Cliff Obrecht, the co-founder of Australia’s most valuable and celebrated start-up, used an interview with this masthead last week to reassure staff about the future and financial position of his company after investors slashed their holdings in Canva by more than $20 billion. Journalists obsessed with his firm’s plunging valuation “need some more interesting things to write about”, he said.
To enter Blackbird’s website, users zoom in through the eye of this bird and pass a wave of psychedelic shapes.Credit:Blackbird Ventures
Obrecht is not the only member of the tech sector to be feeling this way, as punishing market conditions hit home, bringing a decade-long boom in start-ups to an abrupt end. “In 2021 the media stories for start-ups were gushing and in 2022 it’s doom and gloom,” Paul Bassat, one of the country’s largest start-up investors, recently said on Twitter. “It wasn’t that good last year and it’s definitely not that bad this year.”
Endless glowing magazine covers, laudatory pieces about minor capital raisings and photoshoots of two founders standing against an exposed brick wall attest to the former complaint from Bassat. But while some privately grumbled about that, many in the start-up scene grew accustomed to uncritical coverage in the media as a normal standard. Now though, the market has turned sour, and the tech industry is having trouble adjusting.
Some compelling investor letters aside, venture capital firms have every incentive to act like the downturn is a problem for other people. Until recently, capital was a commodity. To persuade start-ups to take their cash, investors had to show that they weren’t just money bags, they were true believers. Consider perhaps Australia’s most prominent venture firm, Blackbird Ventures, for example. Instead of a typical website, a visitor to its online property must “enter the world of Blackbird” by zooming in through the eye of a flame coloured bird and flying past a series of kaleidoscopic shapes to learn that the fund backs ambition so great it is “generational”.