Adam Spencer: You’re listening to a special interview series as part of a documentary W2D1 is producing about the history of the Australian startup ecosystem. On the episode today, we have-

Yolanda Redrup: Hi, everyone. My name is Yolanda Redrup. I’m a senior journalist with the Australian Financial Review. I’ve been covering the technology and startup space for about nine years now and yeah, I was first introduced to it in my first job when I was working as a small business journalist at SmartCompany.

Adam Spencer: What was your very first exposure to this thing we call the startup ecosystem?

Yolanda Redrup: Okay. All right. Taking me back.

Yolanda Redrup: I think my first exposure was probably within my first couple of weeks starting at SmartCompany. My editor at the time, her name was Cara Waters, she now works for The Age, she had asked me to start looking after a segment that they were kicking off called Diary of an Entrepreneur.

Yolanda Redrup: At the time, to be honest, I was pretty young and green, and I didn’t have a lot of exposure to the startup world, but I was familiar with some entrepreneurial stories, and I thought that would be a great column to sink my teeth into and cut my teeth as a young journalist. That was probably the starting point.

Yolanda Redrup: I’d be lying if I said I could remember who the first person was who I interviewed for that column, but I definitely spoke to some colorful characters in my sort of year and a half when I was at SmartCompany, people like Janine Allis of Boost Juice, Matt Barrie of Freelancer, Abigail Forsyth who started KeepCup. I think one of my favorite interviews probably was me Megan Quinn, who did Net-a-Porter, some of the entrepreneurs that were already quite prominent about a decade ago.

Adam Spencer: Yeah. Wow. How has your view changed of the ecosystem or what your understanding of the ecosystem since you’ve been covering it for all these years?

Yolanda Redrup: Well, I think the first point there is probably just that it was extremely different as an ecosystem when I first started.

Yolanda Redrup: I think back, and I started covering the space around 2013. At the time, Blackbird had really only just done and/or were finishing raising their first $29 million fund. Square Peg was equally in its extremely early days, and Craig and Daniel hadn’t even launched AirTree yet. It didn’t exist. So there was really only a handful of notable funds in the ecosystem at the time, and the amount of investment was just so much lower.

Yolanda Redrup: I went back and had a look over some of the articles I was writing back then, and it was quite common for us to cover rounds that were below a million dollars. If the company raised $5 million, it was quite a big deal. So the progression in only nine years has just been astronomical so it was just a very different landscape.

Yolanda Redrup: I guess impressions of it at the time were that the majority of investors back then were male, and it’s been great to see some additional diversity come in, particularly in the past couple of years, as it’s been a real priority for the funds here. Equally, most of the founders I wrote about were male who were out there raising capital.

Yolanda Redrup: I went back and pulled up some AVCAL stats from 2013 and, interestingly, there was actually a drop-off in investment that year. There was a 20% decline in the amount going into local startups, and I think the grand total for that entire year was only $111 million. Now, I could probably name off the top of my head five rounds by individual companies that were bigger than that size in the past six months. So it’s just a totally different landscape now to what it was back in 2013.

Adam Spencer: From your assessment of it, what would you say has driven that change?

Yolanda Redrup: It’s been a combination of factors. I think we can’t underestimate how important it was to have the sort of the building blocks of the ecosystem being put in place. That’s things like having angel investors to fund the really early stage ideas to having money for follow-ons with Series A and Series Bs.

Yolanda Redrup: Then you needed to have the sort of architecture around it, I guess, so having you little hub. So you’ve got a thriving community around Cremorne and Richmond in Victoria, you’ve got Health Precinct, which is well known around Parkville and then, obviously, in Sydney, great software and FinTech hub up there.

Yolanda Redrup: Then you’ve got the sort of accelerators that came in, which were able to provide some of that early coaching and mentoring and help founders that had a good idea put the pieces in place to turn that into something that was commercially viable.

Yolanda Redrup: I think the sort of connection of all those pieces is probably what led to this acceleration and then there just had to be enough money.

Yolanda Redrup: I think we can’t undervalue the importance of the original sort of LPs that put money into those early VC funds because they were doing so and it would’ve been a risk. They would’ve remembered how burnt some of the investors were from the dotcom crash that effectively had been a 10-year drought in Australia for VC, and that would’ve been really fresh in their minds back a decade ago. So to come in and put money in, I think they took a big risk and, fortunately, it’s paid off.

Adam Spencer: Yeah. Off-topic slightly, but I just wanted to go back to a green journalist, just kind of given this column. Nine years later, what keeps you excited about this space?

