Adam: What attracts you to the early stage investing? 

Brendan: I really think early stage investing is one of the most exciting things that you can do. You’re meeting really interesting founders every day and these founders are trying to bend the future to their will. They’re working on exciting projects. They’re super passionate, sometimes a bit crazy, which, I always liked to meet the crazy founders as well. Because often they’re the most interesting people that are going to work the hardest and are going to turn their reality of the future into something real. 

Adam: Cheryl Mack recommended you, do you know why she would have put your name forward? 

Brendan: Yeah, I mean Cheryl and I we do a lot of mentoring for early stage startups, we’ve invested in three or four startups together as well. So I guess we really love to add value without expecting anything in return. And we also run an event called 361 angel club. And this brings together 60 investors and 60 founders once a quarter, very laid back, very casual down at a pub in Sydney. And it’s just a way to introduce great founders to great investors. 

Adam: When would you say that you really first got involved in kind of startup land? 

Brendan: Yeah, I remember very vividly, it was at a Google event down in Piermont. They had Melanie Perkins who had recently launched a startup called Canva. She was talking with her first investor, Bill Tai, and it really opened up my eyes on the possibilities of great founders can come from anywhere.

You know, Melanie was originally teaching Adobe classes at a university in Western Australia, she started a yearbook business with her partner Cliff. And now, this amazing Silicon Valley investor, one of the best Bill Tai first investor in Zoom as well, which has done pretty well.

He has come to Australia, invested in a founder from Western Australia. They were able to build their product for one year before launching. So I remember that talk very vividly, just learned so many things and what a great, talk to see in 2013, Canva first exploding onto the scene.

Adam: So from 2013, from your perspective, what did the ecosystem look like back then? Community size programs, successful startups that were in the media?

Brendan: Yeah so the early days of the Australian startup system are very different. So Blackbird were just kicking off their first fund, weren’t too many community events. I remember Google were really the ones trying to spark the ecosystem, high profile speakers, domestic and international speakers. And, that’s how I went to my first event. And saw Melanie Perkins and Bill Tai, talk on a panel. So there was no Sydney Startup Hub. I think Sydney Angels was just kicking off as well. I mean, If you look at the ecosystem back in 2012 and 2013 compared to today, it’s night and day difference. 

Adam: How did you get involved like, the origin story of you getting involved in investing? 

Brendan: Yeah so I’d always be around interesting founders. It’s great because you get a surface level across many different areas. Like you’re meeting founders that are trying to paint shark skin on a plane. That’s a startup called Micro Tail. They’re trying to reduce drag by painting a shark skin-like substance on the outside of planes. And you get to learn about things like blockchain when it first came out. So you’re sort of getting a sneak peek into the future, which is super exciting.

And that’s what really drew me to the space. So being around the ecosystem you get, I mean, going to different events, you get to meet lots of great founders and you quickly get to form some kind of pattern recognition about the ones that you would like to possibly back financially. 

So that’s what happened you know, I met four great founders and they started a startup called GROW Super and they were trying to disrupt the superannuation industry. Got to know them over a couple of months. And that was my very first angel investment back in 2017. And this month, June 2021, they just raised their Series C led by AirTree.

And they’ve also got ASX as an investor now. So it’s been a fantastic ride. Fantastic first investment grow, and they’re going from strength to strength, disrupting the financial landscape in Australia. 

Adam: How do you manage? Cause I looked at all of the things that you’re invested in or have invested in and you’re with Startmate, you’re a mentor at USW founders.

Brendan: I mean, I’m currently trying to focus on a couple of areas like growing my angel lead syndicate and what that does it democratizes access for Australian startups to get US investors on board in the early days, which I mean, I’d sort of liken 2021 as the gold rush, so many opportunities, so many fantastic startups raising, so much capital available. Everyone’s plans are really accelerated during this period because they can raise the money that they want. They can execute on their ideas and we’ll see who the winners are.

Adam: What event or series of events happened from your perspective that you would say really got the Australian startup ecosystem on the map?

Brendan: I think the thing that really got the Sydney startup scene on the map was the success of Atlassian. And then a couple of years down the track Canva as well. So from an international perspective, whenever I talk to investors in the US they’re always interested in previous employees from Atlassian and Canva, are they starting startups?

What a Blackbird and AirTree investing in? Cause they were the first money into Canva’s round. So I think from a local and international perspective, I’d say the success of Atlassian and Canva were definitely a catalyst for where the Australian startups system is now.

Adam: What do you think that we as a startup community or ecosystem is doing really well? Like what separates us, what would you say our competitive advantage is here?

Brendan: We’re doing a lot of things in Australia as a startup ecosystem, but I think one of the main things is the quality of our founders. So we have so many smart founders, that either commercializing their research. Coming out of some of the world’s best universities right here in Australia, we have a deep history in deep tech as well.

