Georgie Turner discusses the next steps for Australia’s ecosystem
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Georgie Turner is Principal at Tidal Ventures, a seed-stage focused venture capital investment firm which is based in Australia and has an office in the US. Tidal Ventures invest primarily in B2B software startups. Georgie also acts as Board Director or Advisor for multiple startups, including Operata, Socialsuite and Shippit. In her conversation with Adam, Georgie discusses what the Australian startup ecosystem looked like when she entered it around 2012, and what she sees as the important steps to take in order to take the ecosystem to the next level.
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Tidal Ventures: https://tidalvc.com/
Georgie on Twitter: https://mobile.twitter.com/georgie_turnr
Georgie Turner: Hi yes, Georgie Turner from Tidal Ventures, and we are a seed-stage focused VC investor in the Australian ecosystem. We have an office in the US as well. We invest mostly in B2B software businesses across a range of really interesting thematics that we’re seeing. We started the fund a couple of years ago, seeing a bit of a gap in the ecosystem in Australia and wanting to really help founders with that journey from that pre-product market fit point through to their Series A raise.
Adam Spencer: So the pre-product, that was a gap in the ecosystem that you observed? Was that the gap?
Georgie Turner: Not so much the pre-product part. We definitely are seeing a big pickup around that accelerator phase, ideation and getting to the MVP point and post that. But what we see as a huge gap is, we just don’t have enough founders and enough investors who really understand how to build an MVP and actually test it in a market. And we don’t have enough investors that are really willing to put their capital on the table pre-product market fit. And that’s the sort of space that we really specialise in at Tidal.
Adam Spencer: What year would you say you got involved in this? Was it prior to all the vocabulary around the modern wave of startups in Australia?
Georgie Turner: Yes, yeah, definitely. So I actually first got involved with startups in, it was about 2012. I was actually working for a US tech company that had just started their Australian office. I was actually selling manage hosting solutions and the earliest adopters of cloud were actually tech startups. I would say it’s definitely well before we had an established ecosystem in Australia and it was just before AWS arrived in Australia, which was a massive inflection point.
Georgie Turner: And I was working for a company called Rackspace, which was later private equity acquired. We had a data center in Sydney. We were actually selling physical kit in the data center, but also starting to build a cloud. And it was funny, the sales guys in our team, we’d always say, oh, this cloud thing will never catch on. And then two years later, AWS were hosting most of the Aussie startup ecosystem. So it’s always a bit of a laugh when we look back on that 2012, 2013 year.
Adam Spencer: So back in 2012, 2013, from your perspective, what did the ecosystem look like in terms of size, community and what did the landscape look like?
Georgie Turner: Yeah, AWS, they launched their cloud down here in about 2012. And that was definitely a kick starter because they did a lot. They started to do a lot around the startup ecosystem at that point. In terms of number of companies. I’m not entirely sure. We had maybe 20 or 30 tech startups as customers. And I would say in terms of the addressable market that we were selling into, that was probably about it. A lot of them were sort of sitting with just a single server and we were looking at them, how we could get them converted to cloud, for example.
Georgie Turner: But I just remember back then Campaign Monitor was the biggest Australian tech startup. Raised what back then was a huge round from inside partners. I think they did that in about 2014. And that was a little bit of an interesting kickstarter. I know a lot of the other founders that we hung out with the ecosystem at that time, that this big US VC is interested in investing in this Australian startup. Obviously everyone knew about it, Atlassian, they weren’t really classed as much of a startup at that point.
Adam Spencer: Around 2012 Fishburners was launched. What else was visible in terms of startup support?
Georgie Turner: Not a lot, to be honest, there was AWS hosting credits. So AWS was starting to give away a bit of free cloud and they were doing events around that. We were running events at Rackspace, trying to bring together people in the ecosystem. Fishburners was the only network that I am aware of that was available back then. I think it was pretty disparate other than that, people hanging out online and not really getting together in person in the Sydney ecosystem in a way.
Adam Spencer: How have you observed the ecosystem change and evolve over the last, what eight, nine years since you first got involved?
Georgie Turner: Well, first of all, we had some great success with our first venture capital funds in Australia and the likes of Blackbird and AirTree and Square Peg made their mark, which made capital more available and the business model and how you actually got funding behind some of these businesses became quite clear. Gave everyone something to aspire to, I suppose.