Yolanda Redrup: Ah, it’s the story and it’s the people. I feel like it’s been just a really great round to have, and I’ve got to grow up with it, which has been really nice. It was very green, like I was when I was back in 2013 and, now, the stories and the quality of the founders is just really impressive.

Yolanda Redrup: I think, too, that just the scale that everyone’s able to reach has been extremely great to see, and they’re able to do it quicker because of having the money, obviously, to back them. They’re able to go global from day one, which is just something they always talked about.

Yolanda Redrup: But it’s really it’s the people and the story and the community, and there’s always a new innovation so there’s a lot to be excited about

Adam Spencer: Aside from the dramatic increase in funds available over the last decade and we’re getting better at diversity, it’s still a long way to go, obviously, but what are some other trends that stand out to you?

Yolanda Redrup: I think certainly Australia, it’s been very clear where we’ve got some real strengths. Software is, obviously, one of them, SaaS products, not surprising given the success of Atlassian. We’ve had some real strength in the software-as-a-service model.

Yolanda Redrup: Then I think we’ve also seen a real strength in FinTech, which probably isn’t surprising given how regarded our banks are globally, that we were able to have some of that talent. I think a lot of our strengths comes down to those existing industries where there was talent, there was people that might have been getting frustrated about doing things the same way and then have ideas about how to solve problems and then, all of a sudden, had the ability to go out and do that and have some funding behind them to get there.

Yolanda Redrup: So I think we’ve definitely seen it’s come through in those sort of key areas. We’ve certainly seen a lot of investment into AI and autonomous technologies, be it from a business process perspective or things like [inaudible] sensors that enable better maintenance of assets so there’s a whole range of things happening in that space as well.

Yolanda Redrup: Then more recently, we’ve obviously seen a lot of investment starting to flow through into battery technology and renewables and clean tech so I think that’s really great to see. I think the investment in the clean tech space will flow through as well into more broadly deep tech, which is an area which, obviously, takes more upfront investment, has longer lead times and longer times to get to an exit, but it’s critically important.

Adam Spencer: Looking back over the last nine or 10 years, what has inspired you the most to see within the startup space?

Yolanda Redrup: I just think that it’s the success stories. Thinking back to the early days when Campbell was a really young business, I’ve covered Go1. I think their first round I cover was about $4 million that they did, and they’re obviously now a unicorn. Employment Hero, which have come out today as a unicorn. We’re seeing all of these companies come through, which I was lucky enough to get to cover when they were really young, little businesses with tiny teams doing small raises. Then a reasonably short period of time, they’ve come out and they are global leaders in their fields and that’s impressive. It’s great to see.

Adam Spencer: Looking to the future, what are some areas that you would like to see us really leap forward in?

Yolanda Redrup: There’s probably a couple different angles to that question. But we touched on diversity before, and I think I’ve done a bit of work over the last number of years in tracking the diversity of the ecosystem, both in terms of the founders getting funding and also the venture partners that have investments sway, and it’s been great to see that there are a lot more women in investing roles within VC now, which is good. Certainly nowhere equal 50-50, but people like Sam Wong and Michelle Deaker and Jackie and Melissa Widner and Sarah Nolan and Kim Jackson, there’s some great women who is creating pathways, I guess, that others can follow in their footsteps into the ecosystem.

Yolanda Redrup: But I think one way where there’s probably not enough data, but from my own understanding of the space, I could say that still hasn’t equalized would be in around the amount of money flowing to founders with diverse teams, particularly from that gender perspective. But also, it’s far worse when you look at race or a number of other metrics. Gender is just the one that usually gets used. But by and large, when you’re reporting on a large round company raising 30 million, 40 million, a hundred million dollars, it’s still all-male teams. So I think it would be really great to see more funding flowing through to those diverse teams, which studies have shown us that diverse teams get better outcomes, but still the majority of funding will flow to all-male teams.

Adam Spencer: Do you have any numbers right there in front of you in terms of the split?

Yolanda Redrup: That’s part of the challenge is that it hasn’t been well-tracked in Australia, specifically, how much of the value is going to diverse teams. In the States, there’s been a lot more modeling on that, but there’s been less here.

Yolanda Redrup: What I have looked at in previous years has been just the number of deals that have gone to diverse teams. They’ve made 40 investments in a year, how many of those went to teams with female co-founders, and those numbers certainly improved. So Artesian were always a standout almost 40, 42% of their deals tend to go to diverse teams, which is great.

Adam Spencer: Wow.

