Blackbird’s soaring ambition for Australian startups
Blackbird co-founders Rick Baker and Niki Scevak poured their hearts into a fledgling venture capital business, convinced it was what Australia’s startup tech industry needed. They were right.
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It’s now Australia’s largest venture capital firm, with a portfolio worth more than $10 billion and aspirations to pass 100 staff across Australia and New Zealand this year.
But Blackbird Ventures’ origin story has humble roots that can be traced back to a chance introduction in San Francisco more than a decade ago, followed by years of persistence and failure before the first financial return would eventuate.
The company was founded as a partnership between Rick Baker and Niki Scevak, now high-profile members of Australia‘s startup and venture capital circles, helping to fund Australia’s largest tech companies and creating billionaires in the process. But back then they were relative unknowns, each coming out of tech companies that had achieved only moderate levels of success.
“I’d done two startups,” Scevak says. “The first was notable for who it was with, [Atlassian co-founder] Mike Cannon-Brookes, rather than what it did or what it became. That was while we were both in university, and Mike obviously went on to found Atlassian and I’ve been very close in that journey from the beginning of learning the lessons, the decisions and culture they built.”
Scevak was in year two of running Startmate – the accelerator program that has now invested in more than 170 startups – and had an idea for starting a new venture capital fund when he met Rick Baker, who was then leading MLC’s venture capital program. The pair were connected through 500 Startups, a US-based startup accelerator program, and introduced by the founders of a fledgling e-commerce startup, Grabble.
“Niki and I meeting was pure serendipity,” Baker says. “When there are two Aussies in the same building together, of course you get introduced to one another. And what bonded Niki and I immediately was this shared almost obsession with this idea that there was going to be another cohort of great tech companies built from Australia, and there was this big gap in the market for venture capital.
“At the time there was almost no venture capital left in Australia after the dotcom bust; the funds had invested all their capital and hadn’t raised new funds. And there was this pervading view that you couldn’t really do venture capital from Australia at that time.
“We both imagined that it was possible to build a brand in Australia that was kind of following in the footsteps of these great US brands that were building really impressive things.”
Scevak says he’d experienced a moment of clarity that what he really wanted to build with his career was an investment company, rather than a tech startup.
‘A decade ago there were so few people interested in investing in global startups from Australia’
“I love technology companies but I also love the philosophy and the psychology of investing, and I’ve always been passionate about [Warren] Buffett and [Charlie] Munger, and the whole world of investing,” he says. “When I moved back from New York to Australia I had a wake-up call that this is what I should be doing with my life, and this is the biggest impact I can have.”
The current Australian venture capital landscape is almost unrecognisable compared with what existed 10 years ago when Blackbird was founded, Scevak says.
“A decade ago there were so few people interested in investing in global startups from Australia,” he says.
“When we started, venture capital was a dirty word. People still had this sour taste from the dotcom bubble. There was the image of pets.com rather than the image of Google and Facebook, who are so successful now that we need to regulate them and are producing so much cash flow that it’s too much.
“It kind of felt like a real discovery to meet someone else interested in the same sorts of companies, and Rick and I immediately connected over that. Then our relationship really came together through an investment in Shoes of Prey.”
It shut down in 2019, but for a time Shoes of Prey was one of our hottest startups, winning over customers by allowing them to design their own shoes online.
Co-founder Jodie Fox, who recently wrote a memoir about the rise and fall of her company, says Blackbird‘s support was key to Shoes of Prey’s early successes.
“MLC invested in Shoes of Prey’s first round of funding, and shortly after we found ourselves taking Rick’s first headshot for Blackbird,” she says.
“Blackbird became an investor in Shoes of Prey, and were investors with lots of heart. I still remember
Rick coming to the opening of our first store in the US and being our first sale there when he bought a pair of shoes for his wife.
“Lots of investors talk about being ‘smart money’, not just helping you with their financial capital but helping you with their intellectual capital. That’s what we got with Blackbird, even in the early days, and I’m sure dozens more Australian founders have experienced it – a hands-on, helpful, supportive and honest ally in your corner as you tackle big challenges.”
Baker says Blackbird wasn’t born out of nowhere, given that some local tech successes at the time were growing up quickly, including Atlassian, along with Campaign Monitor, Halfbrick Studios and design startup Redbubble.
