I’ve been talking this weekend to an awesome little startup out of Sydney, Australia. They’re based in the enterprise software tools/middleware/cloud area and have a great solution with huge potential. They’ve done all the right things – mentions by the big analyst companies, partnered with the right vendors and hired some seriously smart people.
Now that it’s time to seek some funding, they’ve begun having conversations with Aussie VCs – which is where the problems begin – unfortunately in a small investment community like Australia, it’s unlikely that any company will have the breadth of knowledge to really be able to “get” the proposition of the company in question. That’s especially so when the company in question plays in a highly technical space – a Facebook clone they can understand as a concept, enterprise middleware not so much.
There’s another issue though, as a favor to this company I reached out to a few of my VC friends in the US – people who have made smart investments and would undoubtedly understand the proposition. The response was resoundingly consistent – “we only invest in the US”. I entirely understand this approach, investing outside of the US brings a whole lot of geographic and cultural issues and, given the multitude of potential investees inside the US, why would they do it? But still this constricts an industry, and potentially means some really amazing businesses fail to gain momentum.
The vast majority (witness Huddle and Zendesk) of startups outside the US understand this and send either their entire operation or at least part of it stateside. While this is a little sad for the originating country, maybe it’s a fact of life as startups get bigger. I’d like to think it’s not inevitable but perhaps that’s naive of me.
Anyway – if anyone out there is interested in connecting with a great cloud company, drop me a line and I’ll connect you. And if anyone has some thoughts about investing outside of the US, I’d be keen to hear them.