Yolanda Redrup: And certainly the other funds have made strides in that respect, [inaudible] , we’re above 30%. All the funds generally across the board were above 20%. So that’s certainly an indication that we are ahead of the States in some regard on that respect, but there hasn’t been as much data pulled out on the value of money into these companies.

Adam Spencer: You just mentioned diverse teams get better outcomes. What does that look like in the real world?

Yolanda Redrup: In the real world, the studies that have come out on that tend to show that on a financial basis, they tend to have high growth rates and get better financial outcomes, which is, you can only put that down to most likely having that diversity of thought around the table. I think that’s the metric everyone looks at is, are they financially, economically more successful? For the most part, it seems like they are.

Adam Spencer: Yeah, the diversity of the different perspectives approaching the same problem.

Yolanda Redrup: Yes, that’s right, and I think that can’t be undervalued. It’s also why diversity goes a lot further than just gender. Really what you need to be getting at here is not having a man and a woman around a table. It’s by having different perspectives, people in different walks of life, people from different socioeconomic backgrounds, different cultural experiences.

Yolanda Redrup: All of that feeds into building a better business because, at the end of the day, startups talk about all the time being customer-centric and customer-obsessed. But how can you be customer-obsessed if you don’t have a realistic representation of your customer around the exec table?

Adam Spencer: Before I ask this last question, is there anything that you wanted to touch on?

Yolanda Redrup: Ah, I always ask that, too, so I should have seen that coming.

Yolanda Redrup: Look, I think what’s just most remarkable is truly how far the ecosystem has managed to come. I don’t think we can undersell that. I remember pieces back around 2014, 2015, where there was this constant comparison getting made saying if Australia could have a city or be like Silicon Valley and it wasn’t the right comparison to be making. It was fundamentally flawed. But there were certainly learnings that we could take from places like Silicon Valley or Tel Aviv and how those could influence the creation of our own startup ecosystem here.

Yolanda Redrup: But while we’re not going to be Silicon Valley, what we have managed to do is pretty remarkable. I saw some stats recently from Cut Through Venture and they said that in 2021 more than $10 billion of capital had flowed through the Australian startup ecosystem. Founders [inaudible] Chris and this is a little alarming, Founders [inaudible] Chris personally raised over $1.3 billion.

Adam Spencer: Wow. I know what I’m naming my son.

Yolanda Redrup: Yeah. Bring that back to those AVCAL stats in 2013, which showed that only $111 million got raised in the entire year. To have done that in a nine-year period that growth is just astounding.

Adam Spencer: Also, I mean, Silicon Valley and all these other ecosystems, they’ve got like at least a two-decade headstart on us.

Yolanda Redrup: Exactly. That’s right. It’s not a correct comparison. Yes, there’s learnings, but we don’t need to be Silicon Valley. We should be playing to our own strengths and building what works for us, rather than trying to aspire to be somewhere else.

Adam Spencer: What we’re trying to do here is we’re trying to create the most comprehensive, kind of holistic documentary that will tell the story of the Australian startup ecosystem. We want founders, academics, policymakers, investors, everybody from every corner of the ecosystem to hear this story. Any one of those categories or everybody, what do they need to hear from you?

Yolanda Redrup: Well, first up, is just the importance of this space to the future economic growth of this country. We can’t undervalue how much of our future economic prosperity comes from technology. There’s been plenty of talk about shifting away from mining, about resources, obviously, have a finite lifespan. But if we want to maintain our quality of life, then improving tech exports, investing in this space and creating the policy settings to make it flourish, that’s incredibly important to the future of our nation.

Yolanda Redrup: I guess the only other thing that I would add is there was a lot of commentary back when I first started reporting on this space about this thing called a fear of failure. It was something that was really holding Australians back. I feel like we’ve shifted beyond that now. I feel like it’s probably less a part of the sort of Aussie story is this fear of failure.

Yolanda Redrup: I think it’s a real milestone for us to have achieved that founders can go out there, and they can start businesses, and they can do it and not think that if it fails, they won’t get another shot. In my sort of time, I’ve spoken to people that have started three or four businesses before finally learning on their fifth venture and that’s the one that’s really successful.

Yolanda Redrup: So I think it’s a real mark of the sort of maturing of the ecosystem that personally, I feel like we’ve progressed past the fear of failure. I think there’s less of a tall poppy syndrome than there was a decade ago. So I feel like we’ve got all the hallmarks now for this just to keep growing and growing.

Adam Spencer: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast wherever you’re listening right now. Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem.

Adam Spencer: Thanks for listening and see you next time.

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