Australia is a fertile land for cultivating tech companies. The majority succeed in crossing Moore’s Chasm but seem overwhelmed by the thought of crossing the Second Chasm:  to double and double again in size and enterprise value. A feat that cannot be achieved internally by the sales and marketing team. Organic growth has its limits.

Twenty-five years after publication, Geoffrey Moore’s book Crossing the Chasm remains an invaluable reading for founders of technology startups and young companies looking to become dominant in their space. The book describes the chasm which businesses must cross, from initial success in selling to innovators and early adopters to the other side of the chasm, being the revenue-rich bulk of the market. Growth and profitability come from the early majority, late majority and laggards.

What Moore doesn’t address, perhaps because his book is focused on the new and young companies, is the ‘second chasm’ which must be crossed to make a business big and valuable. The distance between Moore’s Chasm and the Second Chasm is able to be covered with organic growth. Tech businesses that succeed in reaching the first half of the bell curve of growth tend to plateau quickly. Revenue acceleration slows and organic growth can’t fuel the desired trajectory.

In Australia, you can see this with the many software, services and distribution companies that reach revenues of $5m, $20m and $50m, respectively. It then becomes difficult to double and double again from there.

Crossing the Second Chasm is as critical as crossing Moore’s Chasm because it impacts the ultimate valuation of the business. What the founders and shareholders have in mind for themselves. It requires depending on just organic growth to undergoing M&A transactions – mergers, acquisitions, capital raising or IPO (listing on a securities exchange like ASX or NASDAQ).

Every big business was a small business some time ago. But not every small or medium business will become a big business through organic growth alone. Every unicorn, including Facebook, Google and Amazon, has reached large scale through capital raisings, strategic acquisitions and by listing on a securities exchange.

It’s novel and somewhat sad to observe Australia as the world’s most fertile land for cultivating great tech companies. Yet many become stunted in their teen years. In Australia, it’s common to disparage and call crazy our very own tall-poppies when they attempt an acquisition, capital raising or list on the ASX. Less than 5% of tech companies seriously acknowledge and plan to cross the Second Chasm.

Founders and directors of tech companies standing at the crossing procrastinate and use well-rehearsed reasons why they’re ‘not ready’ to Go Big. However, they’re not entirely to blame. There are Australian ingrained cultural defects that contribute to this. A key one being risk taking in Australia.

Other participants in Australia’s eco-system of tech-land have limited the game’s potential. Availability of capital is at crisis point. Venture capital and private equity decision makers are often unreasonable in their assessments (compared to U.S. based firms) and take conservative risks or sit tight waiting for the “next Facebook” idea to come their way. Some M&A advisory firms have not innovated for years and shy of attractive valuations for their clients’ businesses, lacking negotiation skills or have shallow relationships with the market. Add to this how the Australian government and its agencies pushed hard on the brakes for crowd funding regulations (note: a while back Malcolm Turnbull liked the New Zealand crowd funding regulations, yet Australia ended up with an inferior set). And to add more obstacles, the general investor-land is reluctant to invest in tech IPOs.

How do tech companies cross the Second Chasm, a feat that cannot be achieved internally by the sales and marketing team? How would they do founders and shareholders overcome obstacles within their control and without?

Once founders and shareholders acknowledge that organic growth is not going to double then double again the capital value of the business, minds can then focus on committing to a roadmap to growth through mergers, acquisitions and going public. Most of which requires capital. This acknowledgement often comes when a founder or director realizes that “someone out there just like me, equally qualified and bright, equally working 60 to 80 hours a week, is making many times more than me in personal income and the value of their equity in their business is worth ten folds mine.”

The roadmap to double then double again includes allocating a slice of time and energy to inorganic growth. It also includes building real and meaningful relationships with the outside world. No just with clients, suppliers, partners and advisory firm. They must cultivate their own ecosystem. Without deep relationships with M&A firms and potential acquisition targets it becomes difficult to initiate successful acquisitions or a listing. Some acquisitive tech companies attempt DIY acquisitions, believing it would save on professional fees.  They approach acquisition targets expecting to build instant rapport. Some have limited understanding of the valuation game. In the end, founders and shareholders need to consider if organic growth is enough when the potential for massive growth through M&A can be achieved. It’s an obligation to put this question on the agenda of every board meeting.