Ambition articulated in vivid colour: Behind the scenes at Blackbird Ventures

As one of the biggest and most established venture capital firms in Australia, Blackbird Ventures (Blackbird) is a cornerstone of the local startup ecosystem; a constant in the tech news cycle, whether it’s contributing to unicorn-making $100 million raises or getting in on the ground floor at pre-seed stage.

Founded in 2012, it’s raised more than $1.3 billion for investment into startups in Australia, New Zealand and beyond, including its fourth fund — worth $500 million — announced in August last year.

That’s gone into some 82 portfolio companies including unicorns Canva and SafetyCulture, as well as Fleet Space, Nura, Redbubble, Mentorloop, Baraja and many, many more.

So over the past decade or so, founding partner Rick Baker has been in prime position to observe the evolving local VC scene.

It’s one that has grown from something “quite contrarian” into a vibrant ecosystem, with a handful of players firmly established, and dozens of new ones emerging.

“There is now a community,” Baker tells SmartCompany Plus. And Blackbird has been leading the charge.

But beyond the headlines and what I always imagine are comically oversized cheques, the VC world remains something of a mystery.

What do investors do when they’re not handing out cash? How do they decide what — and who — to put their money behind? And what happens next?

We caught up with three key players within Blackbird to take a peek behind the curtain.

The laksa days

As a fledgling fund, Blackbird was headed up by Baker, partner Niki Scevak and Bill Bartee, a partner at Southern Cross Ventures, which lent them desk-space in their offices.

The team was close-knit and as scrappy as they come.

In a tale that has become Blackbird folklore, the trio could often be found making investment decisions over laksa in their favourite food court, Baker recalls.

So, when their headcount started to grow, particularly with new investment partners Nick Crocker and Sam Wong, they had to find a way to formalise the process — without, you know, making it too formal.

The team devised a set of key attributes they’re looking for in an investment, and began rating each opportunity based on those. Then they would discuss the areas where they disagree.

“There’s not much use talking about something we’re all in violent agreement about,” Baker explains.

This drew Scevak and Baker’s process out of their own heads — and away from the food court — to create a shared decision-making template that the team still uses today. It allows for discussion and dissension, and shared responsibility, without one person becoming the gatekeeper of the cash.

‘We wear t-shirts’

Over the past 18 months, Blackbird has entered the third phase of its life, experiencing something of a growth spurt.

Including the Startmate team, it’s grown from about 12 people to 42, and as with any business, that brings pressure.

“It becomes impossible to know everything about everything,” Baker notes.

Rick Baker. Source: Supplied

Suddenly, there are projects going on that he’s not 100% across. He and the leadership team have had to put structures, frameworks and processes in place.

Through all of this, it’s imperative for Baker to keep Blackbird’s ‘values’ front of mind, and trickling through the team.

One of those values is ‘we wear t-shirts’, he explains — which sees him get grief any time his outfit sports a collar.

But the point is less about fashion and more about mindset. Despite its growth, he wants Blackbird to remain scrappy, nimble and startup-esque — maintaining an impetus of getting things done, without getting stuck in decision-making mode.

As the saying goes, it’s faster to turn a speedboat than a cruise ship. Baker wants Blackbird to remain a speedboat, albeit a big one. That takes conscious effort.

“We work really hard to make sure decisions are being made by really small groups of people … that’s everything from investment decisions through to management decisions,” he explains.

He also points to the ‘hospitality’ culture within the organisation. Founders are at the heart of everything the business does, he notes. When founders succeed, Blackbird succeeds and its investors succeed.

It’s important no one in the organisation loses sight of that.

“We’ve been working through our own operating principles, which sit below our values, to bring this hospitality mindset to everyone in our team.”

Across the ditch and back in time

Things are a little different at Blackbird’s New Zealand HQ, headed up by one of the VC’s earliest employees, Sam Wong, who made the move across the ditch in 2019.

Wong’s day-to-day can generally be summed up as ‘meetings, meetings and more meetings’, she tells SmartCompany Plus (over a phone meeting).