Georgie Turner: We also had Startmate. Startmate became a thing, there was a path then for early stage founders to actually try to muddle their way through that early process. So trying to lay the foundations, I suppose, to get volume and some standardisation into the tech ecosystem to try to almost teach our subject matter experts how to take what they know about a problem and turn it into a business. And that has really been, I think, that sort of 2015 to 2018 period was the laying the foundations of that.
Georgie Turner: And since then, we’ve become far more mature, much bigger funds being raised, success stories that you can actually… Where you can actually meet the founder, Canva is in your mind, you’ve seen the founder, you know you can aspire towards that outcome and an actual volume of people in the ecosystem who have been on the journey from start to finish.
Georgie Turner: Some of these businesses that can then feed back through, into an expert ecosystem to talk to founders. It’s actually rare now that I will meet a founder that doesn’t have some kind of interesting ex-operator in their advisory arsenal. So we’ve actually got people who have made it and who have learned along the way, giving back to the ecosystem, which I think is something that’s probably only really developed in the last two months or so.
Adam Spencer: What’s one of the biggest challenges about being a VC that people might not realise?
Georgie Turner: It’s a really, really difficult job because you see a lot of really interesting opportunities, but what may be a successful company may not necessarily fit returns profile of the fund that you’re actually investing. It’s something that I think a lot of founders don’t appreciate, is that venture capital is just another asset class of capital that’s come from someone’s pocket that needs to be deployed for a return profile and how you go about doing that.
Georgie Turner: There’s a little bit of a playbook to it, but there’s also a whole heap of things that you need to consider that go well beyond whether the founder is great, whether the business idea is great, there’s all sorts of other things you think about. Portfolio construction, the capital intensity of the business, whether or not you’re sticking to your fund thematic or not, whether you’re doing what your LPs want you to do. It’s so complicated to start as an investment team if you haven’t operated together for a period of time and you don’t have those things bedded down with your LPs as well.
Adam Spencer: How did you get started in that world?
Georgie Turner: I stumbled upon it. I had started my career in investment banking, so I had a basic training and commercial skill set, I suppose, having done a finance degree and then done investment banking for a little while. I found advising to be a bit boring, to be honest, I wanted to actually be in the thick of a business that was growing. And so that was when I made the decision to leave early and jump over into a tech company. So those are the best years of my life. I made lifelong friends working at Rackspace. I saw so much about go to market in a specific region. They’re taking a US product and applying it to an Australian market, Southeast Asian market as well.
Georgie Turner: And then I was approached by a head hunter who said to me you’re going to… You’re in tech, but don’t you want to not waste your finance background and maybe consider investing. And that was when I had a couple of different VC opportunities put in front of me. At the time I didn’t even… Wasn’t really aware that this ecosystem was evolving in Australia and to be honest, just like almost every decision I’ve made in my life, I just took a bit of a punt and fell into it. And I’ve been doing that ever since. So it was the best decision I’ve made. Obviously I’ve stuck with it and would love to do this for the rest of my life. It’s a great job.
Adam Spencer: What are some of the biggest gaps today that you’ve observed, like where could we improve?
Georgie Turner: I think we do a really good job of taking people who have subject matter expertise in a specific field and giving them the confidence that they can go out and solve a problem that they’ve seen. And I think that’s something that our accelerator… The people who run our accelerator programs, Startmate and Antler in Australia, they’re exceptional. And they are really great at bringing together cohorts of experts to really skill up those subject matter expert founders. But what I think we kind of suck at is all of our great engineering and product management and design talent is sitting within the bigger tech companies.
Georgie Turner: And trying to draw those people out… The people who know how to start and actually do user testing and develop an MVP and test that in market and ask questions about whether or not it truly solves a problem or not. And then iterate on that and figure out the best way to go to market with it for example, those are the sorts of skill sets that is tried and tested in Silicon Valley, these people are a dime a dozen. There’s so many of them, we don’t have enough of those people in Australia, and we’re not doing a good enough job of enticing them out of bigger companies to take a bit of a punt on an early stage business.
Adam Spencer: What makes us unique? What sets us apart, if anything?
Georgie Turner: Well, I think that Australia and I mean, this is coming from my perspective only ever having invested from Australia, so you know, the caveat there. But I think what makes us unique is that for our founders to be successful, they have to think about acquiring customers globally from a remote area of the world. Many would say they have no right to be selling into big markets like the US or Europe. And we fully embody the underdog mindset in the way that we approach growth out of this country.
