Peter Lilley didn’t expect his latest startup to become a global cloud service provider, but things quickly worked out that way.
Thanks to strong marketing support from the Australian government, InstaCluster now employs 115 staff – including 85 staff in Australia and another two dozen spread across Europe and North America, where it derives three-quarters of its revenues.
Overseas customers were critical from day one, which began in 2013 when Lilley and several colleagues were looking to build an application on a hosted version of the highly scalable, open-source Apache Cassandra database platform.
In the absence of a commercial offering, they did what any time-tested entrepreneur would do: they built their own.
By combining the open-source platform with a billing engine and automated provisioning platform, they were able to float a commercial offering – and “pretty much straight away” began attracting paying overseas customers.
“We provide a cloud-based management plane for those fantastic open source technologies that service the most highly scalable, critical kind of cloud applications for major enterprises around the world,” Lilley told Information Age, with early demand “very much driven by what we would call inbound demand in our early stages of growth”.
Subsequent growth saw the company more aggressively tapping overseas markets, shifting to “a combination of inbound and outbound sales” thanks to the support of Austrade’s Export Market Development Grants (EMDG) program, which provides financial assistance “for aspiring and current exporters”.
Supporting overseas growth
EMDG has been in place for decades, and remains a key element of the government’s industry-support agenda.
It provides up to half of the eligible marketing expenses that companies have spent on export market growth, recognising – as Federal Trade and Tourism Minister Simon Birmingham said in April while injecting an extra $49.8m into the program – that companies investing “in good faith to lift Australia’s exports… are unlikely to see immediate return on those investments.”
“These entrepreneurial and outward looking businesses will be crucial to our future economic recovery,” he said.
The government’s additional investment pushed EMDG support to $207.7m for the 2019-20 financial year – a significant boost for a program that in the previous year supported over 4000 small and medium enterprises, employing nearly 70,000 Australian workers and generating exports worth $3.8b.
Recipients can be reimbursed up to $150,000 of marketing expenses from the previous financial year, with eligible funding including expenditure on overseas representatives, marketing consultants, marketing visits, free samples, trade fairs, seminars, in-store promotions, promotional literature and advertising, overseas buyers, and registration or insurance of eligible intellectual property.
Exports in a time of pandemic
The April funding boost came on the heels of a November 2019 government review, commissioned by Birmingham, that presaged the importance of marketing support for businesses as they struggle to emerge from the economic chaos of the COVID-19 pandemic.
The government has leaned on EMDG funding changes as a way towards that recovery, with advisory firm Export Solutions noting that the first tranche payment was increased in June to $100,000, up from $40,000 in the previous year.
For Australian innovators like Lilley, the cloud has provided a crucial bridge to overseas markets where even small businesses will be able to identify and tap into business opportunities in recovering overseas markets.
InstaCluster, for one, has grown by an average of more than 60 per cent annually since it was established.
Growth has continued at more than 40 per cent even through the disruption of the COVID-19 pandemic, Lilley says, attributing that growth to finding a way to use the cloud to service latent demand in a cost-effective and scalable way.
The company’s EMDG funding has supported marketing activities like webinars, technical workshops, and other demand-generation activities.
“Being able to get the support of the EMDG around that sort of expenditure meant we could do more with the money we had to drive further demand,” Lilley said, “and we ended up spending way more and doing more” than would have been possible without the government support.
“When I think back on our business, we could never have done what we can do today without the cloud,” he said, “because leveraging that data centre infrastructure around the world is sensational for being able to reach customers no matter where they are.”