Craig Blair, co-founder of two VC Funds and founder of many start-ups shares his insights on the US VC and Aus VC ecosystem and what it means for founders

1. 1
A Founders Guide to
Australian Venture Capital
Craig Blair
@craigRblair

2. I have been a founder of several successful
startups and a VC investors for almost 20 years
• Cofounder & partner of two VC funds:
• Netus (2005 - 2012)
• AirTree (2014 – present)
• Founder of:
• Pet Circle
• Beamly (zeebox)
• Travelselect/Lastminute.com
I was originally an engineer ‘building things’. I have
also been a management consultant.
Me in 30 seconds

3. Our Previous Funds
Netus 2005 -­‐ 2012
Ecorp 1997 – 2003
20+
years experience
4.1X
cash on cash returns
in 2 funds

4. 4
PAUL BENNETTS
Investment Director
CATH ROGERS
Investment Manager
CRAIG BLAIR
Managing Partner/Co-Founder
DANIEL PETRE
General Partner/Co-Founder
We all have deep operational experience

5. 5
AirTree by numbers
TOTAL
INVESTED
COMPANIES
BACKED
TOTAL
EXIT VALUE
EXITS
29 17 $181m $525m

6. 6
How we invest
Stage of
investment
Average size of
investment
Investments made
in the past 12 months
12
40% 40% 20%
$1.5m
$5m
$100k
Smallest
Largest

7. The AirTree Family

8. 8
AUSTRALIAN VENTURE CAPITAL
ECOSYSTEM
8

9. 9
The history of Australian venture capital
isn’t pretty

10. 10
But some green shoots are appearing..

11. 11
Number of
start-ups per
year
1995 2000 2005 2010 2015 2020 2025
100
1,000
10,000
$80m
$40m
$60m
?
Size of
fund
?
We are seeing 10x the number of start-ups
than we did 10 years ago
Ecorp netus AirTree I AirTree II The future

12. 12
£5m
$1.5m
$20K
1998
My first
start-­‐up
2005-­‐2011
Businesses built in
the Netus vintage
2016
It’s now possible to build a
start-up with a credit card

13. Lots of talented grads are now
choosing start-up as a career
13
Source: WittyFeed, 2015

14. 14
$100m+
Australian VC Ecosystem
ACTIVE FUNDS
<$20m
$20 – $100m

15. 15
US VENTURE CAPITAL
15

16. WINTER IS
COMING

17. 17
The Unicorn fetish
Source: CB Insights, 2015

18. Public markets have punished tech companies that
have under delivered on growth expectations
18Source: Mahesh VC, 2015

19. And things could get worse in H2 of this year
19Source: CB Insights, 2015

20. VC funding flows have been declining for the
past six months
20

21. 21
Valuations have reverted to long term averages

22. THE GOOD ARE
TIMES OVER!
22

23. 23
WHAT DOES THIS MEAN FOR
AUSTRALIAN FOUNDERS?
23

24. 24
AUSTRALIA MAY ENJOY A BRIEF INDIAN
SUMMER...
..BUT A COOL BREEZE IS BLOWING

25. 25
Product
market fit
Sound unit
economics
Delivery of
growth exp
Control of
cash burn
✓ ✓ ✓ ✓ = Will Thrive
✓ ✓ ✗ ? =
Need to create cash
runway. Ideally
18months
✓ ✗ ✗ ? =
Existential Crisis
Down rounds don’t
happen.
Investors are focused on unit economics and valuation/growth metrics
Australian Founder Checklist

26. 26
Avoid the temptation of a subscale ASX listing
The sugar hit does not last long..
Source: Yahoo Finance April 2015

27. 27
Approaching a VC
Do homework
on the
VC/Partner
Know your
metrics
Use contacts
to get an introduction
Use advisor
sparingly
1 2
3 4

28. 28
Key focus points for seed to series A
Revenue/unit
Fully loaded cost/
unit
Contribution/unit
Unit Economics are critical..

29. 29
Customer Acquisition Cost
(CAC)
Life Time Value
(LTV)
Key focus points for seed to series A

30. 30
VCs are the employees you can’t fire..
✔
Can they add REAL value over capital?
Are you aligned on how to scale the business?
How you solve problems together in the early discussions?
Can they support the business through future rounds?
Does their brand help hire talent and raise future rounds?
Do at least 3-5x reference checks…

31. BUT IT‘S NOT ALL
DOOM AND GLOOM
31

32. 32
Tech exit valuations for 2015
Source: Global Tech Exits Report 2015, CB Insights

33. 33
Great companies are started in all markets
Source: CB Insights, 2015

34. 34
For the Australian ecosystem to thrive,
ALL parts have to demonstrate success
START-UPS
Iconic
Companies
FOUNDERS
Successful
exits
VC FUNDS
Return on
Investment
ANGELS
Return on
Investment

35. WE ARE A LONG WAY FROM NIRVANA
BUT IT’S A WHOLE LOT BETTER THAN
THE PAST AND WE ARE HEADED IN THE
RIGHT DIRECTION
35

36. 36
THANK YOU
@craigRblair