Growing your startup business despite a market downturn

In this week’s episode of Platform Diaries, entrepreneurs and start-up founders may be feeling the icy chill of what is being dubbed as a “funding winter”, seeing ramifications comparable to the GFC or the dot com boom. According to Bloomsberg, “venture capitalists are reckoning with their worst quarter in almost a decade”, with global funding to start-up’s falling 23% in the second quarter from the first.

In order to help start up founders navigate the tricky climate, I have enlisted the help of today’s guest, Alastair Blenkin. Alastair is a lawyer turned tech entrepreneur. He is an Adjunct Lecturer of Law and Technology at the University of Queensland, and the CEO and founder of ProcurePro, a construction contracting tech start-up. 

“It is an interesting time for business. ProcurePro was founded when COVID started, so there’s never really been a time of peace,” Alastair shares.

“Some of the major issues we’re seeing now in the construction space is that materials prices are increasing, and therefore so are the costs of building peoples’ homes. In Australia, ProBuild was a high-profile collapse.”

But it’s not all doom and gloom. Alastair shares with me that with ‘unprecedented times’, there also comes opportunity.

“Fortunately, we’ve actually benefited from the ProBuild collapse. One of our customers Roberts Co has taken over a large part of their projects down in Victoria. As a founder in the tech space, there is certainly some silver linings given that technology is a large part of the answer.”

As ProcurePro successfully sails stormy waters, I wanted to know the secrets to Alastair’s business strategy that allowed for success during such difficult times. 

“Right now, our business is a couple of years old. We’ve built a product; we’ve got repeatability and predictability. For us, it’s about staying focused and knowing that in a downturn, it’s probably not the time to be chasing shiny objects.” 

Despite his success, Alastair knows that some start-up’s might not be in such an enviable position. 

“Back two years ago at the start of COVID, we weren't in such a good position. We'd actually spent 2 1/2 years building and launching a product into the commercial real estate market, then suddenly shopping centres and office towers got locked down, so they didn't need business improvement software.” 

The beginning of the pandemic forced Alastair and his team to pivot towards a product with greater market demand. 

“We pivoted into what’s now ProcurePro, so there’s definitely something to be said about timing. We were fortunate to make a good decision that turned into a really good opportunity.”

A healthy dose of practicality and decisiveness were the key ingredients, according to Alastair, that allowed his start-up to overcome adversity.

“You certainly learn a lot through adversity, as well just by putting effort in.”

Now enjoying success, I wanted to know what Alastair would pass on as advice to founders who are earlier in the journey. 

“Focus. There's a lot of things that don't matter and there's a lot of noise out there but focusing on the questions: ‘what are we building for? How much will they pay? How do we get them to actually to do it?’ got us through that early stage.” 

Alastair also delves into the more technical side of running a business. He urges founders to reflect on their business model, and whether this is vertical or horizontal. This directly impacts marketing, sales approach, and broader strategies. 

“If I had my time again, what I would also do differently is just hire more people. As Australians, we can be pretty capital efficient and maybe less massively gung-ho. I’ve learnt from an investor and mentor who runs another construction type platform through a reflection on their business, which was ‘I wasn’t well enough capitalised for the size of the opportunity.’”

While Alastair acknowledges that knowing when to pull the trigger and doubling down on investment does have a lot to do with intuition, advice can come from partners who have travelled the same roads before. 

While we did chat about regrets, Alastair certainly wouldn't change all parts of his start-up journey. 

“We didn’t go the venture path when we raised a 2 and a half million dollar seed round in September last year, we raised a lot of High Net Worth. Those High Net worth’s were pretty closely affiliated with the construction industry, whether they were executives of some of our customers, other construction tech founders, or entrepreneurs who were just construction figures generally. That has been really effective to give people in the industry a real vested interest to help us succeed, whether that's through using our product, making introductions, or helping us with marketing.” 

Alastair thinks that this funding approach isn’t as “sexy” as some other techniques which may get you on the frontpage of the Australian financial review, but believes it was one of the core tenets of ProcurePros success.

 Ending on a note of optimism, Alastair shares that despite the less than favourable circumstance, start-ups are not doomed. 

“I'm a big believer that good companies will get funded. We’re still seeing a lot of inbound interest from investors all around the world and there's certainly opportunity ahead with a little bit more stability ideally in the next six or seven months.” 

If you’re a start-up founder struggling against headwinds, or perhaps you’re needing to refine your business strategy, my chat with Alastair will give you the tips and tricks you need to overcome the hurdles you may be facing.