Founders of some of Australia’s tech ‘unicorns’ and rising star start-ups are casting a wary eye at a rapidly tightening US market, and developing plans to stay ahead.
funding round – led by Tiger Global, AirTree Ventures and Skip Capital – last November, had been strategically timed to land before the clouds gathered.“We started our capital round knowing that the market was the hottest it had ever been, and if you’re in a hot market, you have got to take advantage of it.”
This meant both investors and company founders could be relatively confident that solid companies could keep building in the expectation that markets will have recovered by the time they would look to go public. “Investors are focused on the best businesses right now that have low churn rates below 10 per cent, high growth of over 40 per cent, high gross margins and acceptable or little cash burn,” Ms Court said.
She said most start-ups that have already been funded could expect private equity and VC backers to tip in again, to protect their investments, but that valuations would come under pressure in some cases.“Founders need to be wary about conserving cash as if the valuations initially raised were too high then there is a risk of a down round, which is not great for founders,” Ms Court said.
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