question about startup funding in Australia
Deniss
I was looking for events in Sydney where I could meet
potential partners or investors for a startup and it looks like I
couldn't find much. I've read about Startup Camp II, but couldn't find
any information about the next one. Same with WebJam.
On http://www.startup-australia.org there are links to techstars and Y
Combinator what is good, but that's not AUS.
The big question for me as a newcomer is how startups raise money here
in Sydney? What resources are available?
Thanks very much,
Deniss
Nick HaC
Good question - The startup community in Sydney is still growing and forming it seems - as a result it may seem hard to connect if you have just arrived in Sydney.
Official Fridays, Open Coffee, STUB and other events are useful in meeting the community.
As for startup camp sydney - Rumor has it the next one will be in september.
With regard to funding - it seems most startups in Sydney bootstrap or build of the back of a services/consulting business.
It appears most startups in sydney try to avoid VC funding where possible. The alternative? Build an alpha edition with your sweat, sell to a few key customers early who help pay for and steer an advanced featureset. At that point you have a product, some customers and some revenue and will be ready to go to market. VC's will probably start calling you then :)
Best of luck
Nick
PS: Pollenizer website has lots of great info
Pollenizer
David Banes
Email Filtering by Cleartext a Carbon Minimised company - www.cleartext.com
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Humphrey
I am going to be trying to do the same thing but in Melbourne.
Doesn't anyone know any good resources/networks/groups to join to help
with this?
Cheers,
Humphrey
>
> > Hi,
>
> > I was looking for events in Sydney where I could meet
> > potential partners or investors for a startup and it looks like I
> > couldn't find much. I've read about Startup Camp II, but couldn't find
> > any information about the next one. Same with WebJam.
> > The big question for me as a newcomer is how startups raise money here
> > in Sydney? What resources are available?
>
> > Thanks very much,
> > Deniss
>
>
> - Show quoted text -
Mike Nicholls
Start here https://www.avcal.com.au/iebms/mbd/mbd_p1_all_member.aspx?oc=10&cc=MBD089B
This is the Member directory for Australian Venture Capital Association. Start cold calling :)
Also there is a number of Angel Investor Associations, just watch out for the ones that want to charge you fees to present etc. Vince Stewart at Hall Capital has recently helped start a new Angel association, http://www.aaai.net.au/
Couple of things you might want to ask yourself before you go chasing down these guys and wasting a lot of your time
- Do you have a scalable idea/business with IP or a clear competitive advantage
- Do you have a world class team
- Are you best positioned to win in your market
- Is it an attractive market to win
- Do you know what to do to win
Its important to find out if they actually have a fund raised or are advisers trying to raise capital for you (you can waste a lot of time and money like this)
Find out if they have already invested in a similar business to yours, you probably don't want to be giving them your competitive info, it will almost certainly be used if they already have invested in your competitor and they almost certainly wont sign an NDA and you probably couldnt enforce one anyway.
Having seen the early stage VC market here in Australia first hand and knowing how small it is, I would do everything I could to bootstrap a business rather than waste effort on VC funding, but some ideas and businesses need lots of capital early and some you can bootstrap
Mike
Phil Sim
What we need is something akin to the TechCrunch50 event and Demopit.
I did the Demopit last year and it was an awesome experience and I
think its a fantastic model to borrow from.
We have somewhere between 10 and 20 companies present that are looking
for money. We assemble an audience exclusively of Angels and VCs. This
is obviously the key for it working but if the combined professional
network of silicon beach can't bring together a reasonable audience,
then we truly are screwed.
Each company gets 5 minutes to present and give their pitch. Following
the pitches, everyone drops back to a demo area where the investors
can float around, ask questions and make connections.
Even if nobody gets a dime, the startups get to practice their
pitching, make connections and build some relationships that perhaps
might bear fruit at another time. The investment community becomes
that much more accessible and visible, which I think is key. It could
be done extremely cheaply especially if the space can be donated
(perhaps by someone like one of the technology parks?) and wouldn't
take a great deal of organising.
Warren Seen
(http://pitchclub.biz/) with demos afterwards... oh, and the exclusive
audience bit ;-) Not saying that both ideas/events can't co-exist, but
they do seem to be aiming at a similar market, I wonder whether you'd
get more mileage out of teaming up with those guys?
Last thing I'd say is to be wary of throwing around the phrase
"wouldn't take a great deal of organising" - you're sure to jinx
yourself.
Geoff McQueen - Hiive Systems
Very nice idea. I'm wondering whether some of the start-ups might benefit as much from the VC experience as the potential to pitch/present to prospective customers, particularly given how all of a sudden cash is king again? ;-)
I'm familiar with a couple of expo type events that are running around the place. Unlike the TC50 experience where they do it for the news/publicity, these sorts of events charge $$$ - often big $$$ - for people to exhibit. Often the companies who do have big marketing budgets, and I'm thinking a lot of them have been slashed/trimmed or redirected into SEM and other more measurable things the last few months.
The problem is, these expos need to have a sufficiently good volume of interesting exhibitions to encourage the people they spend a lot of their own money getting along to think it was worth coming, so they'll come back next year.
So, I'm wondering out loud: would our SBA community be able to field a group of 20-30 companies, for a more modest, reasonable fee (since exhibition centre space isn't likely to be dolled out for free), to participate in a special demo-pit and pitching area/day/morning as an adjunct to something like CeBIT Australia?
Potentially, the NSW Department of State and Regional Development (which has started funding clusters, which is what our group kinda is, just a lot more decentralised) would be prepared to kick in the can so that any hard $$$ costs can be reduced even further.
This is all just shooting the breeze at the moment, but is there demand to do this sort of thing in conjunction with another event (where they're already a lot of a hard stuff, like space, booths, insurances, publicity and stuff already being taken care of)?
Geoff
Mike Nicholls
wouldnt be hard to do, could do it in conjunction with one of the Business Mags like Anthill, would be good to get ANZA, AVCAL, AusIndustry or DSRD involved as they have the means to get the message to the investors.
Deniss
here's a question... is it something you would be really like to do?
If yes, I would love to be part of it.
On Feb 3, 5:29 pm, Phil Sim <philip...@gmail.com> wrote:
> Okay, here's a proposal...
>
> What we need is something akin to the TechCrunch50 event and Demopit.
> I did the Demopit last year and it was an awesome experience and I
> think its a fantastic model to borrow from.
>
> We have somewhere between 10 and 20 companies present that are looking
> for money. We assemble an audience exclusively of Angels and VCs. This
> is obviously the key for it working but if the combined professional
> network of silicon beach can't bring together a reasonable audience,
> then we truly are screwed.
>
> Each company gets 5 minutes to present and give their pitch. Following
> the pitches, everyone drops back to a demo area where the investors
> can float around, ask questions and make connections.
>
> Even if nobody gets a dime, the startups get to practice their
> pitching, make connections and build some relationships that perhaps
> might bear fruit at another time. The investment community becomes
> that much more accessible and visible, which I think is key. It could
> be done extremely cheaply especially if the space can be donated
> (perhaps by someone like one of the technology parks?) and wouldn't
> take a great deal of organising.
>
>
> > Hi,
>
> > I was looking for events in Sydney where I could meet
> > potential partners or investors for a startup and it looks like I
> > couldn't find much. I've read about Startup Camp II, but couldn't find
> > any information about the next one. Same with WebJam.
Samuel Bishop
event, the problem is that great idea != pitch and pitch != great idea.
While the people with money have gotten used to dealing with pitches
that aren't worth it. There's not a lot of people around to help
people get their good ideas to the stage where someone would take a
pitch seriously i think.
I can attest to the fact i have *checks notebook*... at least 2 dozen
good ideas for companies to build on... just finished noting down
another one a few minutes ago in fact...
Now while each of these may be worth developing into a company...
there is no conceivable way for me to do so... nor is there any really
easy way to evaluate them all without putting a significant amount of
time / effort towards developing them.
Considering that several other companies have independently developed
similar ideas and built themselves up based on them, im quite sure
that each is worth a company on its own... but how to decide.
For someone in my position such an event is not really going to assist
in getting much off the ground...
I cant be the only person in this position im sure... though it would
be amusing if i was.
Regards
Samuel Bishop
Elias Bizannes
I sat down with some of the Pollenizer boys to understand their business model and something I didn't realise that they did was help connect entrepreneurs with a team. Meaning they'll introduce you to the right investors, developers, and whatever else to push you up and spit out a genuine startup. Drop @liubinskas a message - I hear he helps people focus.