“The crazy thing was, none of those companies had venture capital money in them,” he says. “We could imagine this would be where the next group of companies created were funded by an Aussie, homegrown VC fund, and that‘s where this big amazing dream came from.”
“There was absence of money but there was also an absence of community, and I think at the heart of Blackbird is this idea of founders helping the next generation of founders, in this real circle of life,” Scevak adds.
“Once you build a company you invest in the next generation and so on, and the idea of Blackbird was to help successful entrepreneurs pour money back into startups, rather than real estate or moving to Byron Bay. And that’s still the beating heart of Blackbird.”
The idea of investing in high-growth startups and helping them with mentoring and support in exchange for a potentially mammoth financial return seems obvious now, with super funds and government agencies entering the fray and backing tech companies en masse. When Blackbird was forming, however, Baker says he and Scevak were the odd ones out.
“I think both of us love this idea of kind of coming together to do something that others thought was a little bit crazy,” Baker says. “It was a pretty cool feeling, and in those very days there was almost a spirit of rebellion; we were going against the general consensus.”
‘We just had coffees with whoever we would listen, and we got pretty good at telling our story’
In what they describe as a “brutal” fundraising process that took two years, Baker and Scevak teamed with Southern Cross Ventures’ Bill Bartee, meeting more than 500 prospects, which resulted in a $29 million fund with 97 initial investors. The trio specifically targeted Australian tech founders who had previously made money in the tech industry, hoping they could be convinced to invest in the next generation.
“Wherever they were in Australia or anywhere else in the world, we spent our days trying to get hold of them and get them to sit down, and we’d tell our story,” Baker says. “We believe a lot in storytelling and that process helped us get really clear on what exactly we wanted to do. Which was to be the fund to find and invest in this next generation of companies and turn them into hundred-million and billion-dollar businesses.
“We put our efforts into surfacing the believers, rather than trying to change anyone’s mind. We just had coffees with whoever we would listen, and we got pretty good at telling our story.”
The investors who poured money into that first Blackbird fund have had their faith repaid, with their investment now worth collectively 46 times its original valuation. The fund was used to invest in four companies that went on to become billion-dollar businesses – Canva, Zoox, SafetyCulture and Culture Amp.
While the executives at Canva and Atlassian can now be viewed as rock stars in their own right, and are among Australia’s wealthiest people, Scevak says to imagine that would have seemed delusional only a decade ago.
“To think these companies could reach the scale of Google or Apple, and be from Australia, I think Canva still doesn’t have a likely chance of getting it but it does have a chance of being a company at that scale,” he says. “Google and Apple have billions of users around the world using the product every day or every week. It was so sheepish to say that Australia could be home to that kind of generational company.
“At the beginning, people’s ambitions were very locally focused – ‘I’ll do some idea for Australia or for the region’, rather than try to be the best in the world.”
After a decade of virtually uninterrupted growth, Australia’s startups are now bracing for a period of market carnage, with valuations coming under pressure and widespread layoffs expected as the market tumbles.
Baker has an unflappable optimism, however, about what Australian entrepreneurs are building for the long term, despite what’s expected to be a particularly tough 12 months for the industry.
‘In 10 years’ time, likely the top 10 companies in Australia will be technology companies, not banks or mining companies’
“The best companies just power on through all of this kind of stockmarket disruption,” he says. “And the beautiful thing about being a private company is that you don’t worry about how the public markets view your company day in, day out. You can just put your head down, continue the mission and continue to power ahead.
“Companies like Canva have the ability to do that. They’ve got an amazing balance sheet. They’ve got an amazing business model that means that they are self-sustaining and cashflow positive, even as they’re growing at these phenomenal rates … This period actually gives them the opportunity to do a whole bunch of things that were a lot harder in the boom times.”
Scevak agrees, and says that while stocks go up and down, generational companies will endure.
“These kinds of companies are on the global stage and will generate tens of thousands of jobs that are of the highest quality,” he says. “With technology we don‘t just consume it anymore, we export it, and we feel very confident that this generation will be much bigger than the first decade was.
“The next decade will be many orders bigger … And so that is a truly exciting thing, that in 10 years’ time, likely the top 10 companies in Australia will be technology companies, not banks or mining companies.”
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