Oct 2025
“Invest in unqualified founders, where you know nothing, who are unpopular and where you will be wrong most of the time. I believe in the hungry not the proven. That the people who bring about change are outsiders not insiders. That more ambitious ideas are more likely to happen than unambitious ideas.”
– Niki Scevak, Founder of Blackbird Ventures
“What could be more gratifying than to discover, describe and explain some basic principle that no human being has ever understood before? This is the stuff of true science. Those societies that foster and harness that passion will be the prosperous, knowledge-based economies of the future.”
– Peter Doherty, Australian Nobel Prize Winning Immunologist
A report came out this year that verified something I’ve always believed but had no proof of. That Australia is very good at entrepreneurship and creating great technology companies, even though we have a much smaller market and significantly less funding than our global peers. That Australian entrepreneurs are actually best in class and can be some of the best in the world.
The report, Australia Venture & Startup Report 2025 by Dealroom, AWS, and Side Stage Ventures – benchmarked Australia’s performance against leading global startup ecosystems. It found that Australia creates 1.22 unicorns for every US$1 billion of venture capital invested, far ahead (up to 2x more likely) of the US, UK, China, and Israel.
What I think is less clear about the report is that I don’t think it’s a new phenomenon. The report makes it seem like it is but I think we’ve always been hitting above our league in Unicorn creation. Which is something I want to explore to see if there’s anything in common that we can learn from these outlier outcomes. We know venture follows a power law distribution where the top generated the majority of the returns so I think it’s helpful to focus on the very best. The Decacorns. A technology startup company valued above $10 billion dollars.
This leads to the question of what is a technology startup? I’ve always defined a technology startup as a new enterprise designed for high growth, commercialising a fundamentally new technology or brand new way of doing something with a high chance of failure. And the unicornness of it is basically can it produce outlier venture like returns by using that new technology to grow to being worth billions of dollars in a short period of time of say less than a decade.
This is a broader definition than I think a lot of people have. I think a lot of people have a computing centric definition about what is technology and therefore what is a technology startup. But I think it’s much broader and older than that and I can illustrate this with the parable of the Kangaroo crane. Australia as a country is pretty famous for inventing Wifi by the CSIRO in 1996, the system that allows people to connect to the internet wirelessly. But one of our lesser known inventions that was just as impactful and transformational is the Kangaroo crane.
We invented the Kangaroo crane, a type of crane that cantilevers it’s own weight and can move up floors as a floor is being built. It was invented in the 1960s by Eric Favelle and what that did is unlock high rise construction in the world. The only reason buildings above 8 storeys exist in the world is because of the creation of that technology. The Kangaroo crane was the key piece of technology and invention that underpinned the founding of a generation of billion dollar construction companies globally in the 1960s, including the decacorns of Australian construction at the time like Meriton. But that doesn’t fit into any of the computing centric definitional aspects of technology. But the world wouldn’t have buildings if it weren’t for that.
So maybe there’s a timing aspect. In the 1960s a construction company using the new Kangaroo crane would have been a technology company. So by first principles if you use a new technology when it’s created and it’s core to what you do that allows you to do something new and grow quickly as a result, you’re a technology company. But if 30 years go by and you’re still using it then you’re just a normal company, the way today Wifi and Kangaroo cranes are ubiquitous.
Nobody calls a semiconductor company today a technology company because the technology isn’t new anymore but in the 1957 when Fairchild semiconductor was being founded, the word semiconductor was synonymous with technology. So I think a key part of it as a definition is the newness of the thing. That’s how I think about it, so a lot of companies you wouldn’t normally think about as a technology company, I think are. So who are we talking about as Australian decacorns?
In the 2010s, we’re talking about the founding of Airwallex, AirTrunk, Afterpay, Canva, Life360, Stake and Xero. In the 1990s we’re talking about the founding of Atlassian, CarSales, Seek, Realestate, Goodman Group and WiseTech. There seems to be 2 clear generations of unicorns. The first generation you could say is 1990 to 2005 with 6 decacorns founded. The second generation you could say is 2005 to 2020 with 7 decacorns founded. The 3rd generation are being founded right now in the 2020s but we’ll only find out who they are after 2035 when they get big.
I think people often forget the construction companies Airtrunk and Goodman when they talk about technology decacorns because they don’t have a software product. But I think they are decacorns and fundamentally technology companies, their technology innovations are just in building and operations. We’re going to focus on those 2 generations but if you want to go really far back in time and create a generation before the internet existed you could say there’s one generation from 1975 to 1990 which include the decacorns Cochlear, ComputerShare, News Corp, Macquarie Bank and Resmed.