And ideas we all have, but it's execution that shits all over anything else. I've been sitting on a world changing idea since 2004, and it's so fcuking brilliant that no one understands it but me. Stop thinking, just do it! Worst case scenario, you learn something new for the next time.
But back to why is the event a good idea: because it creates chatter. And if we are lucky - hype. To break the spine out of this damn economic depression, we need to start getting excited again. Nothing proved the point more to me than startupcamp weekend - where just by doing something with some smart people, it inspired you to do things despite logic.
Elias Bizannes
http://liako.biz
Samuel Bishop
Tagmotion
but an alternative route could be to approach Rachel Slattery who's in
the business of running events like FundingConnect that put investors
on a panel in front of entrepreneurs.
She's no doubt considered or even run a Pitchfest-type thing in the
past, where it's the other way around.
Don't know what her thinking would be.
She's certainly got a great database and connections, and does great
events.
If I was her, I'd want control over the 'quality' of the content
(companies and pitches)........after all, the event's got her name on
it, and the last thing she wants to do is burn investor and industry
leader-type contacts in the 'audience', sitting through substandard
presentations.
And getting that control may be more trouble than it's worth (handling
the grief from businesses or presenters that just don't cut it,
assessing them in the first place, training up those who are promising
and also 'coachable'.
Either way, it gets back to Warren's point.........don't underestimate
the amount of organisation required to put on an event like this!
Another thought..........maybe what we're talking about is a 'baby-
ANZA'-type of event (they train up and take Aust and NZ tech co's to
present in the US, for a fee of course).
It could be a kind of 'feeder' or 'entry level' ANZA program.
Again, I'm sure they've thought of this.
It may interest them as something they could underwrite/organise/own
if they see this as part of how they want to grow.
I know Viki Forrest's tapped into SBA. Viki, what do you think?
Samuel Bishop
Given the difficulty for some people to make trips across the country
for events based in the east or the west specifically. A feeder
mechanism is probably going to be essential to get the absolute best
ideas together.
I will blanket outright say it, I couldnt spare $200-500 for a trip to
melbourne/sydney to attend an event, and these days thats about as
cheap as a trip could be these days.
What would be best is if some people/experts/'wizened ones' were to
step up and act as a feeder stage for people looking to attend, and
providing the minimal financial leg up it would take ( the small
number of few hundred dollar travel cost 'grants' would be minimal
compared to the total event costs especialy if the bulk of them are
for western based entrepreneurs to make the trip east to where the
majority of the people are already)
WIth this kind of 2 stage mechanism, the quality of the 'actual' event
goes up & the likely hood of the people involved/paying getting some
world class ideas/tech out of it rises significantly.
Mick Liubinskas
good traction (making a few thousand a month, or over 100,000 users
per month) then you can't talk to professional investors or VC's.
These investors only invest to expand an already good business. Having
an idea or a prototype is not a business at all.
If you've got a great idea - build a great prototype.
If you've got a great prototype - either launch it and see if it gets
traction (see above), ask family, friends or fools for $10,000 each
for 5% or pop it in the drawer and start another one.
Also, start sharing your idea freely. Put it up on a website and show
it off. All of it.
I don't want to be discouraging but I do think sometimes startups get
the picture that the idea is worth a lot and VC's invest in startups.
They really don't.
In fact I want to be encouraging!
Have a great idea that really solves someones problem.
Build it and solve that persons problem.
Charge that person money for solving it, preferably at a very health
profit.
Forget raising money, just keep it all.
Easy huh? :-)
Back to Pollenating........
silky
> Mike's feedback is right. Unless you're a serious management team with
> good traction (making a few thousand a month, or over 100,000 users
> per month) then you can't talk to professional investors or VC's.
Not to pick on you, but I felt it appropriate to sneak in this rant :)
I really think VC's should be called "CIB's" or "Conservative
Investment Blobs". I mean, no offence to them, but they aren't really
investing in ventures. They're investing in proven businesses. And
sure, that's useful, but it's annoying to hold out a tentative sneaky
carrot to people-with-idea's and seductively suggest they may invest,
but in reality never will, not until you've gotten past the most
difficult stages on your own.
Fair enough, you don't want to lose money on risky investments. But in
my humble opinion, the "VC" market needs to take a good look at
itself. If you invest in X number of business and more than X/2
failed; maybe you need to re-think *YOUR* approach, for deciding
candidates.
And don't even get me started on wanting an experienced management
team ... I think that's part of the problem personally. Why crush an
innovative business with potentially "experienced" (and hence probably
biased in certain avenues) and "vets" of the management field? Sure,
there is a *lot* to be said for a good management team; but the
thought that you can take a certain group "a-team management group"
through them at a business and make it successful makes me more than a
little annoyed. You know who makes my business successful? Me. And the
decisions *I* make. You want to get involved in my business? Deal with
me. Don't think you can just throw money and a team at my idea, and
you'll be successful. You won't.
</rant over ...>
:)
On the other hand, part of me things I should run my own VC firm
before I start throwing to many comments at it. Certainly appreciate
it's difficult; but certainly suggest an improvement is required to
get innovative projects off the ground. Maybe if you want to start
another business selling mobile phones or ringtones, they'll work for
you, but for a new idea; probably not.
> These investors only invest to expand an already good business. Having
> an idea or a prototype is not a business at all.
No, certainly it isn't, but that's typically why we want investment.
To build a business.
--
noon silky
http://www.boxofgoodfeelings.com/
Mike Nicholls
Frankly the amount of crazy half arsed ideas that get presented with wild or non existent ideas on a business model is staggering.
They look for a team who knows what to do, the credibility of that team is improved if they have done it before.
Early Stage (ie pre product/revenue) is extremely high risk. The selection process must be rigourous, management team that can demonstrate successful outcomes and track record lowers that risk. You also have technology risk, market risk, execution risk, the recognize that only a small % will ever be truely successful.
So far early stage in this country has not generated great returns, however I think this is as much about the number of funds and the fact that most early stage funds have not been completed yet.
In this country you can count on 1 hand the amount of VCs that do true early stage seed investments, you can count on 2-3 fingers the ones that still have funds available for investment .
The US has much more early stage VC than we do, there is an accepted culture, here it is more development capital, almost in some instanced trending toward private equity.
Im not here to argue the case of VC model, just telling the original poster that unless he meets those criteria his time would be better spent on his product than chasing investment.
Anyone seeking investment in this climate should be asking themselves the question, what would two guys in a garage do, if they didn't have venture capital.
Bill Hewlett and Dave Packard built a $20bill company from a garage in Palo Alto initially without investment. They made their first product and baked the enamel on in his wifes oven.
Go figure.
silky
> Hi Silky, neither Mick nor myself are VCs, we have just worked with them and
> know what they are like.
Oh yes, I know, wasn't meaing to suggest you were.
> Frankly the amount of crazy half arsed ideas that get presented with wild or
> non existent ideas on a business model is staggering.
Indeed. Totally agreed. But just because there are crazy-bad ideas
doesn't mean there isn't crazy-good ideas. This is the point of a
high-rrisk technology investment firm: to decide the good from the
bad, and invest small amounts of money at high risk. My problem is
that "VC's" don't typically fit into that. Somehow they've got this
opinion of them that they invest in risky things. They don't. If
you've got a risky idea you're practically on your own; make friends
with money and you can get a bit, but presenting based on merit, well
for starters you don't have any (merit) you've only got words and a
bit of work, and that won't get you far.
I'm just saying it'll be nice when there is an investment pool like
that available.
> They look for a team who knows what to do, the credibility of that team is
> improved if they have done it before.
>
> Early Stage (ie pre product/revenue) is extremely high risk. The selection
> process must be rigourous, management team that can demonstrate successful
> outcomes and track record lowers that risk. You also have technology risk,
> market risk, execution risk, the recognize that only a small % will ever be
> truely successful.
But that's my point - if a small component will be successful, then
guess what - You're doing it wrong. Re-evaluate how you're operating
(is what I'm saying to them, not you).
> So far early stage in this country has not generated great returns, however
> I think this is as much about the number of funds and the fact that most
> early stage funds have not been completed yet.
>
> In this country you can count on 1 hand the amount of VCs that do true early
> stage seed investments, you can count on 2-3 fingers the ones that still
> have funds available for investment .
