realistic steps to get there to compete with the “lofty goals” that are all too familiar in American startups.
“Set the punchy goal. It’s really, really important because… you’re only going to hit the height of the goal that you set for yourself… Your words create your reality,” she said.
This article was produced by InnovationAus.com in partnership with Something Tech, part of Something Fest.
Do you know more? Contact James Riley via Email.