Two high profile tech investors, including Shark Tank judge Steve Baxter, have ended up in Twitter row after Baxter questioned a pitch by tech startup Nexus Notes on Sunday night’s episode.
Nexus Notes, an online market place that allows students to buy and sell course notes, pitched to the sharks on this week’s episode asking for $300,000 for 7.5% equity in the company.
The pitch at first appeared to be a slam-dunk, but further grilling by the sharks revealed founders Hugh Minson and Richard Horden-Gibbings were offering the business with a price tag 600% higher than the one offered to another investor just six months ago.
Minson and Horden-Gibbings revealed they had been accepted into leading accelerator program Startmate and had already secured a 7.5% investment for $50,000.
Baxter took issue with the deal offered to the sharks in contrast.
“If we invest today, we get to invest at $4 million, Startmate get to invest at one sixth of that,” said Baxter.
“It’s rude, it’s actually rude,” he added.
Baxter then offered a $300,000 at the Startmate valuation, but Nexus Notes turned him down.
As the show went to air, Baxter tweeted, “Arghh ! @startmate awesome program but really guys! @nexusnotes @sharktankau #sharktankau”
But Adrian Stone, founder of mentor and investor network AngelCube, took issue with Baxter’s portrayed opinion of accelerators, tweeting back, “Does that make sense” @Startmate? Heck yes, @sbxr. What’s more, you already know it, so why run it under a TV bus?”
The two investors went into some back and forth about the valuation.
But Baxter this morning told SmartCompany his comments were not a criticism of Nexus Notes, rather a disapproval of the point the startup chose to come on the show.
“The reflection is on timing,” says Baxter.
“Accolades do not equal value. The promise of future growth does not equal value, the delivery does. They should have come on after their start date.”
And Stone this morning agreed, telling SmartCompany Nexus Notes should have waited to pitch their idea.
But Stone says the Twitter row was more about flying the flag for Australia’s startup community, than it was about Nexus Note’s valuation, saying Baxter should have been a voice for Aussie startups.
“To be fair, I only dealt with what was said on show and I know there would have been a lot of editing and you can understand why an investor would be unhappy with that valuation,” says Stone.
“But it was just based on money and it totally discounted the value of an accelerator. We’re trying to build a startup ecosystem in Australia.”
Stone says a lot of time and money has gone into building successful accelerator programs to help Aussie startups reach global success.
“Off the cuff comments like that can come across as irresponsible. I think you have an obligation if you’re on the public stage, to help a new market that needs to grow,” he says.
“Australia can’t be digging coal and iron ore out of the ground forever, [startups] need every possible piece of assistance available to them.”
Baxter responded, “I’m a huge supporter of Australian startups, I’ve invested into over 20 of them.”
“But our eco-system will not thrive on dumb deals or naive entrepreneurs. Accelerators like Startmate offer a vital crash course for startups like NexusNotes, and yes, their value goes far beyond the cash investment they bring. But the deal we were presented on SharkTank involved a massive immediate loss, before the company had even entered the accelerator,” says Baxter.
“For me, calling out and educating founders on rookie errors is flying the flag for Australia’s startup eco-system. If Australia ever going to become a hub for global tech startups, we can’t spend our time worrying about offending people. I think Hugh and Richard have a really strong business, and I’m really excited to see how NexusNotes gets on in Startmate. One thing I definitely know is they’ll be better prepared for their next investor meeting.”
SmartCompany was unable to contact Nexus Notes for comment.
Kirsten Robb is a former journalist at SmartCompany. Previously, she worked at News Corp as a property reporter for Leader Newspapers and the Herald Sun, and holds a Masters of Journalism at Melbourne University.
