The End Of Buzinga – A Reality Check For Aspiring Australian Tech Entrepreneurs

In the last 24 hours news spread about one of Australia’s largest app development agencies, Buzinga, going into liquidation. While bankruptcies are nothing new, the proximity of this situation makes it highly significant for tech founders. The first thing that comes to mind is that people might lose jobs. But another crucial aspect to consider is the fact that Buzinga left behind tens of stranded founders who’ve put their life savings into their startup ideas and now face a compromised future. Not to mention the non-technical founders who relied on the company for ongoing development and maintenance of their products. A common question people might have at this point is:

How did a company in such a high-growth industry manage to go into liquidation after five successful years on the market?

The most likely answer: Premature scaling of the business. Scaling a business too early is a death trap for as many as 75% of all startups. Successfully scaling is an art in itself – it requires a lot of experience, intuition, proper calculations and risk assessment. Firstly, scaling will put a strain on the business. Without understanding exactly where the pressure will be the highest, the risk for failure increases. Secondly, scaling a fee for service company is always riskier than scaling software as a service business. There are more variables in play when considering the level of human interaction present in an agency. We can only speculate the specific events at Buzinga, but there are a couple of takeaways that Australian founders can take from these developments: 



1. While a large reputable company is generally a safe choice, a couple of bad decisions can be enough to put them out of business, especially in a low margin fee for service industry such as app development.

2. Don’t invest too much too early. If an app developer pushes $100K+ contracts with upfront payments, your risk increases.

Helping the driven founders that were left behind

In the wake of these events, we would like to offer a chance to chat with any 3 of the founders at Hyper if Buzinga going into liquidation has stranded you. Reach out to us, and we’ll make time to give you any advice we can, regardless if you have money or not. We’ve been in this rapid-growth situation ourselves. However, we decided to stop scaling to make sure we evolve correctly. While we could have easily been twice the size we are now, we chose to set a growth curve that ensures our quality, ethics and sustainability are secured. The industry still seems to be in a bit of a manic gold rush stage, whereas the markets themselves have matured a lot compared to 5 years ago. Therefore, we only work with a maximum of 15 founders a month on prototypes and a handful of founders with full scope development projects. Our entire business model has always been based on founders starting with smaller investments and moving up the ladder as their startups grow and they themselves evolve as founders. We firmly believe it’s the only right way to do it. If your idea’s not validated, if you’re not prepared to scale, don’t invest everything you own and more into it. You’ll end up regretting it in the end.
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