>
> The US has much more early stage VC than we do, there is an accepted
> culture, here it is more development capital, almost in some instanced
> trending toward private equity.
>
> Im not here to argue the case of VC model, just telling the original poster
> that unless he meets those criteria his time would be better spent on his
> product than chasing investment.
Absolutely agreed on that.
I just think that there is an opening for a good firm to judge risky
investments appropriately; not smother the idea in external management
or other such things. Let the people who have the idea develop it.
Sure, everyone needs to consult with experience people some time, but
the final decision making? Inventor. IMHO.
> Anyone seeking investment in this climate should be asking themselves the
> question, what would two guys in a garage do, if they didn't have venture
> capital.
>
> Bill Hewlett and Dave Packard built a $20bill company from a garage in Palo
> Alto initially without investment. They made their first product and baked
> the enamel on in his wifes oven.
>
> Go figure.
--
noon silky
http://www.boxofgoodfeelings.com/
Nathan de Vries
> I mean, no offence to them, but they aren't really investing in
> ventures. They're investing in proven businesses.
They're looking for signs of a valuable investment. You can show signs
of having a valuable investment very early in the game. You don't need
a heap of users or cashflow, you just need to show signs of growth.
> And sure, that's useful, but it's annoying to hold out a tentative
> sneaky carrot to people-with-idea's and seductively suggest they may
> invest, but in reality never will, not until you've gotten past the
> most difficult stages on your own.
This is where you've got to consider the reverse. It's nice to think
we're all delicate little snowflakes, but everyone has ideas. Again,
you need to show signs that you can do something with them. Throwing
external cash at your business is not a panacea. There are more things
to consider during investment than extending the runway of a business
purely through the use of money.
> Fair enough, you don't want to lose money on risky investments. But in
> my humble opinion, the "VC" market needs to take a good look at
> itself. If you invest in X number of business and more than X/2
> failed; maybe you need to re-think *YOUR* approach, for deciding
> candidates.
Half? Not even close. If VCs had half their investments "succeed",
then I guess your point on being less risk averse makes sense, but I
don't think that's reality. I've been told the number is closer to 90%
failure, 10% success.
Cheers,
Nathan de Vries
silky
[snip]
> Half? Not even close. If VCs had half their investments "succeed",
> then I guess your point on being less risk averse makes sense, but I
> don't think that's reality. I've been told the number is closer to 90%
> failure, 10% success.
Exactly. Personally, if I tried something 10 times and failed 9, I
wouldn't consider that a good method of operation. I would say "okay,
something is wrong here, what do I need to change ...".
> Cheers,
>
> Nathan de Vries
>
> http://nathandevries.com
> http://www.atnan.com
--
noon silky
http://www.boxofgoodfeelings.com/
Nathan de Vries
> Exactly. Personally, if I tried something 10 times and failed 9, I
> wouldn't consider that a good method of operation. I would say "okay,
> something is wrong here, what do I need to change ...".
I guess you're saying that the strategy sucks for people like yourself
who are after investment, rather than that it doesn't work for the VCs
(clearly it does). It's a little bit like complaining to an investment
banker that they make so many trades, many of which do poorly. Why not
do fewer, less risky trades? The trades that do poorly pale into
comparison to the trades that do well, and this is how money is made.
Low risk investments are great if you want to play it save, but you're
not going to make a hell of a lot of money that way.
silky
>
> On 05/02/2009, at 11:23 AM, silky wrote:
> > Exactly. Personally, if I tried something 10 times and failed 9, I
> > wouldn't consider that a good method of operation. I would say "okay,
> > something is wrong here, what do I need to change ...".
>
> I guess you're saying that the strategy sucks for people like yourself
> who are after investment
I'm not after investment.
>, rather than that it doesn't work for the VCs
> (clearly it does). It's a little bit like complaining to an investment
> banker that they make so many trades,
No, it doesn't relate. Traders don't directly influence the operation
of the business; the typically invest based on research and look at
where the company is going, etc. VC's take directly control (or try
to) and that's where the problem lies.
> many of which do poorly. Why not
> do fewer, less risky trades? The trades that do poorly pale into
> comparison to the trades that do well, and this is how money is made.
> Low risk investments are great if you want to play it save, but you're
> not going to make a hell of a lot of money that way.
Nowhere did I say only take low-risk investments. Infact I pretty much
said the opposite. I'm not going to repeat myself.
> Cheers,
>
> Nathan de Vries
>
> http://nathandevries.com
> http://www.atnan.com
--
noon silky
http://www.boxofgoodfeelings.com/
Nathan de Vries
>> I guess you're saying that the strategy sucks for people like
>> yourself
>> who are after investment
>
> I'm not after investment.
Whether or not you're looking to take on venture capital is
irrelevant. What I meant is that you're more likely to be taking on
money than giving out money. Unless of course the suggestion that
you'd start your own magical VC firm was not said in jest, in which
case...good luck with that!
> VC's take directly control (or try to) and that's where the problem
> lies.
That's a pretty vast generalisation. I good VC will know what they
bring to the business (money, network, knowledge), bring it, and then
get the hell out of the way. A bad VC will derail the business itself.
Saying all VCs will meddle with their investments to the detriment of
the business wouldn't be very accurate, unless your only source of
news is Techcrunch.
>> many of which do poorly. Why not
>> do fewer, less risky trades? The trades that do poorly pale into
>> comparison to the trades that do well, and this is how money is made.
>> Low risk investments are great if you want to play it save, but
>> you're
>> not going to make a hell of a lot of money that way.
>
> Nowhere did I say only take low-risk investments. Infact I pretty much
> said the opposite. I'm not going to repeat myself.
I made that point in response to your initial argument that VCs should
invest in "crazy-good ideas" instead of "crazy-bad ideas". Obvious,
since crazy-good ideas are a low-risk investment right? How can you go
wrong with a crazy-good idea?! However, I'm pretty sure that VCs know
they should be picking good ideas over bad ones, it's just that your
opinion of a good idea might not match theirs. That, and the majority
of people with "crazy-bad ideas" think they're "crazy-good ideas" (you
and me included), so one can only expect for the VCs to judge
potential investments on more than just the idea, such as growth
potential, management competence etc.
silky
>
> On 05/02/2009, at 11:51 AM, silky wrote:
> > > I guess you're saying that the strategy sucks for people like
> > > yourself
> > > who are after investment
> >
> > I'm not after investment.
>
> Whether or not you're looking to take on venture capital is
> irrelevant.
? If it's irrelevant why ask the question?
> What I meant is that you're more likely to be taking on
> money than giving out money.
How can you possibly know that. And regardless, as you said, It's irrelevant.
> Unless of course the suggestion that
> you'd start your own magical VC firm was not said in jest, in which
> case...good luck with that!
>
> > VC's take directly control (or try to) and that's where the problem
> > lies.
>
> That's a pretty vast generalisation. I good VC will know what they
> bring to the business (money, network, knowledge), bring it, and then
> get the hell out of the way. A bad VC will derail the business itself.
> Saying all VCs will meddle with their investments to the detriment of
> the business wouldn't be very accurate, unless your only source of
> news is Techcrunch.
FWIW I've never read "techcrunch" in my life.
>>> many of which do poorly. Why not
>>> do fewer, less risky trades? The trades that do poorly pale into
>>> comparison to the trades that do well, and this is how money is made.
>>> Low risk investments are great if you want to play it save, but
>>> you're
>>> not going to make a hell of a lot of money that way.
>>
>> Nowhere did I say only take low-risk investments. Infact I pretty much
>> said the opposite. I'm not going to repeat myself.
>
> I made that point in response to your initial argument that VCs should
> invest in "crazy-good ideas" instead of "crazy-bad ideas". Obvious,
> since crazy-good ideas are a low-risk investment right? How can you go
> wrong with a crazy-good idea?! However, I'm pretty sure that VCs know
> they should be picking good ideas over bad ones, it's just that your
> opinion of a good idea might not match theirs.
Do they though? If their fail-rate is so high? And consider if they do
(as you claim). That means the thing that goes wrong (that forces a
90% failure rate) is the implementation of the idea. And who does that
- but the management team. So who's at fault?
> That, and the majority
> of people with "crazy-bad ideas" think they're "crazy-good ideas" (you
> and me included),
Obviously.
> so one can only expect for the VCs to judge
> potential investments on more than just the idea, such as growth
> potential, management competence etc.
Indeed.
Point remains, if your failure rate is so high, you should re-evaluate
what you do.