Example wifi, an Australian invention out of CSIRO. So much fantastic solar technology. But at the end of the day, it really comes back to our fantastic founders. And what I said earlier, you know, great founders can come from anywhere. So a lot of the big US funds, they’re seeing now that these fantastic founders coming out of Australia and all those, the big funds, they’ve got scouts looking at all these different Australian deals.

And I think it’s an advantage now that, we don’t have to fly over to San Francisco and Silicon Valley to pitch for money. We can do that over Zoom. There’s been some fantastic examples lately of some large rounds in Australia that have closed and you know the founders haven’t even left the country, but they’re getting these big international funds investing, which is fantastic.

Adam: Do you have any unpopular opinion s that you absolutely believe are the case, but no one else seems to believe or be on the same opinion as you? 

Brendan: I think an unpopular opinion is that you should raise from the US as soon as possible. And it’s definitely not a popular opinion. Obviously there’s a lot of fantastic VC funds in Australia and you don’t have to do that anymore.

Whereas in the early days, like Atlassian, for example, they had to go to the US to get funding, they had a US investor on their cap table. But I just like the speed and the aggressiveness that US startups move at. They’re much more all or nothing, which could be a cultural thing as well.

I guess they put their foot down on the accelerator a lot harder. And you’re going to know a lot faster if this thing is going to reach an inflection point and take off. Whereas sometimes in Australia, you know, we might take one or two years to release an MVP. We have a pretty laid back lifestyle, which may play into it as well.

And I think also in the US there’s a lot more funding options as well. So I think in the Bay Area alone, there’s about 1200 VCs. And if you compare that to Australia, there’s probably a hundred VCs nationwide. 

Adam: Do you think we’re on the right track? If we keep going the way we are, are we doing everything right?

Brendan: I think we’re on a great trajectory on a whole in the Australian startup ecosystem, really looking forward to the new precinct opening up, the new Atlassian tower. The kind of Avengers tower in the middle of Sydney.

And there could be more support from the government. There are some fantastic schemes in place, especially for investors like the E6 scheme, that’s the early stage innovation company scheme, where if you invest in a startup in the early days, if they meet a certain set of criteria, you don’t pay any capital gains tax on the liquidation event.

But then on the flip side, there’s things like, early stage employees are still getting taxed on their e-stock. So their employees shares, they’re still paying high amounts of rate on tax. Whereas in other countries they’ve abolished things like that to really make that more appealing for people to join early stage companies.

But I think one of the real challenges that we have at the moment is the war on talent. So there’s obviously so much money going around. So many startups getting funded, every single startup is hiring engineers. And we have to compete against their companies like the big 4 banks, CommBank just came out recently that they’re hiring 650 engineers and they’re paying top dollar.

 A lot of early stage startups really can’t match those salaries. And I have a portfolio company called Tiliter and they’re hiring 30 engineers. And, you know, sometimes I wonder, is there 30 quality engineers in Australia to go around? It’s a real shortage of talent. Borders are closed. We haven’t got anyone coming in if they need to work in person.

The engineering talent, I don’t know what the question is. Do we have to go through these startup companies have to look earlier just get grads, but that’s going to affect the speed as well that they can execute. 

Adam: Yeah, that’s a really good point. If a brand new, green entrepreneur comes to you tomorrow and you can give them just one piece of advice that would slightly increase the chance of their success, what would you tell them?

Brendan: I’d say that you need to have a relentless focus on execution. So the startup game, it’s all about speed. It’s all about getting things done and you need to be able to show investors particularly that you can execute on your plans and do what you say you’re going to do. And it’s fantastic that I get to work at many fantastic accelerators in Sydney.

I get to meet these founders in the embryonic stages, and I get to see if they can execute over time. So are they doing what they say they’re going to do. And it’s great for me as an investor, because I can see that they can get all these runs on the board. They’re building a fantastic company. They’re attracting talent, their products reaching that inflection point. And then I can eventually invest in this strength. 

Adam: The last question that I usually ask is not really a question, I just open the floor up for you to talk about anything that’s top of mind, anything that’s just like, you think about on a day-to-day basis that is relevant to the Australian startup ecosystem.

Brendan: There’s an interesting statistic that the average Australian marriage is now shorter than the average relationship between a startup and their investors. So the average Australian marriage is now less than seven years, but when you’re entering into a relationship with a startup as an investor, that’s a seven to ten year journey.

So you really need to get to know the founders really well. Like do you want to enter into a relationship with these founders for the next 10 years? Do you want to give them your money? You’re not going to be able to see any of that money for at least seven to ten years. Do you have that high conviction that these founders can bend the future to, that will create their version of what they want the future to look like?

So it’s always important to meet founders in the embryonic stages when they’re just starting out, can they execute? Can they build a great team around them? Can they build a product that’s going to hit that inflection point and potentially be the next Canva, be the next Afterpay or be the next SafetyCulture.

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