A clutch of Australian start-ups are navigating the technology market downturn with the aid of an unexpected tailwind: a surging US dollar.
Companies including research software firm Dovetail, drone-mapping company Propeller Aero and workplace safety app-maker SafetyCulture have their headquarters in Australia but do much of their business in the United States.
Propeller Aero co-founder and CEO Rory San Miguel. Louise Kennerley
The widening gap between costs paid in Australian dollars and earnings in the greenback, which was buying $1.57 on Monday AEDT, has given the companies a boost.
Australian start-ups that do not have a presence in the US are eying the market for expansion with greater enthusiasm because of the strength of its currency, although set-up costs will be higher. Those getting cheques from US venture firms are seeing the value of their investments increase.
That is a sharp contrast to most importers and consumers, who are feeling the brunt of higher costs.
Propeller’s head of finance, Daniel White, said the company was getting a 12 per cent benefit compared to currency transfers it made in February. “It’s a pretty good outcome,” Mr White said.
Benjamin Humphrey, Dovetail’s chief executive, echoed his view. “It’s always nice charging in USD and paying majority salaries in AUD,” Mr Humphrey said.
Most of Propeller’s business, which is largely in helping construction businesses understand their worksites through 3D maps created with drones, is in the US. Dovetail has a big chunk of its business there, and about 30 per cent of SafetyCulture’s clients are in that country, compared to about 18 per cent in Australia.
None of the three businesses said they were relying on the strength of the US dollar, though, conscious that the dynamics of the two currencies could change. All also have some staff in the US, and the currency fluctuations can make pricing products tricky because the US dollar is often used as a base price.
“I think there’s going to be pressure on the Australian dollar for 12 to 24 months,” said SafetyCulture founder Luke Anear, whose company recently raised at a $2.7 billion valuation. “[But] for us, we don’t make business decisions around currency.”
The exchange rate also has funding implications. Marisa Warren, the co-founder and managing director of US-Australian VC firm Aliavia Ventures, said it meant that companies taking cheques from American investors would get more money.
“So it actually works better for the Australian founders, because they they tend to get more dollars,” Ms Warren said.
Charlie Wood, the chief executive of KPMG-owned start-up Wiise, said his firm was examining how its product development strategy could be tweaked to allow the company to enter the US and British markets.
One option, Mr Wood said, was to develop new tools for its ERP platform that could be sold as standalone products in other countries, allowing the Aussie company to start collecting revenue in different currencies.
“The Aussie dollar is pretty weak against the US dollar at the moment, and it looks like it’s going to stay that way for quite a while … One of the smartest things I can do as a CEO from here is go collect some US dollars in revenue,” Mr Wood said.
Jonathan Barouch, the founder of Sydney customer experience software start-up Local Measure, was busy selling his software to call centres in the US.
“We charge globally in US dollars, all of our revenue is in US dollars. So at 64¢, that’s great and it naturally hedges us,” Mr Barouch said. But he cautioned there was a downside for businesses that had raised money from investors in US dollars.
“The flip side is obviously sales, engineering and go-to market resources in the US – where you’re competing against all the other tech companies – are expensive in their own right.”
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