Not everyone is in the business of making money by the way. I'm not
anywhere near claiming VC firms are successful. Obviously they are
(that's why they still operate). But surely a goal should not only be
money, but the physical starting of businesses, to create jobs, create
innovate things, help our *community*, and generally do good and
useful things in this world.
> Cheers,
>
> Nathan de Vries
>
> http://nathandevries.com
> http://www.atnan.com
--
noon silky
http://www.boxofgoodfeelings.com/
Phil Sim
community. We need people who have been there, done that to have the
opportunity to sift through the ideas and put a bit of mentoring and
money behind them.
The Australian VC industry should be doing its part to encourage this
as well, and would do well to put some money into some angel-level
fund because they would get a lot greater number of companies making
it through to that level where you justify VC exposure.
Mick, as you'd know having done Techcrunch, an event like that is just
swarming with angel-level investors and the difference between that
environment and what we have here in Australia is so opposite it's not
funny. Until we start a circular effect of our successful people,
putting back into the ecosystem, this whole ecosystem can never, ever
take hold and prosper. If you look at every single successful start-up
centre, this is exactly what they have.
Every person on this list should be making a pact to themselves that
if they do hit a paydirt, they will give back to the community by
putting some time and money into at least one local startup. Thats why
I think we so need an event that focuses on connecting angels and
startups in this way. because it's all very well to say hit up family
and friends for tens of thousands of dollars, but not everyone is in
that position to be able to do that (I'll stop now before I get into
my rant about how this country is going further and further down the
path of locking people into class structures!)
Phil Sim
Chief Executive Officer,
MediaConnect Australia Pty Ltd
www.mediaconnect.com.au
phi...@mediaconnect.com.au
Ph: +61 2 9894 6277
Fax: +61 2 8246 6383
Mobile: 0413889940
silky
[snip]
> Every person on this list should be making a pact to themselves that
> if they do hit a paydirt, they will give back to the community by
> putting some time and money into at least one local startup.
Pretty good idea.
I think a not-bad way of implement this in a formal fashion would be
to have a group/innovation society everyone could join (for some
benefit, such as "networking" or whatever else), and the cost to join
is a fee; which is then put into a fund, which is then loaned to a
"winning" startup, every 6 months or so.
If you had a yearly fee of just 500, you'd only need about 50 members
to make it worth-while (give away 10k each 6 months). Adjust as the
organisation grows; or adjust the fee, or potentially scale the fee to
allow larger corps to give more money.
The organisation would be run in a not-for-profit fashion.
Any thoughts?
>Thats why
> I think we so need an event that focuses on connecting angels and
> startups in this way. because it's all very well to say hit up family
> and friends for tens of thousands of dollars, but not everyone is in
> that position to be able to do that (I'll stop now before I get into
> my rant about how this country is going further and further down the
> path of locking people into class structures!)
>
> Phil Sim
> Chief Executive Officer,
> MediaConnect Australia Pty Ltd
> www.mediaconnect.com.au
> phi...@mediaconnect.com.au
> Ph: +61 2 9894 6277
> Fax: +61 2 8246 6383
> Mobile: 0413889940
--
noon silky
http://www.boxofgoodfeelings.com/
Elias Bizannes
If you had a yearly fee of just 500, you'd only need about 50 members
to make it worth-while (give away 10k each 6 months). Adjust as the
organisation grows; or adjust the fee, or potentially scale the fee to
allow larger corps to give more money.
silky
> > If you had a yearly fee of just 500, you'd only need about 50 members
> > to make it worth-while (give away 10k each 6 months). Adjust as the
> > organisation grows; or adjust the fee, or potentially scale the fee to
> > allow larger corps to give more money.
>
> I like it. The devil is always in the detail, but interesting concept of
> creating a community run investment vehicle.
> If you get 500 people (very doable) putting up $500 in capital to invest
> $250k in a y-Combinator type program: that has a lot of potential. Give them
> a direct interest like shareholders of a company ($500 blocks give you one
> vote).
Like it; I would want to tentatively make it so that the purchase-vote
comes in at a max sway; and also only counts for some certian
percentage of the vote, the board of the entity would decide the rest.
Phil, how does it sound? Elias, and others, who wants to get together
to discuss actually implementing this?
I'm thinking it could be taken to places like YEO and other existing
groups (but obviously it would be produced as a new entity;
specifically targeting innovation).
Pretty excited by this actually ...
Obviously setting out the policy of the thing would be important;
can't have people contributing only to get investment in their own
projects, etc. And I imagine a submission-style system to decide the
winner would be relevant; i.e. just a general pitch. Ideas at any
level, could be submitted, but only solid things would be invested
(and it would be an investment, not a gift) in.
> And whilst the selfish interests of the shareholders is satisfied
> with making a return, the by product is overnight, you've just created a
> dozen startups. That's got flow on effects I don't think we could imagine.
>
> Ticks all my boxes: Create jobs for the broader economy to lift us out of
> the recession + builds the startup ecosystem due to the buzz of it + uses
> small payments for many to fund (meaning easy to participate, easy to raise
> a round) = A radical proposal to change the industry.
--
noon silky
http://www.boxofgoodfeelings.com/
Elias Bizannes
http://liako.biz
Warren Seen
logical extension of microcredit sites like kiva.org that focus on
loans in the developing world.
I presume you would need to set it up like a proper VC fund in terms
of operation? Does that sort of structure scale down to a fund that
small? Or could it be as simple as eg a unit trust that invests in the
various startups?
silky
> Yes policy is crucial. However, I can see something like that getting
> extremely complicated. Community-driven decision making models are not easy
> to design: I spent 50+ hours creating the DataPortability Project's model
> with five super-intelligent & wise men - and I was ready to kill someone by
> the end of it.
>
> And whilst democracy is a concept I'm willing to die for to preserve, it's a
> bitch as well. As you allude to, there needs to be an oligarchy running it.
Certainly there would be a board running it; and the membership would
only buy the "public" a certain % of the total vote allowance (say,
40%).
The board would decide the rest; typically decide the investment/award
prize path, and other such things.
A pricing model I have in mind is:
free: anyone can join, attend "free" events.
500+: buys a certain amount of shares and possibly some other
non-limited asset that gets them access to dinners/breakfasts and more
formalised meetings
So basically it's like starting an investment firm, but not for
profit, with strict policy guidelines.
> Another idea which naturally solves this, is having multiple funds. So
> whoever wants to take the risk of doing this taps into their networks to
> raise money (they become the lead venturer), and therefore have the
> authority to appoint their governance team as the coordinators are the
> common link.
I think a centralised fund (i.e. organisation) is better. If it's all
seperate, no individual (person or group) will care enough. It's hard
enough getting people to interoperate; groups of people is much much
harder. Specially in investing and decision-making.
> Raising money is the hard bit, but very doable - and creates a natural order
> of how things will run. This is better than having a centralised system
> because instead you have multiple "funds" talking together and pooling their
> efforts, having a net greater impact. So long as these funds have a common
> watering hole to mutually help each other, the net impact is the creation
> of an agile investment group that even if its fails, will shake things up.
>
> I'd be interested to talk about further once the idea has had some sharks
> attack it on this list. Might take a few months of planning, but it's a Big
> Idea that's worth it.
>
> Elias Bizannes
> http://liako.biz
--
noon silky
http://www.boxofgoodfeelings.com/
David Jones
I don't know but, I suspect a few barriers exist to investor-eco-system health (thinking of angels mostly here):
a) its a high probability that high networths made their money in property, retail or stocks - so early tech is daunting
b) they've not heard of VCs hitting it out of the park
c) there are only a handful of high networths who have made excess cash OZ. In the bay there is loads. As said previously its a cycle
d) maybe angel community can't clearly reference enough successes. Its pretty sad if radiata, looksmart and resmed are the only reference points that broader investors take away. There are other startup that are great stories such as aconex, hitwise, atlassian and smaller but still great decide interactive, omnisio and probably 20 others that ScuBinator should be marketing as Australian successes.
e) investment can be adversarial and so entrpreneur naivity has been perpetuated
f) there has been not been an "easy to find" filter or mentoring vehicle and I feel SB could ultimately deliver that.
There has been y-combinator me-toos spring up and that is because its a good model: http://seedfunding.weebly.com/
I was having beers with YC company omnisio about 9months before youtube/goog acquired them, they loved being YC even though others told they could get much better terms - why?