Georgie Turner: And I think some people would say that that makes us naive, but I would also say it makes us scrappy and gritty and immune to the trappings of the Silicon Valley growth playbook, herd mentality. So we sit in a bit of an echo chamber down here sometimes, but I also think that it helps us think from first principles more so than you can in a more developed ecosystem.
Adam Spencer: Why do you think that is in terms of the thinking behind not having the right to sell into big markets? Where does that come from?
Georgie Turner: I think it just comes from not having close access to customers. Usually you want to be sitting close to the customer when you’re building a product and Australia does have… We’ve got a good little test bed of customers, but generally if you’re a B2B business, you need to be selling globally in order to get more than maybe five million of revenue. If you want to attract capital post series A’s at this stage, you want to be selling into global markets. And you’ve got to figure that out early. I don’t think that there’s many investors in Australia that wouldn’t put that on the requirement for a founder early on. A lot of founders recognise this early on as well.
Adam Spencer: Do you think that is really important to have a physical location to sell into a market?
Georgie Turner: I will say yes, but to be determined how COVID has changed that. Because there is a big movement at the moment around certain markets that lend themselves really well to zero touch growth, no sales team. And that where you could argue that there really is no need for there to be a local presence in order to entice a company to take up and use your product. So I think COVID will change that somewhat.
Georgie Turner: Having said that, for specific companies, I don’t think that they have to be there for sales, but they may choose to be closer to the customer or where there’s a volume of customers while they’re building the product to engage in ecosystems that have been built around that. In Australia, for example, we have quite a rich… I think we have a great agriculture tech ecosystem. And so engaging in those community discussions and being close to the customer that you’re trying to sell to, I think would be important for founders wanting to sell into that market in Australia.
Adam Spencer: If a brand new founder came to you tomorrow, what one piece of advice would you give them that would help them not fail?
Georgie Turner: I think that the one thing I would say is you really have to go slow before you can go fast. This relates specifically to the seed phase that we specialise in at Tidal. You can’t solve all of the problems at once. So just take your time to figure out what it is that your customers really want. Put the effort into that early. Don’t assume that you know what it is, then don’t assume that it’s what they’re telling you. It’s really the things that you choose not to do, that will make or break the success of your product. Focus. Focus is everything at the early stage.
Georgie Turner: I think we’ve almost swung too far in the direction of, here’s the big vision of how I’m going to be a billion dollar business, where we said to startups you need to have that big picture vision early on. I actually think that a lot of the time you almost do that with your eyes closed with a lot of markets because it’s so abstract, but what’s actually really hard is figuring out what are you going to build today with limited capital that your customer really, really desperately wants?
Georgie Turner: And that piece is a piece that we try to nail at the C-phase and it can take just stepping back and really thinking to do it rather than trying to constantly sell and raise capital. There’s a focus on speed in the market, but there’s also a time to stop and try to just think as well, listen to what your customers are telling you.
Adam Spencer: This last question I have is not really a question. With these last few minutes that we have, I want to just open the floor for you to talk about whatever maybe is top of mind. What you think is really important, keeping in mind that what I’m trying to do with this series is, create a documentary that accurately and honestly chronicles the history of startups in Australia. We want everyone to listen to this really from the startup community, founders, investors, policy makers, academics, what would you tell them? What would want them to hear? Any one of those categories or all of them?
Georgie Turner: Yeah okay. So what I would love for policy makers and leaders, decision makers in the country to hear is that it is still too hard for a great piece of Aussie product or design talent, like a product manager, for example, within a tech company that has a mortgage and they’re making a big salary at Google, or Atlassian, it’s just still too hard for them to take a punt on an early stage product, even if they feel passionately about the problem to be solved. So we need to try to create incentivisation structures to encourage our best engineering, product management and design talent to not only come back to Australia, but the ones that are here to take a risk and join the innovation ecosystem and work on something that’s new.
Georgie Turner: We have some tax breaks at the moment for employees that are given options within early stage startups, but there are a lot of limitations around those tax breaks and those structures at the moment. And it’s not always, it needs to move with how the startup ecosystem is evolving and moving. So that’s what I would say, is the talent is what we lack at the moment in order to improve the success rate of our early companies. And that’s where we should be focusing time and attention.