If the $467 million Airwallex elevate and secondary share sale instructed us something, it’s that Australian enterprise capitalists are more and more much less enterprise and much more capital with a spreadsheet.
When Blackbird and Airtree, two of the nation’s flagship VC companies, lastly joined a Sequence F spherical for an organization that they had beforehand handed on a number of occasions, it was not simply ironic, it was emblematic of a shift that has been creeping up the VC meals chain for years.
As AFR’s Rear Window reported, each companies had heard Airwallex cofounders Jack Zhang and Lucy Liu pitch earlier than. They handed.
And now? Instantly, it’s a “can’t-miss” alternative.
The lesson: miss it early, pay later: ideally with another person’s cash. Herding has by no means appeared so worthwhile.
The issue, in brief, is that the “V” in enterprise is shedding its which means. Australian VCs are flush with money from tremendous funds, together with Hostplus, AustralianSuper, UniSuper, and Conscious. Whereas that is nice for headline valuations, it’s detrimental to risk-taking. Institutional mandates quietly whisper, take dangers, sure, however don’t embarrass us.
The irony runs even deeper. Many of those funds promote themselves because the “first cheque” buyers. They preach conviction over consensus.
But when a founder pitches too early, the reply is invariably: “We find it irresistible, however present us a bit traction first.”
So the founder scrambles to lift from angels, household places of work, and smaller funds. By the following spherical, the VC returns, frowns at a crowded cap desk, and says: “a bit busy for us now.”
Damned for those who do, damned for those who don’t.
Recycled bets
The result’s a sector the place the identical tremendous fund cash repeatedly circulates across the similar offers. Blackbird backs Airwallex; Airtree backs Airwallex; Hostplus backs each. Everybody claims diversification, however it’s primarily only a recycled guess on one thing already confirmed to work.
In the meantime, the very founders who constructed right now’s VCs are sometimes those unnoticed.
The Atlassians, Canvas, and Security Cultures: these have been born in scrappy, unsure years when threat was rewarded, not quarantined. These early buyers didn’t have threat committees. That they had conviction. And braveness.
Now? The massive names are extra comfy writing cheques to corporations which have already cleared the exhausting yards. Sequence F rounds, international traction, and established income streams: these should not ventures. They’re development fairness with higher advertising and marketing.
And the tremendous funds find it irresistible. Hostplus CIO Sam Sicilia calls it “unbelievably constructive.”
Concepts go the place capital is. Positive. However the sort of concepts that thrive in a sandbox the place threat is capped? That may be a very completely different equation from the messy, inconceivable bets that constructed Australia’s tech titans.
Australian VC has matured, little doubt. There may be extra capital, higher follow-on assist, and a vibrant ecosystem. However maturity comes at a value: the business dangers forgetting that its job is to fund the inconceivable, not simply the already possible.
Can a pre-product Canva pitch a world imaginative and prescient to a contemporary Australian VC committee?
The memo writes itself: “too early, too dangerous, unclear path to traction.”
And so, the following era of founders, these prepared to take actual dangers, will look abroad for believers, leaving the numerous native funds to recycle their billions into offers they already know will succeed.
In brief, Australian enterprise capital is awash with cash, however more and more poor in braveness.
The “V” in VC ought to stand for enterprise: exploration, experimentation, and even failure. If right now’s funds proceed to behave extra like cautious asset managers than adventurers, the following era of innovators will vote with their toes.
And when that occurs, our billion-dollar funds might lastly realise the irony: the one threat they prevented was the very threat that made their early success potential within the first place.
- Trevor Beazley is the founding father of Maiden Capital, a boutique advisory agency specialising in early-stage capital elevating.