Keeping investors as informed as possible is the secret to ensuring they’ll be willing to chip in more money down the track, SafetyCulture CEO Luke Anear says. The health and safety software startup has just closed a $6.1 million series A funding round, valuing the company at $50 million. Most of the money for the new round came from previous investors including Atlassian co-founder Scott Farquhar. Diligently keeping these investors informed of the company’s operations, even when a funding round isn’t open, is crucial to keeping them on board in the long term, according to Anear . “It definitely helps when you’ve got existing investors supporting what you’re doing,” he says. “Some investors like Scott are much more heavily involved, but it’s important to keep everyone informed in terms of what the challenges and opportunities are. “When it comes around to making a funding decision, investors will feel more informed and they’re then able to make the decision to fund again. “Transparency is really undervalued. It’s important to have people feel like they’re involved as much as they want to be.” However, it’s important to make sure this doesn’t get in the way of running the business, according to Anear. “You have to balance what can be a distraction,” he says. “You have to find a balance between having their input and making them informed and getting on with running the company.” Checklist to success The $6.1 million funding round follows a $2 million round at the end of last year, and a $3 million capital injection in 2013, bringing the total amount of capital raised by the Townsville-based startup to over $11 million. The software development company’s flagship product is checklist inspection app iAuditor, which launched in 2012. The app allows users to complete mobile safety audits using a library of over 55,000 safety inspection checklists. The app now has nearly one million downloads worldwide. Anear says the new funds will be used to expand the engineering team, and begin work on the sales and marketing side of things. “We’re maturing as a company as we move through the different stages,” Anear says. “The seed round is very much a trial and error of understanding the market and customers, and iterating to a product that fits with that. “We’re now at a point where we have a team that has a lot of domain knowledge, and the next step is to grow the customer base and implement strategies to develop the company and take things further.” A focus on engineering The biggest part of this will be growing SafetyCulture’s engineering department, although Anear says they’ll still be adopting a lean approach. “The traditional approach is that you need massive teams to reach global customer bases, but then you look at very small executions like WhatsApp, where they did most of the work with 30 engineers,” he says. “There are some examples of how small teams can have a very big impact. “There’s every chance we could double the size of our team to 90. But we don’t necessarily see that we have to have hundreds and hundreds of people to deliver world-class products around the globe.” Want to grow your business with Instagram? StartupSmart School can help.
Internet of things startup Ninja Blocks has shut down after running out of money. The startup was founded in 2012 and is a graduate of the Startmate accelerator program. Late last year it raised $700,000 from SingTel Innov8, Blackbird Ventures and 500 Startups, to launch its latest product the Ninja Sphere. It has also received investment from Atlassian founders Mike Cannon-Brookes and Scott Farquhar. Its home automation product Ninja Sphere smashed its Kickstarter goal of $155,000, raising $703,000. In a blog post announcing the decision to close, Ninja Blocks’ Elliot Shepherd says all but 300 of the Spheres are built and ready to ship. The plan is to try and get at least one Sphere to every Kickstarter backer. Those that ordered more than one Sphere might not get their whole reward. “This feels wrong, like we’ll be annoying the people who were our strongest supporters, but we don’t have a better option,” Shepherd says. “If and when we could get Ninja back up and running, building and shipping those 300 Spheres would be our first job and highest priority.” Shepherd says development of Sphere ran overtime and as a consequence over budget. When the possibility of further investment fell through, the startup decided to shutdown in order to pay creditors and ship “almost all” the Spheres that were promised. “Even with all the ninjas earning far below what they would expect to get somewhere else, our burn rate couldn’t be sustained forever,” Shepherd says. “Ninja Blocks has always run lean, and when the next round of investment fell through we didn’t have much runway left to adjust course. “With no credible source of funding on the horizon, and hardware still undelivered to Kickstarter backers we made the difficult decision to down-tools.” Shepherd says the Ninja Blocks team would love to find a way to stay together and keep working on Sphere, but “Ninja Blocks, the company, will almost surely be dead”. “…we’re all reeling here from a big few years and a very difficult few months… but we are all proud of what we’ve been able to accomplish, feel privileged to have worked on such an ambitious project, and most of all feel humbled by the community that built up around our small team,” he says. “You’ve all been more excited, more interested, and more understanding than we could have hoped or expected or deserved. Thank you.” StartupSmart reached out to Ninja Blocks president and chief executive officer Daniel Friedman for comment, but did not receive a response prior to publication. Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Australian software success story and former Smart 50 finalist Atlassian has acquired San Francisco-based Hall, a team chat messaging app for businesses, for an undisclosed amount. Hall, which allows teams to real-time chat and collaborate, will be taken into Atlassian’s stable within its HipChat division, the company's team communications platform. It is the latest acquisition for Atlassian, the $US215 million ($270 million) company founded by Aussies Scott Farquhar and Mike Cannon-Brookes in 2002. Bernardo de Albergaria, vice president and general manager of collaboration at Atlassian, told SmartCompany the deal, which has been in the works for the last few months, will strengthen Atlassian’s push into the mobile space. “We’re really excited about this space. The amount of growth we are seeing and our competitors are seeing is just unprecedented,” says de Albergaria. He says HipChat’s growth has been exponential since Atlassian acquired it in 2012 – jumping from one billion messages in the first years of operations to five billion in the last six months. “Mobile is not a fad, it is here to stay,” he says. “We do believe this is the way internal team communication will evolve for every single company.” While not aiming to take over the humble email, de Albergaria says mobile messaging apps for business drastically reduce the “inefficient” use of emails and internal communication. Until recently, HipChat has largely appealed to technical teams, such as developers, but de Albergaria says Hall’s “beautiful” interface will help make the platform more appealing to a broader range of businesses. “We have consolidated our forces to make a beautiful experience for everyone,” he says. Another drawcard for Atalssian was Hall’s personnel, according to De Albergaria, including its engineers, developers and product managers, who will now all come across to HipCat this Monday. He says Atlassian has successfully used a combination of organic and acquisition growth to underpin its success and will continue to look at further takeovers as a part of its growth strategy. This article originally appeared on SmartCompany. Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Young entrepreneurs are worried the deregulation of university fees will burden them with more debt before starting their own business. However, they are also of the view that a university degree is not necessary in order to start a tech company. Last week Atlassian co-founder Scott Farquhar came out swinging against the government’s proposed changes to higher education, telling BRW it was unlikely he would have started his business if he had accrued $100,000 in debt. Everyone from vice-chancellors to student unions and education experts have weighed in on the debate, but what do the next generation of entrepreneurs – the people who will be directly affected by the government’s proposed reforms – think about deregulation? Victor Zhang is the 17-year-old co-founder of Generation Entrepreneur and is studying for his HSC in NSW. He told StartupSmart he thinks the disadvantages of university fee deregulation “outweigh advantages in the long term”. “It will make the playing ground for entrepreneurs slightly more difficult, where upon graduation they will have larger debts upon their shoulders,” he says. “This could likely discourage entrepreneurs from taking risks and reduce the potential of Australia’s talent.” Zhang says while he thinks deregulation has some benefits, such as an increase in competition between universities, higher fees could mean people his age decide to study overseas which would result in a “drain of talent”. Meanwhile Jesse Park, a year 12 student and co-founder of Bypass – an app aimed at showing users if there is someone they know at a social gathering – says he will be deterred from going to university if a degree costs too much. “It’s an extremely narrow-minded and shallow decision,” he says. However, not everyone thinks university fee deregulation will stop young people from gaining tertiary qualifications or prevent them from taking risks after graduating. Hayley Guagliardo, 14, is in year 10 and has completed an internship at BlueChilli in Sydney. She is working on an online job platform for young teenagers and is thinking about studying law or engineering at uni. “If I want to go to uni, I’d definitely go to uni regardless of the price,” she says. “The risks I would take would probably not put me in much of a worse position [in regards to higher HECS debt]. I would still take risks.” David Chen, 16, is working on a startup called Notestarter – a free online resource to help high school students with their assignments and exams. He thinks deregulation would improve the competitiveness of Australian universities with overseas institutions and allow for better facilities. “I actually think this would motivate more of us to found startups,” he says. “This would be simply due to the fact that by taking larger risks, there could be larger rewards we could reap later.” Nathan Feiglin, the 16-year-old co-founder of online marketplace startup Salir, told StartupSmart he hasn’t decided yet whether he will study at university. “University is not a necessity,” he says. “Many skills required to get a startup off the ground can be learnt by actually doing something rather than sitting in a lecture theatre theorising about how to do it. Other skills, such as coding websites and mobile apps, can be learnt from a countless number of non-university sources both on and offline.” And while Feiglin says he would rather have less debt on his shoulders than more should he study at university, he does not think higher course fees will dissuade him “more than other factors”. “Due to the nature of HECS, I don’t think I’d be less likely to take risks.” Education Minister Christopher Pyne introduced another university reform bill into the House of Representatives last week, before Parliament dissolved for the summer break. It will likely pass the lower house and be debated in the Senate early next year. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Rich Lister and co-founder of tech giant Atlassian, Scott Farquhar, has invested $750,000 of his own cash in Townsville-based app developer SafetyCulture. Speaking to SmartCompany this morning, SafetyCulture founder and chief executive Luke Anear said Farquhar led a $2.1 million investment round in his company, with the venture capital fund he backs, Blackbird Ventures, also contributing $750,000. The remaining $500,000 was raised from existing shareholders. The raise follows a $3 million fundraising round in November last year, which included $1.79 million from Commercialisation Australia and $1 million from Blackbird Ventures. “Scott has been involved with SafetyCulture for around 12 months as an adviser with Blackbird and he got to the point where we he wanted to invest himself,” says Anear. “We didn’t need to raise more than $2 million but we needed to give our other shareholders the right to participate in the raise.” Farquhar is taking an active interest in SafetyCulture, spending last weekend working with the team at their offices in Townsville. “Normally I would meet up with Scott in Sydney and with the launch of our Sydney office on December 1, it means we will be even closer to him,” Anear says. And there is a chance Farquhar could become a more permanent fixture at SafetyCulture, with Anear open to the possibility of the entrepreneur taking a seat at the company’s board table. “It’s quite possible, it just depends on what we need at each stage of our growth,” he says. SafetyCulture is the developer of a number of workplace safety and management apps including iAuditor, which allows workers and employers to complete mobile safety audits. To date, more than 10 million audits have been completed by users. The company now employs 45 people, including former Atlassian senior engineer Anton Mazkovoi, and Anear says the team is close to “turning on our revenue model”. Anear says the latest round of funding will give the company “a little more time” to work on rolling out its revenue model, as well as support the release of its next accident management app and expansion of its cloud-based services. “Anton Mazkovoi has recently joined us, and as the fourth employee at Atlassian, he has seen the whole movie before,” Anear says. “Having someone like that helps us to focus on the areas that matter the most. Having a great engineer attracts other great engineers.” Anear says the support of entrepreneurs like Farquhar can put a new business “on the right track”. “Certainly when you start getting traction, a lot of people want to give you advice and it can be overwhelming,” he says. “But the advice you get from someone who has built a $1 billion company is different to the advice you get from other people … what Scott says resonates on a fundamental level.” This article was originally published at SmartCompany.
Australian startups face a number of challenges when attempting to use employer sponsored visas. These issues were recently highlighted by Scott Farquhar, Atlassian CEO and co-founder, who argued for a simplification of Australia’s ‘byzantine’ employer sponsored visa laws. Since then the federal government has announced the National Industry Innovation and Competitiveness Agenda, which includes several reforms to employer sponsored visas which will affect startups. While reforms will go some way to reducing the burden on startups, it is unlikely that the overall process will become substantially simpler or cheaper in the short term. Employer sponsored visas are a challenging area for policy development, particularly during periods of increasing unemployment. Startups would be best advised to do their research early when considering sponsoring employees through the 457 visa program and look at the limited alternatives that may be available. Impending changes: Industry Innovation and Competitiveness Agenda As part of the Innovation and Competiveness Agenda, the government has announced it will implement measures to reduce the burden imposed on startup businesses. These reforms include lengthening the period that Business Sponsorships are valid from 12 to 18 months, reducing sponsorship requirements for employers, and retaining the Temporary Skilled Migration Income Threshold at $53,900 for two years. The announcements failed to confirm whether reforms would also occur in related areas such as increasing the duration of 457 visas sponsored by startups from the current maximum of 12 months. Factors to consider: Business sponsorships and 457 From an immigration perspective, a ‘startup’ is any business that has been operating for less than 12 months. Businesses with less than one year of trading history are likely to be considered as a startup. Costs Under the reform agenda, startups will see the period of sponsorship increase to 18 months; however, this does little to reduce costs. The business must pay for the initial sponsorship and renewal 18 months later. The business must also pay for most costs associated with the 457 visa – the visa application charge being the exception. It is unclear whether 457 visas sponsored by employers will be increased from 12 to 18 months. Subsequent sponsorship periods and visas are valid for up to three and four years respectively. However, the cost implications are significant in addition to the salaries and other related costs such as paying return travel costs. Salaries The 457 visa program requires employers to pay sponsored visa holders at ‘market rates’. Market rates are based on what an Australian would be paid in the same role. As such, startups are not in a position to pay a founder or early entrant at a minimal rate to push for growth. Any 457 hire must be engaged through a contract of employment and base remuneration must be guaranteed. These factors will need to be taken into consideration when deciding if the 457 is an appropriate option for the business. Training Startup businesses will need to present an ‘auditable training plan’ as part of the Business Sponsorship process. The plan must show how the business trains Australian employees (or directors if there are no employees) over the first 12 months. Expenditure on training must equate to at least 1% of payroll, or where there are no employees, 1% of directors drawings. When renewing the application the business will need to demonstrate that these training benchmarks have been met. The business will need to meet this training benchmark for each year a 457 visa holder remains in the