- they had to compete to be a YC company - they had to kick butt to be selected
- the YC events have profile and a marketing machine precedes them. This gold rubs off on YC winners - its up to them to what they make of it
- being a YC company puts you on a networking fast track - you meet and get mentored those who have been before.
- being a YC company increases a chance of exit because the "network behind the network" is very high value
- yep, thats easy
- yes, taking startupcamp as a recent "outcome-focussed" example: I think a YC-style competition will deliver a much more focussed, quality and outcome related set of contenders than a Pitchfest style. If run twice per year, then startups can decide if it is too early to expose their secret sauce of business model.
- Collectively we SB folk may have 1 or 2 degree network that could credibly deliver this
- thats tough
To me ScuBinator looks like:
- a fund raising engine. It takes the Obama approach to fund raising, a little from a lot of people....often.
- a unit trust (I am no accountant but I think ASIC has shareholder limits of 50, so the vehicle needs to be sorted)
- it may segment the trust into streams or market specialties
- a mentor hive
- a selection team (who set the criteria for competition/selection)
- an incubator that helps with corp structure, finance, grant management, raising, governence
- an filter/advisor for startups that can't win, can't compete, are preparing
- a buzz machine (to market the value of itself)
- a communication arm to unit trust holders. One of the hardest things in terms of taking investment is the reporting regime. With friends/family rounds this can more emotional and high maintenance than originally intended.
this is not to say the cash-is-king comments are invalid, quite the opposite, I just think this is missing in OZ and we need to fix it.
anyway, just some thoughts.
d.
Nick HaC
silky
Not really; the non-profit part only speaks to the fact that the
people involved - the board - aren't doing it for themselves only;
they're doing it for the companies themselves, and the members. Like a
industry super fund.
As I see it, the board would be filled with people who do other
things. Being involved in this organisation is only a side interest;
it's not a full time money-making scheme, it's a plan to help grow
businesses and the community in general.
--
noon silky
http://www.boxofgoodfeelings.com/
Elias Bizannes
Elias Bizannes
http://liako.biz
Mick Liubinskas
It should be for-profit. Micro-finance works because it is a loan not
a donation.
Seriously forget about VC's. If they knock on your door, great, but
otherwise, just do what every you can to build your business. I guy I
saw talk last night gave the order of investment from smallest to
biggest like this;
FFF - family friends and fools.
Angel - generally people in your network (or the network you make) who
have made it rich and get excited by your enthusiasm.
Incubator - if they are around.
Gov grant - good once you're going. Often dollar for dollar matching.
Prof. Investor - like an angel who acts more like a VC.
Bank - seriously. If you're making money, you can go to a bank.
VC - note, that this is below banks. So if you think the bank wouldn't
lend you money, then VC's probably won't either.
Priv equity - like roving gangs of professional investors with
management.
IPO - remember those?
Buyout funds - mega big boys.
I've come to realise that most good businesses, that make money and
bring wealth to the founders are fairly boring, behind the scenes,
unknown brands. Because we see Youtubes, Skypes, Googles, Dodgeballs,
MyBlogLog that's how we come up with ideas and follow the path. I know
I did. But it really doesn't happen often. I agree that VC's are the
most visible, and that's what we hear funds the big wins, but they are
just the ones we hear about. I also agree that angels are not visible,
but I'm not sure I'd want to be visible either.
I'm sort of seeing building the big home run hit consumer startup is
like trying to be U2. If you love being an entrepreneur, then you love
creating businesses (music), getting customers (fans) and doing it
year in year out (touring?).
(more raving...)
That being said, if you're passionate and have built a good
foundation, or done lots of lots of lots of lots of research, then you
might just be able to find someone to invest in you (not your
business). I reckon it takes about 100 cups of coffee. The first 50 to
tell a good story and the next 50 to find the person who gets turned
on by that story and has the $$$ to take a bet.
Feel free to ask me for that cup of coffee. I'm certainly no guru, and
I don't have millions to invest but I certainly have failed an awful
lot, so perhaps I act more as a warning to others? :-)
Back to Pollenating.
On Feb 5, 10:18 pm, silky <michaelsli...@gmail.com> wrote:
Jonathan Williams
David made some really good points about the YC / TS / SC models - they run on the prestige, high quality mentoring and pre-build networks they offer.
The problem is that - if you forget about VCs - what are the startups getting by giving you x%?
The real value in the YC/TS/SC is that they (1) put good startups in front of investors and (2) put investors in front of good startups - it's actually an argument about who they really are an agent for - the startups or the investors. In reality it probably doesn't matter. Doing a good job means everyone is happy.
They also have a lot of top-shelf mentoring, but that's almost cause and effect in reality... Aside from this, if you're not offering that (or something else), not sure what the value to the startups will be? Even the marketing angle is marketing to investors - being a YC company doesn't (necessarily) get you more customers.
As an aside - I think Australia also has some unique aspects that could be exploited. For example, these companies rarely offer infrastructure support (e.g. servers), because it's highly commoditised there - I don't think that's the case for Australia yet. Additionally, things like access to government grants is quite specialised... These aren't usually part of the US models, but might make sense locally.
J
Jason Langenauer
Mick lists below, but because I will absolutely guarantee any not-for-
profit association will degenerate into chaos and infighting should
they suddenly find they have $10m because they made an good early
stage investment in an Australian company that made it big. I've seen
it happen with amounts far smaller. While not agreeing with Elias that
humans are inherently selfish, this is one case where self-interest
would tend to be a stabilizing rather than destabilizing force.
I'm in Sydney tomorrow, and will be at the drinks - definitely
something we should all shoot the breeze on.
Cheers
Jason
mmp1
reasons. Need legal advice here.
ASIC rules on raising capital may kick in - you are basically allowed
to ask family and friends etc, but in Oz outside of that if you seek
more than 20 people who are not sophisticated (thats defined usually
by anual net income - ie. 2M+ a year ?) or in the business of
financing for funding, then you have to publish a prospectus. Not
that you couldn't do it, but would need to get the steps right to
protect the entity from unhappy campers who say they put their life
savings into this based on the assumption of return of X% etc.
its some funny thing.
Again, not a lawyer but it is something worth looking into first. So
yeah, the structure thing is important.
Alan.
Samuel Bishop
the crowdsource/community aspect would solve what concerns me the
most, covering this very wide country effectively.
Ive spent most of my life in Perth, and it would be a little hard to
bear the notion that if this kind of croudsourced fund started up, it
wouldnt have any way to reach people over here, without them uprooting
their lives and moving to Melbourne or Sydney to even take a shot at
the funding, especially in this day and age where people can work very
well with a team via the internet & its many communication tools.
silky
<elias.b...@gmail.com> wrote:
> I like how you're thinking Silky, but it's more a practicality to get the
> funds in the first place. It's not the board that are the problem, but the
> members themselves.
> Think of it this way:
>
> - for profit: you have a membership, and a board of directors making
> executive decisions on their behalf. All profits get redistributed to the
> members if they choose to as a dividend, or it can be reinvested into the
> organisation as retained earnings. Board gets a management fee for their
> services or do it voluntarily.
this is the model i was thinking of (voluntary board) (i mis-used the
term when i said 'not-for-profit' possibly. but also, keep in mind
this is just one model that iw as thinking.
with an investment of $500 i typically wouldn't really expect anything
back. so i want there to be another reason to contribute the money
than a direct result to the members (in terms of profit from the
company). because payout period would be too long (6 months+ to earn
back that 500?) many other problems. it also implies a limited
membership capacity, or it forces a larger amount to be given out so
that everyones money gets "used".
> - non-profit: you have a membership, and a board of directors making
> executive decisions on their behalf. All profits get retained by the
> organisation for reinvestment. Dividends cannot be paid out to anyone. Board
> gets a management fee for their services or do it voluntarily.
>
> Now the problem with the non-profit model isn't the board: it's the members.
> As you can see above, it makes little difference what structure it is, but
> it matters if you are a shareholder because you don't get the option to get
> a return. Where's the incentive for them to give money?
Indeed. As discussed above, I mis-spoke.
> If you are going to tell someone to give you $500 a year to invest in
> companies so that other people can get rich, you are going to have trouble
> fund raising. But if you tell them to invest $500, with a 10% chance they
> will make a million dollars (ie, $100k when applying probability theory),
> that's a great motivator.
maybe, i think the main reasons to join are:
1) access to events
2) something else
3) potential money-back
> Captitalism kicks arse if you can tame it, to have aligned goals that also
> happen to create community good (like what's happening with climate change
> initiatives). Human's ultimately are selfish: better to rely on the cynical
> view of how people act rather than the hopeful view. When you expect the
> worst, you at least can get pleasantly surprised.
