Earlier this month, a three-year-old venture firm that’s focused on Australian entrepreneurs, Blackbird Ventures, raised an impressive $200 million for its second fund.
That’s nearly seven times the $30 million it raised for its debut fund. It also makes Blackbird the biggest tech-focused venture firm in Australia, even while its biggest bets, including the graphic design platform Canva, have yet to exit.
To better understand the firm, we talked with Blackbird cofounder Niki Scevak, who manages Blackbird with just one other GP and a venture partner. Scevak helped shine more light on the whole operation — and the broader landscape.
TC: You invested your first fund across 20 companies. How many deals do you see per year, and how many companies do you expect to fund per year with this new, much bigger fund?
NS: We see roughly 500 deals per year and invest in 8 to 10, meaning roughly four or five per partner per year.
TC: What size checks will you be writing?
NS: Typically $750,000 in a seed or $2.5 million in a Series A , and then keeping our pro-rata in later rounds.
TC: Is it the case that you’ll back businesses started by Australians no matter where the are living?
NS: That’s correct. Our core mission is Australian founders helping the next generation succeed. Most are in Australia but a sizeable community is building in the Bay Area. More specifically, two-thirds are in Australia and one-third — or 7 of the 20 companies we’ve funded — have relocated to San Francisco.
TC: In Sydney, is Silicon Valley still seen as the center of the tech universe?
NS: Silicon Valley is seen as the central station for the startup worlds, but as the capital required to start a startup has decreased, the network effect of Silicon Valley has decreased. Entrepreneurs can now start anywhere in the world. They may build a significant presence in Silicon Valley over time, but the majority of their growth happens elsewhere. Look at Skype, from Estonia; or Zendesk, from Denmark; or Atlassian, from Australia. All are seen as Valley companies but started elsewhere. I think more and more Silicon Valley will be correlated with success but not necessarily cause success.
TC: How long have you been an investor?
NS: I’ve been an investor six years now, first with an accelerator here called Startmate and now with Blackbird.
TC: What have you noticed that has changed regarding the local startup scene in that time?
NS: The ecosystems in Sydney and Melbourne have grown up dramatically in the past few years. The key ingredient is lighthouse companies like Atlassian, Envato, Halfbrick Studios and Campaign Monitor, which then beget a greater number of successful startups in the next generation. There are 15 to 20 iconic companies that have been started that are worth more than $500 million in the last decade. So it’s now an ecosystem and not just a handful of pioneering companies.
TC: Are there certain types of companies that fare the best in Sydney because of the traditional industries there?
NS: Australia has produced a new breed of enterprise software company that sells to the worker in a bottom-up way rather than centrally to the IT department. We’ve also done tremendously well in global marketplaces. Envato, Freelancer.com and 99Designs are all Australian.
TC: Are there many tech-focused seed investors in Sydney?
NS: There’s now a beginning of great founders of technology companies who are angel investing or, in cases like SquarePeg Capital, forming their own venture capital funds.
TC: What about the environment for Series A investing? Is it becoming at all competitive?
NS: Series A investing is not competitive at all. We are a cup of water in the desert in nearly all cases. It’s becoming increasingly possible to raise a seed through the successful founders, and once a company starts to reach $5 million to $10 million in annual recurring revenue, then the market is truly global with Silicon Valley investors flying down here to woo the startups. But if you want to raise between $1 million and $10 million, there’s still sadly a huge gap.
TC: Which American firms are you seeing the most?
NS: Accel has made five investments in Australia and also invested in Xero, which is like the Russell Crowe of the Australian startup industry, [meaning] it was born in New Zealand but Australia has played a big role in its journey. We’ve co-invested with Felicis [Ventures] in a few investments, and they have been a pleasure to deal with. Sequoia [Capital], Index [Ventures] and Khosla [Partners] have also all invested.
TC: Do you buy the argument that Silicon Valley companies know best how to scale into so-called unicorns?
It’s probably 80 percent true but will likely only be 20 percent true in a decade. Silicon Valley as always been an immigrant-driven community, and more and more those people will build companies where they grew up, whether that be in the U.S. or in random parts of the world.
Photo courtesy of Blackbird, featuring (left to right) Scevak, venture partner Bill Bartee, and Blackbird cofounder and general partner, Rick Baker.