business. Documentation The current sponsorship obligations require employers to be on top of their paperwork. It is critical that businesses retain documents relating to training, payroll, job descriptions, and employee records as required by the Sponsorship Obligations. Any startup considering employer sponsored visa options must be prepared to ensure the relevant documentation is in place at all times and the business is able to show the Department of Immigration that it is meeting these requirements. What are the alternatives? If the 457 visa is not an option then startups may consider whether the Working Holiday visa or Work and Holiday visa are better temporary solutions. The visa is not a substitute for the 457, however, where startups are willing to engage an employee for an initial six months these visas may be useful. Both visas are only available for citizens of limited countries and for people under 31 who have not held the visa previously. This initial six-month period may give the business sufficient time to improve its financial position to meets 457 visa requirements. Due to the limitations on startups it is not possible to sponsor staff directly for Permanent Residency at the early stages of the business. Further, businesses should be aware that sponsoring staff who are overseas directly may take 6 to 12 months. Business should also be aware that if overseas staff visit Australia to engage in work then they should verify whether the appropriate visa is a Business Visitor visa or a 400 Short Stay Work visa. In circumstances where work will be conducted the 400 Short Stay Work visa would be required. Concluding thoughts Despite the proposed reforms for startups the visa process will remain complex. The changes will do little to reduce the financial and administrative burden for startups. At this time there is no suggestion of a new visa being considered for startups. Startups should consider whether the business has the resources to meet the financial and administrative costs. If it is essential for international talent to join the local business, but the 457 is too burdensome, then the Working Holiday visa may fill the gap in some circumstances. Despite the proposed Innovation Agenda there is no easy answer to immigration issues for startups. Jackson Taylor is a registered migration agent and principal of Eventus Corporate Immigration.
Atlassian’s Scott Farquhar warns you’re “either becoming a software company, or being disrupted by one”10:51AM | Tuesday, 14 October
Every company is a software company, or is becoming one, according to Atlassian co-founder Scott Farquhar. Giving the 2014 JJC Bradfield Lecture in Sydney on Monday night, Farquhar compared software to the invention of electricity in terms of the impact it is having on society. “It’s software that powers computers, powers robots; software is the ultimate lever for human performance,” he says. “As such, like electricity, it can augment us, enable us, even replace us in many areas. Archimedes said, ‘Give me a lever long enough… and I’ll move the world.’ Software gives humanity that lever. “Companies now only fit into two buckets: either becoming a software company, or being disrupted by one.” Software has liberated Australia from the tyranny of distance, which Farquhar suggests provides both an opportunity and a threat for Australia. “We ‘made it’ from suburban Sydney. That’s the good news. The bad news is that any other ‘Mike and Scott’ from any suburb in Seattle or Shanghai, Lucknow or London or Hanoi or Helsinki can make it too,” he says. Given this, Farquhar says it’s important for the government to implement policy that helps foster innovation in the sector. Like employee share option reform (which the government announced today) and encouraging superannuation funds to invest more into local venture capital in order to bridge a gap in the Australian venture capital market. “Although the activity level of angel investors and VCs has ramped up – there is still a significant gap in the market in Australia,” Farquhar says. “Particularly once you move beyond an early stage, it is too difficult for a company to raise finance locally.” He also praised government tax incentives like the R&D Tax Incentive Program and the Export Market Development Grants Scheme. The parliamentary secretary to the Minister for Communications, Paul Fletcher MP, says he had a number of takeaways from Farquhar’s lecture, including the need for the nation to produce workers with the right skills. “He had some very important points about employee share ownership schemes and venture capital, but the point I want to focus on is the need for the right skills in the workforce,” he says. “Clearly when it comes to having enough skilled people to support a software industry, two critical policy levers sit squarely with government: education and immigration. “Clearly this is a timely point to be raising when the Review of the Australian Curriculum was released (Sunday) and Education Minister Christopher Pyne has stated there will now be discussions with states and territories and other key stakeholders about how to strengthen and regime the curriculum.” That review was criticised by those in the IT industry for not doing enough to promote ICT skills. As for immigration, Fletcher says the Abbott government is setting policy “with an eye towards meeting the skills needs of the economy”. “In my view, Scott has had some serious and important things to say,” Fletcher says. “It is critical to sensible policy development in this area that government is in no doubt what the sector is saying.