What Lessons Australian Founders Can Learn From Silicon Valley

How to learn from those on the other side of the globe?

The U.S. startup ecosystem is the largest in the world. Every founder knows of Silicon Valley, the famous VC firms there, and is certainly using products every single day that were famously developed, nurtured, and scaled in that market.

Although, across the ocean in Australia we have a thriving, albeit much smaller startup scene emerging. From my experience in the States, when most people think of the Australian tech scene, their mind almost always goes to Canva and/or Atlassian. This shouldn’t be a surprise to anyone since those have been two of the largest software companies to come out of of Australia in recent years. It also isn’t surprising that only a handful come to mind to folks outside of the country when you consider the population of Australia is roughly 26 million people while the population of just the Bay Area, CA is somewhere between 7 to 8 million folks.

Breaking down those numbers further, a study from Deloitte Australia had just under 1 million Australian workers (as of 2022) working in the technology sector. The Bay Area on its own has about 40% of that number.

So what can we take from the United States and apply across the ocean?

I’m going to generalize here a little bit but one of the most glaring differences I have noticed talking to investors and founders in these two regions is that in the U.S., founders are given many opportunities to make mistakes, learn from those mistakes, and course correct. This may be for a variety of reasons such as more investment capital in the region to deploy, more venture arms to raise from, larger seed rounds on average, or any combination of those items. While this is certainly changing some, most people in the startup scene in the U.S. will know someone who raised millions of dollars on very little traction/revenue, often at shockingly high evaluations. There are many reasons for this but the moral of the story here is that it is not uncommon for U.S. founders to raise enough capital to allow them to “figure things out” even in the very early stages of a company.

In Australia, where there are less funds and capital to deploy in the market, investors want to see more revenue and more thought out strategic thinking to raise funds. Whether this is good or bad for the sector as a whole I won’t speculate on, but what I do think is clear is that founders look to raise funds and grow their companies need to have a clear strategy from day one.

Having a clear product strategy during the earlier stages of company building means that founders still can do all the things needed to develop and grow their product (i.e. the “figure shit out” phase of startups) but with a strategy that helps them focus those efforts and make the most of our limited opportunities to find product market fit.

This doesn’t mean that strategy won’t change.

In fact, if you do things right then your strategy certainly will change, especially in the early days of building your product. What I think is very important for founders to understand is that having a robust strategy doesn’t mean you can’t adapt and pivot. In fact, the best strategies allow founders to learn fast and adapt faster. This is critical in markets where fundraising is difficult and capital comes at a higher price. By taking the time up front to develop a guiding strategy, it gives founders the freedom to take chances, explore new opportunities, and make adjustments as new insights arise.

Australian founders must think globally but own locally.

Due to the smaller size of the Australian market, founders must “think globally” from day one in order to make the venture math of investing make sense. VC’s are looking for “fund returners” in every company they back. By the nature of the size of the Australian market, it is almost impossible for a company to be a fund returner without expanding globally. Globally might just mean the U.S. market, APAC market, etc… but it means founders must be thinking about how to scale outside of Australia from the start. In the U.S. startup ecosystem, companies do not need to be thinking about moving outside of their national market until much later on due to the inherent size of the market in the United States. Australian founders don’t have that luxury and it is important to consider this from day one.

To be clear, this does not mean that companies must leap out of the Australian market immediately. Rather, it means that globalization must be a strategic thought in order to show investors that you intend to grow your company to point that makes sense for them to invest in it.

This is where the concept of “thinking globally but owning your local market” comes from. While strategizing about how to grow outside of the Australian market, it is crucial that you have a clear strategy in place to own your local market. Although Australia is a fraction the size of the States in terms of population and economic opportunities, there is plenty of market out their to be captured, learn from, and prove that your company and product has market fit. Using the regional market to improve your product, gain traction, and learn before expanding globally are all factors that contribute to the long term viability of startups in Australia.