In the US, the attitude is that things need to be done yesterday. They want to move quickly on everything, while we are a bit more conservative here.
We have a foot in both camps – in Sydney and San Francisco – so we aren’t always moving at a breakneck pace.
Start-ups get a maturity in terms of pitching very quickly in the US. Some people I know were going over there and I offered to look over their pitch and give some feedback.
When they came back, they had done 30 or 40 pitches and their pitch was 10 times better. They really got down to the nub of what their business’ proposition is. You have to be rigorous about pitching in the US.
It’s a great time at the moment; Australia is in a very good position in the world. If you say you come from Australia, it is a positive thing.
US investors would say that we build very old businesses. The three Australian businesses that Accel have invested in are profitable, all of them are growing, all of them have real products that solve real problems.
We are known for our good products and our good management. Because Australia is a much smaller market, there isn’t as much money, so we have to manage it more carefully. They like that.
Plenty of start-up incubators (Startmate, PushStart, AngelCube and York Butter Factory) have launched in Australia over the past year. You must be encouraged by this?
Well, it’s certainly easy to get money at the seed funding stage now. If you want a very small amount of money, you are okay. It’s more about the mentorship you get, anyway.
I’ll be fascinated to see how many of these incubators survive. There are a few around now, but it was similar to the early 2000s and they all dried up. I think that people are a bit smarter about incubators now, though.
I’d say around 2005 and 2006 was a turning point for Australian start-ups. A lot more people began to jump on the bandwagon.
Incubators are an important piece of the puzzle, but they aren’t everything. We are still lacking some things.
I don’t think we have a very good angel community here, or series A venture capitalists. Then again, I don’t think there’s the deal flow either, so it is an open question really.
The question is, do all start-ups need to go to the US to get a $2-3 million funding round, or do they wither and die? Can we find 20 $2 million start-ups in the next year? I don’t think so.
It’s easy to blame the Government. I think their VC programs are generally pretty good. The problem is that super funds don’t see venture capital as having good returns.
We just don’t have the entrepreneurs for them to invest in. Start-ups can blame everyone else, but you need to either get on with it or accept it.
You can work on your weaknesses or you can get on with a job that leverages your strengths. Maybe we don’t need an entire funding market here in Australia.
Maybe we will lose people to the US and they will come back and help improve things here. It may take 20 years, but it will still help the community.
People complain about that, but if you were in any of those business’ shoes, what you would you do? You’d probably do the same thing.
Australia needs stronger, deeper connections to Silicon Valley and that will involve some, or lots, of start-ups moving there. We shouldn’t be worried about that.
The Australian film industry is a good analogy. We don’t want to beat Hollywood. But we can still have great effects studios in Sydney and make our own decent Aussie films.
If Warner Bros films Superman in Australia, it will employ people and help improve skills here. Start-ups are similar. The more highway between us and the US, the better.
I’m pretty happy with how the whole experiment has gone. For a first year project, the end result was very good – two out of five start-ups moved to the US and one was acquired.
We will look to beat that in the second year, but I think it has got off to a good start.
I look for people who are passionate about what they do. I like people who are really interested in what they are building.
This attitude builds better businesses than someone with no passion, who has run a spreadsheet and found a hole in the market, whatever it is.
For tech start-ups, both founders need to understand technology at a basic level, with one of them being a technical co-founder and writing code.
Innovation loops get harder if you don’t have a technical co-founder. Everything takes longer and costs more if you have to explain something to someone else, rather than just sitting down and doing it yourself.
Finally, I’d say that people have to have a long-term sustainable business. I realise it’s very hard to paint that vision when it is just an idea, but you need to show that you will be offering solutions to problems.
I’m very anti the “build to flip” model. Your business exists to serve the customer. If that customer is just someone you want to sell the business to, you’re in trouble.
You can take shortcuts, but they will come back to haunt you. You’ll find that the people who were interested in your business will drift away.