>
> Elias Bizannes
> http://liako.biz
--
noon silky
http://www.boxofgoodfeelings.com/
silky
MegaMobile - http://www.mega.org.au/
I think it's free, it offers a fully-mentored program to the members.
But it's a nice effort to help projects, basically for free.
EO - http://www.eonetwork.org/
I don't know much about it, but a few people I know are members, I
think it's not free, but there are events and general networking,
probably other things.
The vision I have for this group is to sit somewhere between them; to
be a group that helps develop innovative companies via a competitive
loan every month, rewards its members with "things" (as yet to be
decided, networking doesn't seem enough), helps them learn (if they
want) via programs, and is done in a volunteer fashion by people from
the community.
The main goal of the organisation, as I see it, isn't strictly to make
direct money for the people paying the membership fee. If you want to
do that, it seems that just setting up a typical investment firm and
(as someone else said) publishing a prospectus and going for it is the
way to go.
The main goal should be the development of new and innovative
companies within our community. This will help the community
generally. When the loan to the group is paid back, something could be
done with it, like a party, or similar.
--
silky
Tyrone Castillo
- I like the fact that $500 (or what ever the final number is) pa. get me access to formalised events,
- Access to a network of people who have been there, done that (and potentially from people who can give a different view on commercialisation aspects from a non-tech view), and
- For $500, I get a small return with a "hot" startup and first dibs to invest more if I find one that I really like) <-- to be approved once structure is finalised.
Geoff McQueen - Hiive Systems
I was at a dinner last night (prior to a somewhat disappointing Top Gear Live) and spoke to a few traditional business types. I was surprised at the level of interest they had with startups. One guy in particular stated that he and some of his colleagues, had been thinking about investing in tech but was not sure who, what, where, and when to invest.
Totally agree. I see this all the time.
Mike Nicholls
I am an EO Allumni after being a member for 5 years, its definitely not free but it is some of the best money you will spend, I think the current rates are ~$3k pa.
Its somewhat like finding the mothership full of other entrepreneurs.
In the fee you get monthly high quality educational events for free, very nice dinners and offsites and regular invitations to some events for your partner, as well as the opportunity to go to International Events (which are pretty amazing)
Often the educationals have top Australian & US Entrepreneurs, Govt & opposition members and they always end up eating and drinking well.
There is qualification criteria, you must be majority owner/founder, being turning over >$1m USD pa and be prepared for your accountant to verify this.
When I joined it was known as Young Entrepreneurs org and you had to be under 40 but they changed this about 3 years ago, I can highly recommend it, you get a directory of 6500 members worldwide, there is a very strict non solicitation requirement (breaking it gets you booted out) however due to the level of trust that develops many people end up doing a lot of business with their fellow members, you just cant actually go ask them for business.
You also get to join Member to Member which is an assistance forum that you can ask for help advice or introductions world wide from EO, World Presidents and Young Presidents as well as the offshoot 49ers group
The valuable thing about the directory is, that you are encouraged to make contact when traveling and local members will bend over backwards to take you out for dinner or to events, for example when I went to San Francisco last year, I sent an email to their local chapter president and 12 hours later I had about 6 invitations out for dinner and drinks as well as one to an exclusive nightclub event for AdTech (not my sort of thing but nice to be asked)
Last but not least, most valuable thing for EO is what is known as Forum. Forums are groups of 6-12 members in non competing industries that meet once a month to share their problems and opportunites in total confidence (again this is a sackable offence) the overriding principle is that you share your experience in similar situations not your opinion (big difference)
If you qualify you can contact Suzy Byrne who is the local chapter Administrator to discuss an introductory attendance at one of the events.
Just as a bit of feedback, I cant imagine a time where what is being proposed on this thread re: Investor club would be sanctioned or get much involvement from EOers, they are just to busy and focused on their businesses and would see it as a distraction.
Thanks
Mike
silky
While EO is a fine legitimate operation; I was just highlighting it's
existence and the fact that it's *different* to what I was proposing.
I'm not suggesting an "investment club", as I hope can be seen. EO
and any other organisations and the one I am proposing can live in
harmony together ...
--
silky
Bart Jellema
excellent input! Having been around the community for a while now I
keep hearing this argument over an over that what Australia need is
more access to funding. This is bugging me for a few reasons:
- I feel that many use this as an excuse to justify their failure or
much worse: Their failure to even try.
- I get the feeling that some think "getting funding" = success,
instead of the "creating a great product that solves someones issue" =
success.
- Sometimes I think people feel a sense of entitlement.
- Many seem to me to have a skewed view of how hard/easy it is to get
funding in the valley. (One of our friends in the valley spent
countless coffees trying to get funding. After months they finally
just bootstrapped it and sold to Salesforce after about 1.5 years.)
Sure, some startups can only happen with funding, but in this day and
age I don't quite understand why you would lose your focus and waste
time on trying to get funding for a web startup if you can simply
bootstrap it. Sure it takes sacrifice (Kim and I lived in my parents
attic for 3 months to get tjoos off the ground) and it's a huge risk
because in all likelihood you will fail. But how can you expect others
to take that risk off you if you're not willing to take that risk
yourself first? Once you get your venture off the ground and start to
get some good traction you will find that there is plenty of money
available in Australia to help you grow.
Right now I meet many wantrepreneurs, hear about many great ideas, but
see too little people cutting code and putting it on the road. I think
it's true that one of Australia's problems is aversion to risk, but
this doesn't only apply to the investment side. So I'd say: Take some
risk, believe in what you do and just build it. If you're growing like
crazy but can't grow as fast as you'd like because nobody wants to
invest, then come bitching about it.
silky
Legitimate advice but nothing to do with the topic at hand - creating
a group to help fund people that *do* deserve it. Nobody wants to fund
people that don't.
Deniss Sudak
On 5 Feb 2009, at 23:12, Jason Langenauer wrote:
>
> I agree that it should be for-profit too - Not only for the reasons
> Mick lists below, but because I will absolutely guarantee any not-for-
> profit association will degenerate into chaos and infighting should
> they suddenly find they have $10m because they made an good early
> stage investment in an Australian company that made it big. I've seen
> it happen with amounts far smaller. While not agreeing with Elias that
> humans are inherently selfish, this is one case where self-interest
> would tend to be a stabilizing rather than destabilizing force.
>
> I'm in Sydney tomorrow, and will be at the drinks - definitely
> something we should all shoot the breeze on.
unfortunately not sure. So, what drinks are you talking about?
D.
Nick Ramage
Yep, just do it.
Start-ups will still always have to do the old juggling strategy of any ..yes..business. Needs innovation, businesses development, marketing, chasing the occasional Government funding carrot etc - even selling site ad $pace.
The trick is for us not to get sloppy and drop any of the balls for the easier ones.
--
Kind regards,
Nick Ramage
Managing Editor
Foolkit - Legal
visit www.foolkit.com.au
e:: ni...@foolkit.com.au
m:: 0419 824 915
t:: 08 8382 4349
Foolkit - Your Online Legal Toolkit
Deniss
sure.
D.
Geoff McQueen - Hiive Systems
Lachlan Hardy is the man to watch for tonight: one of the other regulars, Mick L, can't make it. There's probably a bunch more people on this list heading on down. There's a pic of him on his own Flickr account: http://www.flickr.com/photos/lachlanhardy/3100475013/
Geoff
Deniss
On Feb 6, 11:32 am, Geoff McQueen - Hiive Systems
Elias Bizannes
http://liako.biz
Phil Sim
scheme like this, would be the advice and mentoring you would get from
some of the 500 'shareholders'' who all have an interest in helping
you to succeed. Suddenly, you've got a crowd of people who you can go
for advice, guidance, etc. A swathe of people who have been following
you from word go who might then want to invest more as angels and a
genuine path up to larger funding. Read the Y-combinator material and
they go to great pains to say most of their companies dont need the
money but they're doing it for the access to networks and guidance.
After all, nobody REALLY needs money in Australia to do a start-up
because you can go on the dole and just code until you've got
something to show for it, but its taking that next step to
commercialise, market it, make those important first hires that people
need help with.