Sam Wong. Source: Supplied

After an hour or two of “deep work time” each morning, she’s meeting entrepreneurs, attending board meetings and checking in with the Aussie team.

A lot of her time is also spent working with portfolio companies, whether that’s through one-on-ones with execs, attending board meetings or anything in between.

Wong compares Blackbird New Zealand to Blackbird Australia in 2015, when she first joined.

She and the Kiwi team, including Tip Piumsomboon who relocated at the same time as Wong, are pounding the pavements, networking, getting their names out there and spreading awareness of what Blackbird is all about.

In New Zealand, founders are less likely to do the rounds as they seek funding, Wong observes. They’re not knocking on the door of every VC in town. 

That means the team has to be a tad more proactive.

The long game

Over the past year or two, there has been a huge amount of activity in the Kiwi startup sector.

But Blackbird is “a new kid on the block,” Wong says.

The challenge is to make sure people know who they are and what they’re investing in — and that the door is always open.

“We’re here. We’ve got $60 million to deploy. And we want to try to help grow the ecosystem as much as we can.”

In practice, this means meeting with people who aren’t necessarily founders, or who aren’t looking for investment right now.

It’s about forging connections, finding out what people are up to, what they’re interested in and how Blackbird could possibly help them. That leads to more connections with more people, and more coffee meetings that lead to yet more connections.

Once people understand what makes an investor tick, they may one day reach out with an intro to a founder who’s perfect.

“It’s actually quite organic,” Wong explains.

“It’s a lot of putting value into the world and waiting for serendipity to strike.”

Wong’s depiction of Blackbird paints a picture of a business trying to attract investees. That goes against the way we tend to view the VC world, which is rather the other way around.

VCs are held up as the keepers of cash, while founders circle, trying to secure a few coins.

Actually, it’s not like that at all, particularly at the earlier stages, Wong says. The best startups often don’t need your money — and if they do, they have plenty of interested parties.

Wong’s job is to get Blackbird on the radars of those founders, and to offer them any help she can, even if it doesn’t end in investment. Supporting the ecosystem is good for everyone, she notes.

“We take a long view that if we can be helpful, it will come back to us some way, somehow,” Wong says.

“You’ve just got to put a lot of value out there and hope for it to come back to you in due course.

“In some weird way that the universe will serve it up.”

Behind the scenes

Of course, signing on the dotted line of a deal is just one small part of the investment process.

Sure, it’s the big-figure deals that get the headlines, but once they’re finalised, the cogs behind the scenes start to whir.

That’s when operations manager Dan Danilov and his team step up.

Dan Danilov. Source: Supplied

The ops team manage things like finance, compliance and general business operations — office management, wages, paying the bills and suchlike.

They’re also the ones keeping track of how much is flowing in and out of the coffers, and staying abreast of all the regulations and “alphabet of acronyms” that funds must be compliant with.

Using a soccer analogy — and apologising as he does — Danilov compares the investment team to the strikers, out in the field scoring the goals. His team is in defence, he says, making sure nothing slips through the cracks to ruin the game.

“We free the rest of Blackbird to go and do their jobs to the best of their abilities,” he says.

It’s in Dalilov’s department that the ‘hospitality mindset’ Baker has built into Blackbird really becomes evident.

The ops team is the first point of contact for investors into the fund, and stands ready to answer any queries, fast. 

And when a deal is finalised, Danilov strives to make the process that follows as seamless as possible. He aims to never double up on requests, or ask for anything the team can source elsewhere.

There’s something of a misconception that this stuff has to be drawn out and complex; even more so the bigger and more sophisticated a fund is, he explains.

The ops team is working to actively counter that narrative, “to make sure we don’t become this behemoth of a fund where we throw out requests left, right and centre for someone who just has an idea and wants to raise a bit of seed capital”.

It’s about doing all the required due diligence, and ticking all the boxes, while asking founders to jump through fewer hoops than they might expect.

“We always try to check ourselves when it comes to that.”

Steadying the speedboat

A former founder himself, Danilov has deep experience on both sides of the VC relationship.

And, while Baker may see Blackbird as a speedboat, it’s Danilov who has to keep the thing on course and above water.

