A GUIDE TO AUSTRALIAN VENTURE CAPITAL
•
1 like•469 views
This document provides an overview of Australian venture capital from the perspective of Craig Blair and Dominic Reardon. It discusses the history of VC in Australia, the current state of the ecosystem, how AirTree Ventures evaluates investments, and advice for founders. Key points include: the Australian VC market is growing but was historically weak; AirTree has achieved strong returns across two funds; they evaluate companies on criteria like team, product market fit, growth and cash burn; and recommend founders focus on metrics and securing the right investors.
Recommended
Recommended
More Related Content
What's hot
What's hot (18)
Similar to A GUIDE TO AUSTRALIAN VENTURE CAPITAL
Similar to A GUIDE TO AUSTRALIAN VENTURE CAPITAL (20)
Recently uploaded
Recently uploaded (20)
A GUIDE TO AUSTRALIAN VENTURE CAPITAL
- 1. A FOUNDERS GUIDE TO AUSTRALIAN VENTURE CAPITAL Craig Blair and Dominic Reardon @craigRblair @dominicreardon
- 2. I have been a founder of several successful startups and a VC investor for almost 20 years • Cofounder & partner of two VC funds: • Netus (2005 - 2012) • AirTree (2014 – present) • Founder of: • Pet Circle • Beamly (zeebox) • Travelselect/Lastminute.com I was originally an engineer ‘building things’. I have also been a management consultant. A reformed investment banker and chartered accountant, I studied economics at university before starting my career at PwC, then on to Macquarie Capital. About us..
- 3. AirTree Ventures ● November 2016 4.1Xcash on cash returns in 2 funds 20+years experience (AU) Our Track Record
- 4. AirTree Ventures ● November 2016 https:// JOHN HENDERSON General Partner Investment Manager CRAIG BLAIR Managing Partner/Co-‐Founder DANIEL PETRE General Partner/Co-‐Founder CATH ROGERS We all have deep operational experience Investment Associate ELICIA MCDONALD Investment Associate DOMINIC REARDON
- 5. AirTree Ventures ● November 2016 TOTAL INVESTED COMPANIES BACKED TOTAL EXIT VALUE EXITS 36 17 $203m $525m AirTree by Numbers
- 6. AirTree Ventures ● November 2016 Stage of investment Average size of investment Investments made in the past 12 months 12 35% 45% 20% $2.0m $15m $200k Smallest Largest How we invest
- 7. AirTree Ventures ● November 2016 The AirTree Family
- 9. AirTree Ventures ● November 2016 The history of Australian venture capital isn’t pretty
- 10. AirTree Ventures ● November 2016 But some green shoots are appearing..
- 11. AirTree Ventures ● November 2016 £5m $1.5m $20K 1998 My first start-up 2005-2011 Businesses built in the Netus vintage 2016 START OWN COMPANY Then Now $685m Value of Atlassian ESOP and RSUs at IPO World-class product expertise either built here or coming home from leading o/s businesses A new generation of Angels from tech successes Inspired by role models, a shifting paradigm in young talent employer preferences 1 2 3 Low barriers to entry and cultural shift
- 12. AirTree Ventures ● November 2016 $250m+ $100m -‐ $250m $20 – $100m <$20m $FUM • A number of announced funds are likely to close short of their targets Australian VC Ecosystem
- 13. US MARKET
- 14. AirTree Ventures ● November 2016 Source: CB Insights, 2015 The Unicorn fetish
- 15. AirTree Ventures ● November 2016 These companies will come back to market in a subdued funding environment Source: CB Insights, 2015 When will unicorns likely raise next?
