I’m spending more and more time in the US with just under a third of our portfolio companies, as well as many of our VC co-investors based there. Last week I spent time on both coasts and thought I’d share my top 5 takeaways from the Land of the Brave…
Aussies and Kiwis are making a serious dent in the US
On each visit, I am continually impressed by the number of Aussies and Kiwis making a real dent on the global tech stage.
This is really great news for the Australasian startup scene.
We’re seeing more opportunities for investment, but on the flip-side, also seeing talent coming back home and either looking to start something up, or to join a local success story.
We lament the brain drain of talent to global hotspots but often fail to appreciate the ‘reverse brain drain’, where talented people with world class experience choose to return home, helping to turbocharge our ecosystem.
Engineers particularly machine learning experts are rock stars
Global tech platforms with hundreds of engineers are duking it out to hire the best engineers. If you’re offering a candidate a Head of Engineering role, expect to be 1 of 6 offers on the table.
For well qualified graduate engineers, companies are paying $100k base salary + $100k sign on bonus. For someone with a PHD in ML, they can expect an offer of $450k. Not bad for your first job!
Heavy competition, outlandish packages and high retention rates are making it increasingly tough for start-ups to build quality engineering teams. Most focus on attracting engineers through the company mission and equity. Others are resorting to moving their teams to regional cities in the US.
In saying all this, SF is really the centre of the tech universe — nowhere else in the world will you find the density of expertise, customers, capital and history.
For anyone interested in technology, it’s a must to spend time there… but, food for thought if you are considering scaling an engineering team!
Australia and NZ are well and truly on the map
Buoyed by the steady stream of tech success coming out of Australia and NZ over the past 10 years (think Canva, Xero, Culture Amp, Atlassian, RocketLab to name a few!), senior well-known VC brands are keeping a close eye on our market.
Gone are the days when you had to beg for a meeting — Managing Partners of top VCs are eager to learn more about what companies are emerging from our shores.
The sweet spot for these US funds to invest in Aussie or Kiwi companies is around Series A — they prefer to work with a local VC who can help on the ground, while they can help to accelerate growth and customer intros in the US.
This is more good news for our sector… more US VCs + more capital + more support for our founders!
The $100bn Vision Fund is altering the funding landscape
The Vision Fund is pushing VC managers to raise larger funds — witness Sequoia’s monster $8bn fund. This is also changing the way founders and investors are thinking about competition and growth. Founders are being offered huge amounts of capital at flattering valuations, but at levels of dilution higher than founders want. Terms are often far from founder-friendly and accompanied with a veiled threat the funding will go to a competitor if the offer is not accepted.
The move by mega-funds to become kingmakers is one to watch.
Off the back of the murder of Saudi Journalist Jamal Khashoggi, there has been a groundswell of founders who want to know more about where VC firms get their capital. And competitive VC funds are using this against the Vision Fund.
Health is hot
There is a real energy around the health space as founders are going after every sector including diagnosis, testing, data collection, longevity and even boring workflow management. Many funds are spinning up specific health teams and there is a ton of capital flowing into the sector.
This is another field where Australia has a chance of producing world beating companies given our centralised data capture (Medicare, PBS), depth of world class R&D and history of success (Cochlear, Res Med).
I’m a partner at Airtree Ventures, one of the largest venture capital funds in Australia. We are looking to partner with world-class Kiwi and Aussie entrepreneurs building ambitious global businesses. I’ll be back in the US in the new year— get in touch if we missed you this time round!