This is how I would see it working:
500 shares at $500 each gives an annual fund of $25k. Aim to fund 20
startups in two batches six months apart. (2 x 10) Funding would be
similiar to y-combinator model of $5k per founder. The event I
previously proposed could be used in doing some of the selection
process. The organisation would also try and get sponsorship
agreements for free hosting, etc. further reduce costs. Again keeping
to the Y-combinator model that would get the group up to 10 per cent.
An email list like this would be used to keep the group up to date and
for the startups to talk about their progress and ask for
help/feedback. Nice and low maintenance. Virtual networking for the
investors as well as the startups.
The quality of the investors is important. I'd suggest an application
process and that at least 100 powerful investors who are invited to
join so as link the group to VC organisations, angel groups, political
circles, and generally wealthy networks.
After the first six months is up, startups that have done well could
apply to receive one of the next batches as well.
This is a concept I've been keen to get involved with for a long time.
I even registered a domain virtualkapital.com a few years ago when I
last got excited by the idea. Would be happy to donate that to the
cause if people liked it.
What this needs now is for some people to actually step forward and do
something about it. If there is anyone that could do the
legal/financial legwork to get up a structure that would work then I
would be happy to use our upcoming media conference (feb 22 to 24) to
launch this idea and get the publicity rolling and then to basically
take the lead in marketing the organisation. Someone who would put
some time into project managing it, would be useful as well...
I sincerely think this would make a massive difference to our startup
environment and provide a true path from seed through to VC funding.
Phil Sim
Chief Executive Officer,
MediaConnect Australia Pty Ltd
www.mediaconnect.com.au
phi...@mediaconnect.com.au
Ph: +61 2 9894 6277
Fax: +61 2 8246 6383Mobile: 0413889940
silky
Later tonight I'm going to work on the policy/structure that I have in
mind (just documenting it properly) I'll post it back here. Maybe
people like it, maybe they dont, but that's what I'm going to try and
push and I'll see where it gets me.
> If there is anyone that could do the
> legal/financial legwork to get up a structure that would work then I
> would be happy to use our upcoming media conference (feb 22 to 24) to
> launch this idea and get the publicity rolling and then to basically
> take the lead in marketing the organisation. Someone who would put
> some time into project managing it, would be useful as well...
>
> I sincerely think this would make a massive difference to our startup
> environment and provide a true path from seed through to VC funding.
>
> Phil Sim
> Chief Executive Officer,
> MediaConnect Australia Pty Ltd
> www.mediaconnect.com.au
> phi...@mediaconnect.com.au
> Ph: +61 2 9894 6277
> Fax: +61 2 8246 6383Mobile: 0413889940
--
noon silky
http://www.boxofgoodfeelings.com/
dekrazee1
I'm behind this idea. It's really exciting tbh.
You can have my money and (although I'm a relative n00b with these
things) am happy to pitch in wherever needed.
Rai
Geoff McQueen - Hiive Systems
Quick question: since the idea is to have "rounds", would it really be a commitment to contribute $500 per half year for each of the 500 investors?
If so, the share values themselves could probably be traded - if the group has a couple of decent exits to proper angel or series A or - God forbid - the businesses generate dividends without needing to have a specific liquidity event - which would result in the value of the shares going up.
The trustholders/shareholders agreement or articles of association would require a capital raising every 6 months, which I don't see as an issue: however, if we don't have a liquid market to set the price for shares (which we shouldn't be aiming for: the idea of the network/connections/support stuff is that the investors would probably be pretty engaged and stable), when someone chooses to dip out or not pay up, how would you "buy out" their share? Surely it wouldn't be a sum of contributions, else people could vote with their feet if times were tough and realise a valuation greater than "book value"...
These problems have solutions, and I've got a few ideas, but I was wondering if you had some comments to make about how this sort of thing would go over time since you've certainly already put a lot of thought into it...
Geoff
-----Original Message-----
From: silicon-bea...@googlegroups.com [mailto:silicon-bea...@googlegroups.com] On Behalf Of Phil Sim
Sent: Friday, 6 February 2009 3:21 PM
To: silicon-bea...@googlegroups.com
Subject: [SiliconBeach] Re: question about startup funding in Australia
Jonathan Williams
J
Geoff McQueen - Hiive Systems
I’d think separating rounds could make things a bit messy, particularly if there are companies who, say funded 12 months apart, turn out to be competitive..
Still, making the investing in a round separate from the shareholding of being involved (i.e., shareholding in incubator is separate to investing in a round) could make the “swimsuit section” section of the 6 monthly pitching and funding process interesting, i.e., you’d have 10x finalists, and even if only 5x investors really liked one, they could choose to drop $1K on just that one pitch.
Or, are we now just facilitating normal angel processes (or perhaps making them a lot more complicated)? Is one in, all in, with a 6 monthly capital raising as a requirement of being a shareholder/unit holder/member’s agreement more conducive to the network stuff?
Jonathan Williams
The alternative could be messy too. After the first round the shares would need to be priced accordingly - which could be tricky... It could also mean that after the first successes it's difficult / less motivating to invest (as the shares are now worth $xxx). That might be fine, as it means the fund has been successful - but has the disadvantage that the investor pool is then stagnated. I think getting new investors involved would be one of the key objectives.
Facilitation is a different angle. In that respect, you would consider youselves agent for the angels rather than the startups - which isn't a bad thing.
J
Phil Sim
of expertise, but I imagine that each year all investors would be
given the opportunity to invest again and you just essentially add
that number of shares each year. So when you start you start with the
.2 per cent and you can maintain that holding by investing each year,
if you don't your shares just get diluted. To be active, however, with
the event/email list you need to have invested in the current round.
I don't know about anyone else, but $500 a year to be involved in
something like this would just be a no-brainer.
Phil Sim
Chief Executive Officer,
MediaConnect Australia Pty Ltd
www.mediaconnect.com.au
phi...@mediaconnect.com.au
Ph: +61 2 9894 6277
Fax: +61 2 8246 6383
Mobile: 0413889940
Geoff McQueen - Hiive Systems
Sounds reasonable; in my limited experience, I think this is called a recapitalisation.
My only comment: make the price to play higher. Making it something closer to $2k means people will care more about their investment; $500 for the angel types (and possibly also $2K, or even $20K) is more like a donation.
Jonathan Williams
Even if it's somehow workable, then you're taking away a big risk element - I can invest at round 3 and reap the rewards of the previous rounds at no cost.
Perhaps it can work, but I think that will be an issue.
J
silky
which is what you guys are talking about with the investment-based
approach ...
Geoff McQueen - Hiive Systems
I still think the concept is worth preserving with – I’ve come across a lot of people who want to get involved in the scene, are prepared to invest something, and will feel more motivated and excited about their involvement if they’re something at stake.
Phil Sim
The problem with running it how you're proposing with lots of
networking events and so forth and incentivising people to become
members based on benefits is that it becomes a business in itself -
and those type of things don't run on charity. Despite people's best
intentions, any business that needs ongoing maintenance will die
unless people are paid to do that job.
If you limit the scope to basically getting in the money, investing in
10 companies and then relying on social media/email groups to do the
virtual networking it's a more realistic goal. It really just needs
someone with legal/financial knowledge to come up with a workable
structure.
Jonathan, I take your point but I think you could use some sort of
auction system maybe? ie 10 out of 500 people decide not to go
forward, so there are spaces for 10 new investors. Those places are
auctioned which would then actually give you a bit of a valuation on
what the group is currently worth. The same system could be used if
people wanted to cash out.
Phil Sim
Chief Executive Officer,
MediaConnect Australia Pty Ltd
www.mediaconnect.com.au
phi...@mediaconnect.com.au
Ph: +61 2 9894 6277
Fax: +61 2 8246 6383
Mobile: 0413889940
Warren Seen
I'm feeling the same, I think this discussion is drifting towards a
miniature version of that model, with all of the pros and cons it
entails. At the same point in time, I think adding contrived
membership "benefits" distracts from the core of the idea, which is to
get a sufficient amount of cash to somewhere where it can have some
utility. If we go back to the example of kiva.org, people do it for
the sake of loaning the money to someone who has more use for it at
that time, not to become members of their website.
