There’s certainly been a number of tech success stories in Australia. Apart from an extensive list available here, we’ve seen companies in the past six months like The Iconic receive a massive amount of money – $50 million to be precise.
But there is also an increasing amount of angel investment. As Liubinskas describes, investors are starting to notice successes like The Iconic and Catch of the Day.
“Some decent-sized companies have been able to do some raises in the past few years, and they’ve been very successful.”
Such success gives entrepreneurs like Gullicksen hope. Ken, who invested in Evernote as a start-up and maintains angel investments in multiple companies, says he believes the state of the Australian market is encouraging.
“I think there is a critical mass here, and there is absolutely no shortage of both design talent, as well as engineering talent, and that’s something fairly unusual.”
But while there is a distinct lack of venture capital-led investments in technology and eCommerce, Gullicksen says this shouldn’t be of much concern to industry advocates. Instead, he’s encouraged by the high level of angel investment.
With home-grown investors like Craig Winkler investing in start-ups such as accounting software firm Xero, and overseas partners like Peter Thiel and Mike Arrington looking for deals in companies like ScriptRock and Shoes of Prey, Gullicksen is optimistic.
“What I think is more interesting is the angel level community in Australia, which has progressed enormously, and it’s very much possible as a kid starting a company with some of your friends here to get some money.”
“In a lot of places, like Europe for instance, that can be hard.”
Gullicksen even goes so far to say Australia looks a lot like the United States does with a lot of variety among angel investors.
“The market here is very similar,” he says. “You’ve got the talent, you can get companies off the ground and you can get the initial financing done.”
Gullickson says the market is simply in a state of maturing, which will take some time. After all, he argues, institutional capital doesn’t lead – it follows.
“What tends to happen is that success breeds success, and the institutional capital follows from that.”
“It just takes time.”
It’s already been a decade since David Jones first abandoned its online shopping plan and although plenty of companies are improving, it doesn’t seem like anyone’s on the verge of hitting the big-time yet.
Or are they?
As these entrepreneurs explain, the market is waiting for a big success story. Once that happens, employees turn into angel investors, who spark a dozen more successful tech companies. This is exactly why Silicon Valley is flush with cash – there have been dozens of these stories which result in more employees and investors with money able to invest.
“If you look at groups like us, StartMate and AngelCube, everyone is doing maybe their second or third batch of companies.”
“But it’s all about the laps of the block. Silicon Valley has had perhaps 80 generations of investment, where someone invests and they either succeed or fail, you get a return and invest again.”
“Now it’s much faster because you can create a company and sell it in a year. I think you need about 10 before we start seeing that begin to improve.”
It’s already happening. Mike Cannon-Brookes, one of the founders of Atlassian, one of the trio of companies Accel Partners funded in 2011, has invested in start-ups including Shoes of Prey and Blackbird Ventures.
The tech veterans who spoke to SmartCompany believe Atlassian may be a key to increasing the rate of investment in Australia, with the founders having already hinted at a float somewhere down the line.
“Atlassian is not a full success,” says Liubinskas.
“Obviously, it’s a successful company. What I mean by that is I want them to IPO, and create a dozen millionaires in Australia who leave Atlassian and then start their own businesses.”
But to be sure, Australia has the attention of investors across the world. Liubinskas says start-up incubators in the United States are now actively looking for projects here, with the likes of Peter Thiel and other prominent investors gaining interest in Australian companies.
“There are still going to be failures,” says Liubinskas. “But the more investment we have the more people we have with experience being a chief executive, engineer or whoever, or actually go out and invest. It just takes a couple of laps to get started.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