Then if you want to go even further back in time and create a generation from 1960 to 1975 you create all the construction and engineering decacorn companies like Hutchinson, John Holland, Leightons, LendLease, Meriton and Stockland. I’m going to stop there in terms of looking backwards because you get to World War 2 so I think the world was generally preoccupied.
Simplistically in Australia, we seem to be founding 6 decacorns per 15 years regardless of how much funding is available in the country or another way of saying it is 1 decacorn is born in Australia every 2.5 years. And it seems to me like in this country we’ve been creating decacorns at a pretty reliable rate of every 2.5 years for the better part of half a century. But what a technology company looked like in the 80s is different to today.
I don’t think it’s quite that evenly distributed. Airwallex and Airtrunk were both founded in 2015 for example and CarSales and Seek were both founded in 1997 for example. But I think that’s a helpful mental model to think about it. Something special must have really been in the water in 2015 and 1997 for 2 decacorns to each have been born in the same year. That’s pretty incredible.
I wrote in this essay that globally there are 5 decacorns born each year. If we can say that Australia births 1 every 2.5 years, you can informally and in a very ad hoc way infer that for every 13 global decacorns born, 1 is Australian. We produce something like 8% of the worlds decacorns despite having only 0.3% of the worlds population.
That report tries to make this point in a different way, by tying the outcomes to venture dollars invested. But I’m going to go beyond investment and make the point that we’ve got a much higher batting average regardless of the amount of venture dollars invested. In the 90s we had an extremely nascent venture capital industry but were still producing decacorns at a rate well above other countries, especially per capita.
So let’s look at those 13 decacorns and try to see if there are any patterns between them that we can learn from. To help calibrate the lens to see more of them in future. Maybe we learn nothing from this exercise. Or maybe everything we think we learn is wrong. But it might be interesting all the same.
The first one macro pattern screams out to me, none of them are from an accelerator or incubator program. Even though there were plenty around trying to fund startups, especially in the 2010s, none of them seemed to get the big wins of those generations. The Angelcubes and the Startmates and all the different variations of accelerator programs missed all the big wins. There’s something fascinating in that insight, a proof of a type of adverse selection. None of the big wins look like they’re going to work when they’re being founded.
The second big pattern also screams out to me, every single one of them is founded in either Sydney or Melbourne, Australia’s 2 main capital cities. Canva, AfterPay, AirTrunk, Atlassian, Goodman and WiseTech are all from Sydney. Airwallex, CarSales, Seek, Stake, Realestate are from Melbourne. Xero is from Auckland and Life360 is from San Francisco, other major capital cities and are the 2 that stand out as not from Australia but chose to domicile themselves in Australia.
If you measure on sheer market cap, Sydney is better than Melbourne. Most of generation 1 are from Melbourne, most of generation 2 are from Sydney. That means over 30 years, not a single decacorn is founded in any other Australian city or non major capital city. So if you want to go big, you have to move to or be in either of the two major capital cities.
Here’s another insight I found interesting. Almost all of these companies went public onto the Australian Stock Exchange (ASX) quickly at a market capitalisation under $1 billion. Afterpay even went public in 2016 at a market capitalisation of $25 million and Xero went public in 2007 at a market capitalisation of $15 million, both lower than the valuations of a lot of Series A venture financing rounds today.
Goodman which is the largest company among all the last two generations of Decacorns at the time of this writing, went public on the ASX in 1995 at a market cap of $37 million. Today at a market cap of $75 billion, it can buy Atlassian and Canva combined and still have enough change to pickup Seek or Life360. But just 5 years ago Atlassian could buy Goodman. So the current market cap numbers can fluctuate pretty wildly, even at this size and scale.
The really interesting point to me is for the last 30 years locally our technology companies seem to be using the ASX as a de facto Series B round of financing which is something I’ve written about before. But it’s fascinating to see how well exactly it does work. That means if you were only looking at private companies for Unicorns, you would have missed the 2 big ones in the latest generation and almost all of the first generation of unicorns including the very biggest one.
These companies weren’t private for very long and went public as quickly as they could. A venture fund mandate that precluded public market investing would have accidentally adverse selected themselves out of picking all of the decacorns. Which is a pretty strange thing to think about and is unique to Australia. This phenomena doesn’t exist elsewhere in the world where companies stay private for much longer and don’t go public until they are already very big.
