Is Australia on the Cusp of a Silicon Valley type tech boom?

Tech editor for the AFR , Paul Smith’s takeout from the AFR summit is  that Australia can become the new tech hub. 

Anthony Eisen of  Afterpay and Steve Vamos of  Xero - agree that Australia is on the cusp of a tremendous post-pandemic growth opportunity through the creation of a Silicon Valley-style global technology centre and widespread digitisation in small businesses.

Anthony  Eisen suggested that  Australia could use its COVID-19 success story,  outstanding educational system,  infrastructure  and lifestyle to attract significant investment from global tech giants and emerging start-ups - being a tech hub exceeding competing head to head with Silicon Valley and Tel Aviv .

The recipe of a Global Tech Hub 

Australia has the recipe of being  a global leader in tech and has  the key ingredients  - it now needs the magic formula - to mix and bake these awesome ingredients!

Talent, experience, mindset and the desire to collaborate and connect entrepreneurs , government, universities, corporates, and money - and we’re cooking - says Ivan Kaye - founder of BSI 

Afterpay, Atlassian, Redbubble, Canva, Zip, NextTech, Referron and myreruitmentplus   (and who knows - even Bitcoin?) have shown that we can build global technology platforms.

The Power of the SME

Steve Vamos said that Xero’s extraordinary growth was a result of the willingness of Australians to be early adopters of  tech and cloud-based software, with 50 per cent of small businesses in Australia now having some connection to a cloud-based accounting platform. 

Small business represents over 90pc of the workforce - and is a significant factor in the success of technologies.

“Small business owners are very busy and they aren’t excited by a new change. Like when we see new iPhone software, they don’t think, ‘What can this do for me?’ They think. ‘Oh God, what is this going to do to me.’ ”

That’s the challenge! 

What was the tipping point to make small business in Australia make the change to Xero? Or adopt the iPhone? Or use Microsoft, LinkedIn, Google, Insta, Amazon or Facebook?

KarbonHQ raises US$10m making raise to date US$17m

KarbonHQ seems to be on a rocket ship to growth,  having raised a $US10m investment from @FiveElms that will accelerate Karbon's evolution to cloud-native practice management for accounting firms.

This is after a series A round of us$7m led by Blackbird Ventures on June 2018

CEO and co-founder @stuartwmcleod says that 

Karbon is growing at 100% year-on-year , their NPS is accelerating, payback periods are low, and net retention figures are world-class. 

The team is growing from 46 employees, to 75 this year and will continue to expand globally.

What it does 

KarbonHQ provides everything you need to run your accounting firm in a cloud-native, easy-to-use, thoughtful platform.

It helps an accounting firm of any size to go from prospect and lead to proposal, onboarding, scheduling, capacity planning, budgeting, time collection and capture, write-on/write-off, invoice presentment and payment. 

So, what makes VCs back a Company?

The Leader?

The marketplace?

The team? 

Others backing the business?

Trust??? 

Belief that the business will hit a home run? 

It would be interesting to hear the war stories from CEO Stuart Mcleod!

Fintech Athena disrupting the Legacy Banks core business - home loans!

Gotta luv the combination of how ex NAB execs, Nathan Walsh and Michael Starkey of Home Loan provider, Athena,  have used the powerful combination of outstanding customer service + a smart domain knowledge + strong tech driven operational excellence, to disrupt the banking industry !

“The big legacy banks have been broken by their complexity. It’s not new news, the community has been getting a raw deal for quite some time, [but] the time couldn’t be riper to put a genuine alternative out there.” Says Walsh 

It has settled over $2billion of home loans since it started two years ago - automatically giving existing customers the same low rates as new customers. 

Here is the knockout blow .... 

“Our mission is to acquire new customers and retain existing customers by delivering an exceptional customer experience. We have passed through RBA rate cuts in full to all our customers. using the right technology allowing us to listen, learn and innovate for customers and develop great products.”  Walsh shares with the AFR.

Claire Gillies of Deloitte helped implement the tech around Salesforce by including a blend of interviews, interactive workshops and observing how the technology is used to drive improved insights to build an amazing business  with CX in front and centre of everything it does! 

So, where does Athena get its money from?

"There’s $2.7 trillion in super which is going to increase to $5 trillion and then $10 trillion, or the $17 trillion in bonds at negative interest rates in which high quality mortgages are an attractive asset class.” 

The customer pitch 

“Refinance With Athena and Enjoy Zero Fees So You Can Pay Off Your Home Loan Faster. Learn How Athena Can Accelerate paying off your Home loan! P&I, OO, 60% LVR. Cr Warning. Fee Free Extra Repayments. Equity Release. Direct Debit Repayments. Choose Your Loan Terms.

Apply now. 5 minute application. 100% Online. Award winning. Fast outcomes. 100% Online Application. No Early Repayment Fees. Low Fees, Great Rates. 6 months to 5 years. Borrow from 2k to 30k. Types: Personal Loans, Loan Calculator, Savings Accounts.”

Athena’s People and Investors 

It’s all about the people says Walsh 

“The beautiful thing about great talent is it attracts other great talent,”

Part of the magic formula  was to source the  skills and experience to help the startup through the growth phase.

“A big part of the journey is around the investors and the team we attract to the business,”

The value of relationships with people who have an understanding of the startup journey, who are able to introduce the founders to other connections, who are thought leaders in their fields, and who share the startup’s values is “broader than funding”, Walsh says.

“You are the company you keep.”

The Capital Raising  Journey 

Athena initially raised a Seed round of $3m  in June 2018, followed by a Series A round of $15m from  Macquarie Capital and Square Peg and B funding of $25m  before it launched in February 2019, receiving $250 million in applicationswithin the first three days. 

8 months later, Athena raised a series C $70m round in Oct 19 supported by Square Peg Capital, AirTree Ventures,  Hostplus,  AustralianSuper, Salesforce Ventures and NAB Ventures at a valuation  of $230m, after  it had originated $500m of loans. (They delivered on their promise - their investors trusted Asad supported  them!) 

Today it has written  over $2b of loans - could it now be a unicorn? 

Where to from here?