- 16. AirTree Ventures ● November 2016 Companies are taking longer to raise and valuations have come back The market has seen a number of flat rounds in 2016 (with more yet to come) after frothy rounds in 2015
- 17. AirTree Ventures ● November 2016 Product market fit Sound unit economics Delivery of growth exp Control of cash burn ✓ ✓ ✓ ✓ = Will Thrive ✓ ✓ ✗ ? = Need to create cash runway. Ideally 18months ✓ ✗ ✗ ? = Existential Crisis Down rounds don’t happen. Australian Founder Checklist Investors are focused on unit economics and valuation/growth metrics
- 18. AirTree Ventures ● November 2016 Product Market Fit What do we look for? A few customers in love with the product Low churn and MMR expansion (for SaaS) 2 High repeat (for Marketplace place) 3 High engagement 4 Viral coffiecient – the k factor 5 1
- 19. AirTree Ventures ● November 2016 Key focus points for seed to series A Unit Economics are critical... Revenue/unit Fully loaded cost/unit Contribution/unit
- 20. AirTree Ventures ● November 2016 Customer Acquisition Cost (CAC) Life Time Value (LTV) Unit economics
- 21. AirTree Ventures ● November 2016 What does growth mean? 0 50 100 150 200 250 300 350 400 450 500 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 0 200 400 600 800 1000 1200 1400 1600 Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 Month 13 Month 14 Month 15 Month 16 Month 17 Month 18 Month 19 Month 20 Month 21 Month 22 Month 23 Month 24 Monthly revenue (re-‐based to 100) Monthly revenue (re-‐based to 100)
- 22. AirTree Ventures ● November 2016 Outstanding team We invest in quality teams with product expertise. 1 Path to sustainable revenue We invest in businesses with a clear revenue strategy. 3 Controlled cash burn We invest where cash burn is under control. 5 Evidence of product-market fit We look for metrics that demonstrate market traction. 2 Clear differentiation We invest in companies that have an unfair advantage in their chosen market. 4 Likely exit options We invest where we see a prospect of a quality exit. 6 Our investment criteria
- 23. AirTree Ventures ● November 2016 Criteria Portfolio example Solving a real problem in a materially better/faster/cheaper way Prospa – banks cannot service $20k loans economically Founding team Paxata – excellent enterprise software track record Product market fit Canva – High engagement: high designs per designer, high repeat rates Unit economics GlamCorner – first-purchase CAC payback, repeat customers, accelerating growth Market timing 90 Seconds – democratization of video Cash burn Brosa – great cost discipline Great businesses attacking large markets: these can be either global or local Our investment criteria
- 24. AirTree Ventures ● November 2016 95% of VCs rate themselves as top Quartile founder friendly • When surveyed about their ability to get on well with others, 85% of US students put themselves above the median and 25% rated themselves in the top 1%1 1. Mark D. Alicke; Olesya Govorun (2005). "The Better-Than-Average Effect” 2. Svenson, Ola (February 1981). "Are We All Less Risky and More Skillful Than Our Fellow Drivers?" • When surveyed about their driving skills, 93% of US respondents put themselves in the top 50%2 Illusory superiority - the above-average effect
- 25. AirTree Ventures ● November 2016 • Actively coaching and supporting our founders • Recruitment support • Data and finance • Leveraging the AirTree network of over 100 founders • Global VC network What Founder Friendly means to us
- 26. AirTree Ventures ● November 2016 Kim Scott is the author of Radical Candor, to be published by St. Martin's Press in March 2017. The importance of radical candor
- 27. AirTree Ventures ● November 2016 Approaching a VC Do homework on the VC/Partner 1 Use advisor sparingly 3 2 Know your metrics 4 Use contacts to get an introduction
- 28. AirTree Ventures ● November 2016 ✔ Can they add REAL value over capital? Are you aligned on how to scale the business? How you solve problems together in the early discussions? Can they support the business through future rounds? Does their brand help hire talent and raise future rounds? VCs are the employees you can’t fire Do at least 3-5x reference checks
- 29. IT‘S NEVER BEEN A BETTER TIME TO LAUNCH A START-UP
- 30. AirTree Ventures ● November 2016 30 We are seeing 10x the number of start-ups we saw 10 years ago Start-upsperyear 2005 2010 2015 2020 2025 100 1,000 10,000 $40m $60m $250m Size of fund netus AirTree I AirTree II The future
- 31. AirTree Ventures ● November 2016 Great companies are started in all markets Source: CB Insights, 2015
- 32. AirTree Ventures ● November 2016 START-UPS Iconic Companies FOUNDERS Successful exits VC FUNDS Return on Investment ANGELS Return on Investment For the Australian ecosystem to thrive, ALL parts have to demonstrate success
- 34. AirTree Ventures ● November 2016 VC funding flows have been declining since a peak in Q3 2015 • Investment count and value is down • Late-stage VC count materially lower
- 35. AirTree Ventures ● November 2016 Source: Yahoo Finance April 2015 Avoid the temptation of a subscale ASX listing The sugar hit does not last long...
- 36. AirTree Ventures ● November 2016 Tech exit valuations for 2015 Source: Global Tech Exits Report 2015, CB Insights