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Sydney-based mentor-driven seed funding program Startmate has opened applications for its 2015 intake, with the iconic program now entering into its fifth year. First run in 2011, the Startmate program was a pioneer in the Australian startup scene. Based on an observation that VCs were missing in action in Australia at the time, it was inspired by the success of US-based seed funding programs such as Y Combinator and Techstars. Startmate and Blackbird Ventures co-founder, Niki Scevak told StartupSmart the program has proven Australia has the talent to build world-class tech companies. “If you look at something like 500 Startups or Y Combinator, a large proportion of the teams there are international and they’ve moved to San Francisco to start their business,” Scevak says. “But really, you can launch a startup anywhere and we believe Australia punches well above its weight in terms of talent.” Scevak says the big change in 2005 will be the increased importance of Startmate graduates from past years. “The big change after five years is the network of alumni companies. We’ve invested in 29 companies over the years, and that network is increasingly becoming even more important to the program than the mentors. “The folks who have gone through Startmate want to give back to the program, so the alumni and the mentors is really a one-two punch.” Startmate initially offered startups a $25,000 investment in exchange for a 7.5% stake – a figure that has since been increased to $50,000 (which gives successful companies a valuation of $666k). Aside from the investment, the program offers startups office space and legal advice for its duration, and includes demo days where technology can be demonstrated to potential early-stage investors. A key feature of Startmate has always been the use of high-profile mentors from the Australian startup and tech community. Some of the mentors have included Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar; Tjoos co-founder Bart Jellema; and Spreets co-founder Dean McEvoy. The first program in 2011 generated 86 applications, which were eventually narrowed down to just five participants. The first intake was made up of Bugherd, Chorus, IRL Gaming, Grabble, and Noosbox. By the end of the year, one of the participants, Grabble, had been acquired by the US retail giant Walmart. Between January and April 2012, Startmate returned with its second intake, with the program increased to eight participants. The number of aspiring entrepreneurs and startups boomed to 164, with Clique, Flightfox, Property Inspector, Invc.me, Ninja Blocks, ScriptRock, Setkick and Young Republic eventually chosen for the program. It returned bigger than ever in 2013, with the initial investment doubling to its current level of $50,000 for 7.5% equity. The 2013 participants included 7pm Anywhere, Bugcrowd, GetStall, Kinderloop, SalesTeam, Shiftr, Storyberg, and Tutor on Demand. In late 2013, applications opened for Startmate’s fourth intake, with the 2014 program kicking off earlier this year. The participants included Lumific, HayStackHQ, Inductly, Drawboard, Flirtey, Foogi, Composure, and SportHold. In 2015, Scevak predicts Startmate will attract more than 250 businesses, with the growth of applications now tracking the number of startups in the ecosystem. Applications for the 2015 program are available on this page.
Miners and property developers are among Australia’s wealthiest people, but young technology entrepreneurs are snapping at their heels, according to the 31st BRW Rich 200 released Friday. Gina Rinehart once again topped the BRW Rich List with an estimated worth of $20.01 billion, down from $22.02 billion the previous year. Anthony Pratt, chairman and chief executive of paper and packaging company Visy Industries, came in at number two and is Australia’s richest man, with a net worth of $7.64 billion. James Packer came in at third place with $7.19 billion. Despite the usual pack of miners, property investors and those born into wealthy families dominating the list, people who have made their fortunes from striking it out alone in the IT industry are quick on their heels. Former Smart50 winners and Atlassian founders Mike Cannon-Brookes and Scott Farquhar have surged ahead in this year’s rankings, coming in at number 35 and 36 respectively. Between them, the pair is worth $2.14 billion. Last year the entrepreneurs were worth $250 million each. Atlassian, a software development company founded in 2002, has averaged 40% on year growth for the last five years. Cannon-Brooks and Farquhar have been hailed as examples of how Australian tech companies can thrive on the international stage. However, the pair also has their priorities set on other things besides profit. In April, they pledged $35 million to community-building after setting aside 1% of the company’s equity to charity when starting the business. Farquhar told SmartCompany Atlassian has a passion for investing in charity for the long-term, especially when it comes to giving people the skills to help others. “It’s really about education,” he said. “Ideally in 50 years’ time we want to say we have really achieved fixing something rather than just patching over something.” Another entrepreneur, Ruslan Kogan, also fared well and came in at number 162 – his first time making it onto the list with a net worth of $320 million. Kogan’s business is going from strength to strength, and launched in New Zealand in March. “Our goal is to deliver the latest technology at market leading prices,” he toldSmartCompany. “Whether it is manufacturing our own Kogan products, or sourcing the world’s biggest brands, we can cut out all the middlemen to guarantee the best prices.” Mining magnate turned politician Clive Palmer didn’t fare too well in comparison to previous years, falling a massive $980 million in comparison to last year. However, fellow miner Andrew Forrest had the opposite fate – his wealth jumping from $3.66 billion to $5.86 billion this year. The average age of those on the BRW Rich 200 is 64, and of the 200 people on the list 39 of them are billionaires. Only 7% of the rich-listers are women. The richest people in Australia: 1. Gina Rinehart - $20.01 billion 2. Anthony Pratt & family - $7.64 billion 3. James Packer - $7.19 billion 4. Frank Lowy - $7.16 billion 5. Ivan Glasenberg - $6.63 billion 6. Hui Wing Mau - $6.35 billion 7. Andrew Forrest - $5.86 billion 8. Harry Triguboff - $5.5 billion 9. John Gandel - $4.08 billion 10. Kerr Neilson - $3.35 billion This article originally appeared on SmartCompany.
