With some local AUS examples, this article explores how responsible cash management is often a critical difference between startup survival and failure.
You’ve built an innovative product, assembled a stellar team, and your user growth is promising. Yet like many tech founders before you, you might be wondering why cash feels increasingly tight. As Canva’s Melanie Perkins often recounts about their early days: “We heard ‘no’ over a hundred times from investors. During those times, making our initial capital last was the difference between survival and failure.”
Here’s a sobering statistic: 82% of Australian startups fail due to cash flow problems, not because of product issues or market fit.
Understanding Your Runway
Your runway isn’t just a number—it’s your startup’s lifeline.
When Atlassian first started, Mike Cannon-Brookes and Scott Farquhar bootstrapped their company using a $10,000 credit card. Through careful cash management, they turned that initial capital into a global tech giant now valued at over $40 billion. Let that sink in: from a credit card to billions.
The lesson? Understanding and extending your runway isn’t just about survival—it’s about giving your vision enough time to become reality.
The Milestone-Based Approach to Valuation
Tech startups aren’t valued like traditional businesses. Your valuation increases when you reduce risk through achieving specific milestones. Take SafetyCulture’s journey as an example. Luke Anear started with a simple workplace safety app. But by consistently hitting clear milestones—from initial product validation to international expansion—the company’s valuation skyrocketed. In fact, their valuation jumped from $440 million to $2.2 billion in just over a year by focusing on key growth metrics and careful cash management.
Customer Traction: Your Most Powerful Asset
Nothing speaks louder to investors than paying customers.
Linktree’s story proves this perfectly: they grew from a side project to over 12 million users globally, with their valuation hitting $1.3 billion. Their early focus wasn’t just on user numbers—it was on proving that users found genuine value in their product.
“We knew we had something special,” reflects Alex Zaccaria, Linktree’s co-founder, “when users started telling their friends about us before we had any marketing.” That organic growth? It saved them millions in customer acquisition costs.
Establishing a Repeatable Sales Model
For SaaS and tech companies, proving you have a scalable sales model changes everything. Employment Hero’s Ben Thompson puts it bluntly:
“Once we could show investors that for every dollar spent on acquisition, we were making three dollars back within a year, our conversations completely changed.”
It’s simple math, but it’s revolutionary when you get it right.
Managing Risk Through Different Growth Stages
Think of risk management as a series of hurdles you need to clear. Culture Amp’s Didier Elzinga frequently shares how they tackled different risks at each stage: technical feasibility first, then market validation, followed by scaling challenges.
Their approach worked: they now serve over 5,000 companies globally, with a valuation exceeding $2 billion. But more importantly, they maintained healthy cash reserves through each growth phase.
Practical Cash Management Strategies for Different Stages
- Early Stage
When you’re just starting out, every dollar counts. Envato’s founders worked from their garage and reinvested all early revenues back into the business. This bootstrap mentality built their foundation—now they’ve paid out over $1.1 billion to their creator community.
- Growth Stage
As you scale, complexity increases. Airwallex’s journey from Melbourne startup to global fintech illustrates this perfectly. Even while processing over $20 billion in annualized transactions, they maintain strict cash controls.
- Scale Stage
At scale, cash management becomes about optimization. Afterpay’s story shows how critical this is—their focus on unit economics while scaling helped them achieve a $29 billion valuation before their Square acquisition.
The Warning Signs
The Australian tech landscape has seen its share of cautionary tales. Companies that seemed to have strong growth have stumbled due to cash flow issues. Some signs are obvious; others are subtle. Revenue growth outpacing collection capabilities? That’s a red flag. Customer acquisition costs creeping up without corresponding lifetime value increases? Time to reassess.
Looking Ahead
Smart cash management isn’t just about survival—it’s about creating options for your company’s future. As WiseTech Global’s Richard White often says, “Good cash management gives you the freedom to make long-term decisions rather than being forced into short-term ones.”
His company’s success proves his point: WiseTech Global now processes over 54 billion data transactions annually while maintaining strong cash reserves.
Taking Action
Working with founders across Australia’s tech ecosystem has taught us that cash management can make or break even the most promising startups. At Fullstack, we understand the unique challenges tech founders face because it’s all we do. Whether you’re raising your seed round or scaling globally, we can help you build and maintain the financial foundations that will support your growth journey.
Let’s work together to ensure your innovative ideas have the runway they need to become tomorrow’s success story. Reach out today!
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