When you’re a founder, you’re in “a relentless kind of pursuit of a certain goal,” Danilov explains.

“You’re constantly running towards that, full speed ahead.”

When it comes to VC — and the ops side of VC in particular — moving fast and breaking things is not really an option.

The investment team, by definition, deals in risk. In ops, a small mistake can have big ramifications.

Every time a new process is rolled out, Danilov has to be certain there will be no unforeseen knock-on effects.

There’s a lot of testing, a lot of discussion around legal, tax and compliance, and those acronyms raise their heads again. The bigger the fund and the more capital is deployed, the more is at stake here.

As Blackbird grows up, Danilov’s role feels about as far from decision-making over laksa as you could possibly get.

But, all the same, he says the startup mentality does filter through. The ops team is in no way tied to ‘the way things have always been done’, Danilov explains.

There are mechanisms in place to ensure they can change tack with relative speed. 

The team’s KPIs are around stability and making sure nothing goes wrong. But they also set themselves projects: new tools to implement or new onboarding processes, for example. 

These are little innovations to make improvements at Blackbird, bit by bit. This team may have to keep the organisation intact, but these are the projects they can move fast, innovate, and break things on.

What is Blackbird looking for?

Of course, what startup folk really want to know is how to pique the interest of the Blackbird team. Once they’re on the radar, how do they get to a point where they’re closing a deal?

As frustratingly predictable as it may be, Baker says there’s no set formula here. In fact, the opposite is true. The very nature of startups is that they’re disrupting the status quo, and doing things no one has ever done before.

“Inherently it means the next Canva is not necessarily — and is probably not — going to look like the last Canva.”

Baker talks about the ‘gut feel’ behind investment decisions, which he acknowledges makes it sound like he’s “just spraying money around”.

In reality, the gut feel is more about pattern matching, he says, something he compares to machine learning.

Baker sees thousands of businesses each year. Yet Blackbird has just 82 businesses in its portfolio.

“We’ve seen success and failure at close hand,” he says.

The team gets better and better at making decisions based on core information and metrics, and early interactions. Based on that data, they try to make predictions of success.

What Baker is saying is that there’s no handy list of things to ‘tick off’ or get right to secure an investment. 

But, when pushed, he says there is one thing a founder can do to optimise their chances: build a great product.

“We’re looking for amazing products that people love, in really big markets that are on a global scale.”

He admits with a laugh that that’s easy to say and hard to do. But when he sees a product that’s getting early traction and creating a buzz — something that’s getting people excited — “that’s a really good indicator that there’s something special happening”.

Blackbird offices. Source: Supplied

“Ambition articulated in vivid colour”

Baker does, however, give us an idea of what will absolutely not get you across the line. 

The investment team is looking for founders with big ambition, he says. That’s the difference between being a small business and being a startup. 

If you’re seeking enough capital to sustain a couple of founders and a handful of staff, and not looking to grow, venture capital probably isn’t the right fit. 

That’s not to say there’s anything wrong with the model, Baker stresses — it can be very lucrative for the founders — it’s just not for Blackbird.

On the other end of the scale, however, are those with blind ambition. Those who claim they will be worth $1 billion within months; the next ‘Facebook of something’, without offering anything to back it up.

“We will pretty quickly say no to that,” Baker says.

Blackbird is looking for what he quite beautifully calls “ambition articulated in vivid colour”.

It’s the sweet spot where a founder has big dreams and big ambitions, and can lay out a feasible path to making those ambitions a reality. It’s not only about seeing it, it’s about showing other people too, and making them believe.

For Wong’s part, she wants people to know that VCs spend much more time saying ‘no’ than they do saying ‘yes’.

Those ‘no’s are not personal, she says, although she understands why it can feel like they are.

More often than not, it’s not about the founder or even the business. It’s about whether the investor feels connected to the problem, and whether they can see themselves being deeply involved in that space for the next ten years or more.

If they can’t, they’re probably not the right investor for the business anyway. As hard as it may be to hear, they won’t make a good partner.

“Investors actually have to love and be passionate about the problem and the market as much as the founder,” she says.

“That’s a big ask.”