With Atlassian’s latest share sale valuing it at $US3.3 billion the Australian software company has pledged $35 million to charity. Founders Scott Farquhar and Mike Cannon-Brookes set aside 1% of the equity in Atlassian to the Atlassian foundation when they started the company. Farquhar told SmartCompany the foundation is part of the “untold” story of Atlassian and the latest valuation means it is now a $35 million foundation on paper. Like Atlassian’s business plan, Farquhar says the company takes a long term view to its charitable giving. “It’s really about education,” he says. “Ideally in 50 years time we want to say we have really achieved fixing something rather than just patching over something.” Farquhar says the Atlassian foundation concentrates on education rather than services such as homeless shelters which, while vital, don’t really address the root cause of the problem. So far the Atlassian foundation has focused on charities such as Room to Read which works on educating children in the developing world. “Their motto is that world change starts with educated children,” Farquhar says. In addition to the $35 million in foundation stock, Atlassian has donated another $7 million to the Atlassian foundation and $3.1 million of this has been on-donated to Room to Read. Farquhar says Australia does not have the culture of entrepreneurial giving like the United States. “We want to encourage other entrepreneurs to pledge 1% of their equity early on when it’s not worth much,” Farquhar says. “Then, like Atlassian, hopefully in the future it is worth more.” This article first appeared on SmartCompany.
Atlassian’s $US150 million ($A159m) share sale announced yesterday has rocketed co-founders Scott Farquhar and Mike Cannon-Brookes into Australia’s billionaire rankings. Farquhar talked to SmartCompany from Los Angeles last night as news broke of the deal which values Atlassian at $US3.3 billion. Farquhar and Cannon-Brookes are each believed to own close to 40% of the share capital and neither is selling down their stake as part of this sale, which leaves them with paper wealth of $1.4 billion each. Farquhar says the deal was brokered by “inviting bids from a small number of select parties” and will assist Atlassian’s future growth through an injection of both capital and expertise. “We have always been about thinking long term so the investors we get on board, like Accel Partners, help us set up the company for the next stage of growth,” he says. “As we head towards an initial public offering we’ve now got one of the largest tech investors in the US on board and with their public market experience they will really help us set up.” “It also allows our employees, some of whom have been around for 10 years to realise the value of their Atlassian stock.” Farquhar would not be drawn on the timing of an IPO for Atlassian but it is “not in the next few months”. The share sale is the latest move in a trajectory which has seen Atlassian soar to global prominence. In 2013, the business booked revenue of $US149 million up from $US111 million in 2012. Farquhar says revenue is on track to be “north of” $US 200 million for this year. He attributes Atlassian’s success to “taking a long term view of everything we do”. “At Atlassian, we want to be around in 50 years’ time,” he says. Farquhar plans to grow the business further by expanding into multiple markets. “As software development becomes an increasing part of every single business, our products actually become quite critical to every business,” he says. “That’s the area for growth of us.” Atlassian plans to achieve this growth without hiring a single salesperson. “We are not anti-sales; we are pro automation,” Farquhar says. “We take an engineer’s philosophy to everything that we do. We are really about scaling the business.” Although Farquhar concedes eventually Atlassian may have to follow a more traditional sales path if it wants to sell into large businesses at the top instead of going through the business’ developers. “In the future we may have sales situations where we need to speak their language,” he says. The biggest challenge at the moment for Atlassian is its stellar growth according to Farquhar. The business has averaged 40% year on year growth for the last five years. “We are growing fast. With that comes the inevitable issue of scaling, it sounds mundane but finding office space when you double in size every two years is hard.” Atlassian’s move earlier this year to shift its domicile from Australia to the United Kingdom caused some soul searching in Australia’s tech scene but Farquhar insists Atlassian is still an Australian company “through and through”. “We still collect all our revenue globally through Australia and the large number of people we are hiring are through Australia,” he says. Farquhar says the move followed a global search to find the best place for Atlassian to be based “for the best interests of the company”. Atlassian’s “back office people” analysed where Atlassian’s customers were, where the team wanted to live and settled on the United Kingdom. “We looked at Singapore but the UK made sense because of the treaties between Australia and the UK