The only long held private companies were Atlassian, Airtrunk, Airwallex, Stake and Canva. Every other decacorn went public quickly at low valuations under a billion dollars. The private ones stayed private for long periods of time and raised a lot of venture capital. So it definitely does seem like as the amount of venture capital has increased, it has allowed companies to stay private for longer. You could infer causatively that as the amount of ventuer capital has increased, the number of decacorns founded has also increased and when they are born they grow bigger. The second generation’s valuations are notably well into the 10 figures and are on average larger than the total valuations of the first generation. Especially if you exclude Goodman.
Why didn’t the companies that went public early raise venture capital instead and stay private for longer? I suspect there’s a secret ghost in the story that maybe they tried to and couldn’t get the funding on terms they liked. So they went public instead and raised capital from the general population. Maybe it was easier to take on the regulatory burdens of a public market company rather than deal with the private market venture capitalists.
You can sort of see the proof for this in the story of Life360. That decacorn was born in San Francisco in 2007 and was offered investment by venture capital firms. It didn’t like any of the offers it received and chose instead to go public on the ASX in 2019 as a capital raising to raise $150 million in investment from the public. They’re the first founders to actually say the words out loud that the history of most of these decacorns seems to show. That it has been historically better to raise that kind of money from the public than from a venture firm.
That’s as clear an answer for venture capital reform in Australia as I’ve ever seen. If the best entrepreneurs would rather take on the pain and headache of going public rather than raise capital from them, that says to me that our entrepreneurs might be excellent but our venture capital firms certainly aren’t. Yet at least, still room for improvement.
There’s probably a lesson here for venture firms. Offer promising startups terms and funding that is more competitive than going public on the stock exchange. I think founders don’t actually want to go public early, in a jump ball they’d almost always choose to stay private if they can get the capital they want on the terms they want from the private market.
For a deeper dive into the history of venture capital in Australia, this article is excellent. It tells the story that even when the Australian VC firms got the decacorns in the first generation, often on a portfolio level the returns were still negative. By the time we hit the second generation the likes of Blackbird and Airtree were started and the returns finally became positive. They emerged as a true version of the venture asset class. The kind of venture firm that everyone should aspire to.
In America almost every single decacorn outcome is funded by US venture capital firms. The traditional financiers of this style of high risk high reward innovation. But in Australia, of the 11 decacorns there’s only venture firm participation in 4 of the companies, Atlassian, Canva and Airwallex with predominantly private equity participation in Airtrunk.
Perhaps this is a good thing as by going public early, all the growth from these companies share prices accrued to the public market mum and dad investors and retirement savings superannuation firms. Instead of a small number of venture firm limited partners. This likely answers quite a large question, it’s no wonder why superannuation firms haven’t been investing in venture capital firms because they were secretly getting more decacorns by looking at public markets anyway.
They would have invested in the 8 of 13 decacorns that went public early that the venture firms missed. Probably the great secret within Australia is that by exclusively focusing on public markets, the superannuation firms were the unsung heroes of venture capital in Australia with a higher decacorn strike rate as effectively an early stage public market long only venture capital firm.
Here’s an interesting insight in relation to the business models. CarSales, Realestate and Seek are all Marketplaces. Canva, Life360, Xero, Atlassian and WiseTech are all Software as a Service (SAAS). Airwallex, Afterpay and Stake are Financial Technologies. Airtrunk and Goodman are both Infrastructure or Construction companies. Marketplaces, SAAS, FinTech, Construction, that’s what we do best. The business models we’re good at making and by looking at what’s not on that list, you can see what we’re not good at making.
We haven’t produced a single Enterprise decacorn like a SalesForce or a Physical Product decacorn like an Apple. No Ecommerce like Amazon, no Social Media or Consumer applications like Facebook or Snapchat. No Gaming, Media or Entertainment decacorns like Netflix or Electronic Arts. They’re all B2B companies, no direct to consumer companies at all. Canva and CarSales are probably the closest ones used by regular consumers but I suspect most of their revenue is from business users.
I think the fact that we have multiple decacorns within each business model category and none in other categories says a lot about the type of businesses that work here. I’ve written before why startups struggle in Australia and this seems like confirmation of some of those reasons but why this happened exactly I don’t really know but there’s probably some insight somewhere into why. If I had to speculate I’d say it’s because these businesses were going public earlier they had to have higher quality of revenue earlier and be profitable with growing profit margins.
Maybe the common factors of these business models is they tend towards early profitability which public market investors want. Is this a cart before the horse I don’t know but that answer feels right to me. There was no Australian investment market appetite like there was internationally to support sustained losses for long periods of time like an Amazon or Facebook or Netflix needed to achieve scale.
Are there any other insights? I’m not really sure exactly what we learned in this exercise but I feel like I learned a lot.