it is easier and the global investor base is more used to investing in a UK company.” But Farquhar does say the talent pool in Australia is limited. “We don’t graduate enough computer science graduates from university,” he says. “That is the biggest constraint on our growth.” “We have a unique company culture so we spend a lot of time on hiring for promotion and continuing that culture. I think half our staff have been here less than one year and four months.” Atlassian has previously criticised the government for its approach to 457 visas for skilled employees and Farquhar says the program is essential because the Australian technology environment has more jobs than people to do them. “Arrogance and lack of a strong industry in Australia meant we didn’t have mentors for a long time,” he says. “Our argument with the government on these visas is that a lot of the people who could train us are highly qualified people we need to import from Silicon Valley.” “Now we have mentors in our business and also on our board.” This article first appeared on SmartCompany.
Designed to turn Australian technical founders into successful global entrepreneurs, one of Australia’s first start-up accelerators Startmate is now open for applications. The program will run next year from January to May. Companies will spend three months in Sydney and two in San Francisco. Startmate is seeking around eight companies, which will receive $50,000 in seed capital, in exchange for 7.5% equity. Startmate co-founder Niki Scevak told StartupSmart they’re seeking founders with big dreams and plans. “Beyond the very product centric technical team, we’re looking for people with large ambitions, the crazier the idea the better. We really want to work with teams who want to make a big difference in the world, so the scale of the ambition is what we’ll be selecting,” Scevak says. He says they’re committed to approaching each pitched idea with an open mind, adding that being the hundredth start-up to tackle an idea didn’t hurt Google, Facebook or Atlassian. “Anyone doing anything in an incredibly crowded area will be taken as seriously as brand new ideas. The ideas may sound incremental, but it really does matter why the founders have chosen to pursue this idea, and if they have a unique insight into it,” Scevak says. “It’s about why they care about their customers and if they have an authentic connection to the market. We look for what in their lives have driven them to this idea.” The program includes an impressive line-up of mentors including Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar; Tjoos co-founder Bart Jellema; and Spreets co-founder Dean McEvoy, as well as several partners from Square Peg Capital and Blackbird Ventures. This will be the fourth intake for the program. Previous participants include BugCrowd and NinjaBlocks. Start-ups can apply via Angel List.
It takes many things to get a business off the ground. It takes a flash of insight, plenty of drive, and good advice. It takes savvy staff and helpful networks. It also takes something few start-up founders have to begin with: money. Australia’s venture capital industry is growing and maturing. But the funds to finance start-ups don’t just come from high finance. Increasingly, a generation of Australian entrepreneurs who made or grew their fortunes over the past decade are investing their money back into start-ups, either directly or through niche venture-capital firms. Through this, they’re helping build a start-up ecosystem able to support new, growing start-ups, using the spoils of yesterday’s success stories. Here are just a few rich listers putting some of their money back where it came from. James Packer In many ways the trailblazer in this regard was James Packer, who made a fortune investing in companies like SEEK and Carsales.com.au a decade ago. While by no means a successful start-up leader (Packer inherited most of his money), he has nonetheless grown his fortune through savvy start-up investing, a passion that doesn’t appear to have ebbed with time. Packer bought a 25% stake in SEEK for $33 million in 2003. When the business listed, Packer’s stake was worth $150 million. By the time he sold out, he had made $440 million from his investment. He was also an early investor in Carsales.com.au, putting $100 million for a stake in the company that sold for $500 million a few years later. Those were some of the best dot.com investments ever made in Australia, and, perhaps spurred by his early success, Packer has continued to invest in start-ups with potential to disrupt their industries. One of his most recent investments was last month in taxi app goCatch, which could radically disrupt Australia’s cab companies and Australia’s Cabcharge monopoly by allowing passengers to book a taxi by directly liaising with the driver. Paul Bassat Packer is joined in his goCatch investment by Paul Bassat, a cofounder of SEEK who’s since left running the business to his brother while he focuses on investing. Bassat is the cofounder and joint chairman of Square Peg Capital, a newly minted venture capital firm that’s already put money into a heap of start-ups like beauty-box business Bella Box and design start-up Canva. “First and foremost, we want to back fantastic people who are smart, passionate and high integrity,” Bassat told StartupSmart when Square Peg was formed a few months ago. “For businesses that have been around for a few years and have a bit more traction, the question of if they’re solving a problem has been partially answered. If it’s an early stage business without a track record, we want to know exactly what the problem you’re trying to solve is if you’re actually solving it, in a unique and differentiated way.” Bassat is also a mentor at Startmate, which offers mentoring and seed financing to online and software start-ups. Mike Cannon-Brookes and Scott Farquhar Bassat isn’t the only rich lister to volunteer his time mentoring young companies. Scott Farquhar and Mike Cannon-Brookes, who cofounded Atlassian and for two years have topped the BRW Young Rich list, are also mentors at Startmate. Last year, Cannon-Brookes also invested in Shoes of Prey, which gives shoe lovers the chance to customise every part of their shoes online and have a unique pair created and shipped. Both Atlassian cofounders put money earlier this year into Ninja Blocks, a Sydney start-up that builds devices that let people link their devices to physical things in their homes (‘SMS me when the washing is done’, for example). This story first appeared on SmartCompany.
Data released this week by US tech database CrunchBase has found the University of New South Wales produced more technology entrepreneurs in the past 15 years than any other Australian university. The data was based on the CrunchBase dataset of over 170,000 companies, including 169 Australian entrepreneurs. CrunchBase is a free database of technology companies, people, and investors where anyone can upload information on start-ups. Australians on the database included Dean McEvoy from Spreets, Tess Walton from Aruspex, Mike Cannon-Brookes and Scott Farquhar from Atlassian, Alicia Navarro from Skimlinks and Eddie Machalaani from Bigcommerce. The University of New South Wales was ranked number one in Australia and is credited with launching the careers of 16 entrepreneurs. UNSW had more than double the number of entrepreneurs produced by the University of Technology Sydney, which took second place and clocked in with seven entrepreneurs. Monash University, Queensland University of Technology, University of Queensland and University of Sydney shared third place with six entrepreneurs. Swinburne University, Melbourne University and the University of Newcastle were credited with four entrepreneurs each. Josh Flannery is the student enterprise manager at the University of New South Wales entrepreneur program and commercialisation arm NewSouth Innovations. Flannery told StartupSmart while the results were recognition of their commitment to encouraging entrepreneurship, he believes UNSW and NewSouth Innovations are about to reach a tipping point and start producing even more successful start-ups. “It’s been an experiment really, but we’re at a tipping point now. I’m speaking to 60 to 70 individual students who are working on start-ups at the moment,” Flannery says. UNSW runs entrepreneurial and innovation-themed subjects in every faculty and has a variety of internal programs. “What’s maybe different is our NewSouth Innovations commercialisation approach. We now give 100% of the equity to the students. That’s not the case in every university yet but it’s becoming the trend,” Flannery says. He adds that universities play an important role in encouraging young entrepreneurs and can do more to boost the start-up ecosystem. “Universities play a very important role in nurturing entrepreneurial students, but also something I’ve found that we’re doing, which is relatively new, is almost offering the entrepreneurship career route as an alternative to the safe route as a consultant in a big firm,” Flannery says. “The way we’re doing that is encouraging students to have a go at something entrepreneurial right now, when they have the least expectation on their shoulders than they will at any point of their life.”
The US-founded Startup Grind event series continues to grow in Australia, with the Sydney and Melbourne chapters set to host the founders of Atlassian and Zendesk respectively.
The first class of Atlassian Hack House graduates have highlighted their achievements since participating in the program, after the second class began work yesterday.
Government regulations need to change if Australia is to create a 'Silicon Beach' that will compete with the world's leading digital economies, a gathering of tech giants and start-ups has told Prime Minister Julia Gillard.
This year’s BRW Young Rich List may be striking due to the dip in overall wealth of the top 100, including a $700 million plummet by mining mogul Nathan Tinker, but there are encouraging signs for start-ups.
The 2012 BRW Young Rich List has a strong start-up and tech flavor, with Atlassian founders Mike Cannon-Brookes and Scott Farquhar heading the rankings.
Mike Cannon-Brookes and Scott Farquhar, founders of tech success story Atlassian, have toppled miner Nathan Tinkler to head BRW’s Young Rich List.