I think this needs to work somewhat like a distributed "FFF"
fundraising, which means low cost of investment, ($500 is probably as
low as you want to go), with an equally low expectation on return. If
people want to put more in so they feel like they've got some real
skin in the game, then fine, allow multiple units to be bought up to a
sensible limit. A lot more people (particularly those of us with
families) can justify a $500 annual gamble, but $2k and upwards on a
speculative investment would be difficult to get "approved" ;-)
I think it should also be a per-year thing, spread the risk and the
return amongst those who put their money up for a particular "round"
but don't let them be diluted by someone who comes in late to the
game. This would probably also simplify the administration of things
as you'd have fund A, B, C and people could be in/out of a particular
round as they so desired without affecting the value of their previous
investment. Managing a rotating list of members and how they
enter/exit sounds too complicated for the amounts we're talking about.
But hey, we have 490 members on this list, shouldn't be hard to come
up with 490 different ways this could work, seems we're already
heading that way! :-)
Phil Sim
absolutely the way to go! Simplicity rules.
So I'm trying to keep the momentum on this going and evolve something
as dead simple as possible, without it falling into a whole or
differing opinions.
1. 500 shares at $500. People can buy multiple shares but I think we
should cap it it at say 5 or 10 shares
2. That money is invested in a number of start-ups for up to 10 per
cent equity. I've changed my mind and think 1 batch would be best.
Standard legal agreements, etc need to be employed to keep down the
overview. I'd suggest to use a Digg-style voting site that allows
people to pick the companies that are invested in
3. Have 2 to 3 low-key networking events per year to update
shareholders on progress of start-ups and provide networking benefit.
Also use social media/email to provide on-going
discussion/advice/mentoring
4. We'll need a small board with people who commit to investing a bit
of sweat. As I've said I'm happy to do so on the publicity/marketing
side of things, but we really need someone or organisation to put
their hands up to do the legal work. And a coder/development company
who could whip up a few of the webside things that would automate the
crowd-sourcing aspect of this. Someone with financial knowledge.
Someone with good links into the angel community
5. The organisation is positioned as a way to get companies from seed
to angel funding. To provide them with an automatic network of
assistance, guidance and links to investors.
6. As an orgnisation we're able to cut deals with partner companies so
our start-ups get either free or cheap services. eg. Web hosting. I
reckon I could go to my community of IT PR companies with an "adopt a
start-up" proposal.
Please keep evolving this but for me the perfect analogy for this is
Racehorse Syndication. People invest a bit of money with the idea of
primarily having a bit of fun but with the feint hope that their
'investment' will turn into a superstar and they'll make a motza.
Samuel Bishop
for it"
To put it into perspective...
Assuming I bail on my apartment, move back home where i will be
miserable round the clock, I cant weasel out of several contracts I've
signed... at least $600 a month goes into these probably a bit more
and thats before i account for any other expenses... and the most I've
seen centerlink offer is about $200 a fortnight which leaves me
needing to declare bankruptcy to be able to live on the dole.
This isnt anything personal... It just irritates me...
While I'm sure some people don't mind the idea of bankruptcy but thats
a step I wont take in order to do something...
The first step in my entrepreneurial career shouldn't be bankruptcy...
Jonathan Williams
I like the racehorse analogy.
Given that model, easiest structure is probably a unit trust per round, with a separate body (the actual incumbator group) acting as the administrator... With the right setup that's reasonably scalable.
I think capping the shares is a good idea - you might increase the cap for previous investors, and/or otherwise give them preference.
J
Warren Seen
mentioned them was there is a limit of 50 unitholders per trust?
Also, there was the issue of ASIC rules around solicitation of
investment that someone else raised? These would seem to be the only
structural blockers to the setup you've proposed...
Deniss
people couldn't keep up with the discussion.
Would it be possible for everybody who had strong opinion about the
topic to meet somewhere (maybe with the white board) and have a
discussion about that?
If somebody could lead the discussion then it should be faster way to
get the answer to the question: Whether young entrepreneurs in
Australia have favourable environment business or something is
missing?
On Feb 6, 10:04 pm, Warren Seen <warren.s...@gmail.com> wrote:
> I think the issue with unit trusts which I was not aware of when I
> mentioned them was there is a limit of 50 unitholders per trust?
>
> Also, there was the issue of ASIC rules around solicitation of
> investment that someone else raised? These would seem to be the only
> structural blockers to the setup you've proposed...
>
> > Phil,
>
> > I like the racehorse analogy.
>
> > Given that model, easiest structure is probably a unit trust per round, with
> > a separate body (the actual incumbator group) acting as the administrator...
> > With the right setup that's reasonably scalable.
>
> > I think capping the shares is a good idea - you might increase the cap for
> > previous investors, and/or otherwise give them preference.
>
> > J
>
Pieter Peach
otherwise keep those emails coming.
Pieter
Samuel Bishop
very important... In addition, it would be best if it were at a time/
date when it was possible for people working 9-5 in Perth to not miss
the entire thing due to being at work/behind firewalls.
Elias Bizannes
I like your meetup idea but for different reasons - let me explain why.
First of all, it all boils down to this:
- entrepreneurs complain there is not enough capital
- financiers complain there are not enough quality entrepreneurs
- Owners complain there is not enough talent
- Employees complain there is not enough pay and opportunity for development
Depending on which circle you hang around, you will hear a version of one of those four themes. People love feeling sorry for themselves, as it takes the blame off them.
But at the end of the day, you can write a book on the amount of success stories we have that originated in Australia, executed in Australia, and that have impacted the world. We're not exactly a country like Bolivia, where even optimists lose hope.
So to your question: "whether young entrepreneurs in Australia have favourable environment business or something is missing?" is a question that's answered by the fact 20% of our population are foreign born. On any broad based metric, Australia is a favourable environment for a business and shits all over other countries. It's not perfect but our weaknesses also give us unique strengths. (All that great capital in the Valley that people pine for, has created a culture of build to flip, and few sustaininable independent businesses).
The question you should be asking yourself, and which people on the mailing list are missing the point of, is "how can I surrounded myself more with the people on this list and beyond?". I created this mailing list so that we could build awareness of what exists - identify the dots on the map - and then hopefully connect those dots like a spider web gone crazy.
Put smart people together in a room on any topic and you can do anything.
Elias Bizannes
http://liako.biz
David Jones
Couldn't agree more. We should not be trying to recreate Silicon
Valley in Australia- we should be trying to make something better.
We're supposed to be innovators! Silicon Valley has been done. If you
really want that culture, you can go there. Personally, the idea of
building to flip makes me want to flip off a building. Here in Aus I
think we have a great opportunity to do something new. So lets get in
as many rooms in as many places as possible and make it happen. I'll
do my part- If anyone wants to meet up in Melbourne's far eastern
suburbs (Montrose), my old man and I will throw a shindig. Is anyone
even out this way?
Casey Butler
CEO, Shopfront.com
0412375740
Twitter: @caseybutler
Phil Sim
Silicon Beach Startup Syndicate
50 shares @ $500 = $25,000
Invested in 1 startup
We invite any startup to apply
We have a meetup to let a shortlist present
We select a startup
We set up a mail group/blog/facebook group whatever to keep everyone
in touch with progress and to provide feedback/mentoring to the
startup
Within the community/syndicate we organise some free/cheap services
like hosting/design/marketing/etc to further assist the startup
We have quarterly meetups to hear progress from startup, network and
have a few drinks
I think a lot of us tend to think too big. Realistically to get
something off the ground we need to start small and take a first step.
So lets start with one startup, keep the number of investors under 50
to overcome that ASIC rule. And we should almost just about get 50 off
the list + direct contacts. Pretty much, all we need is someone to
agree to contribute the legals/finance aspect and I can't see any
reason we can't push this ahead pretty quickly.
What do you's reckon?
Elias Bizannes
http://liako.biz
Phil Sim
<elias.b...@gmail.com> wrote:
> Legal and finance can be taken care of by my old man and myself
> respectively.
> I'll put $500 to be an investor and help you find another 48.
> Three questions:
> 1) What proportion of the equity do the investors put in and how much is
> retained by the founders?
reckoning 10 per cent would be your starting point but if there is a
company that reckons they're valued at more than that, you don't want
to rule them out because you're sticking to 10 per cent. So you'd draw
a consensus and then make an offer
> funded?)
in the company other than the founders and that it is early stage
Rai
47 to go Elias :)
So if we keep the number of investors under 50, does that mean that we can do a round of another 50 for a second start-up once this first round is 'settled'?
Rai
Shaon Diwakar
Phil Sim
we've got this much money to spend and will investing in up to 3
startups. Startups could ask for how much they want and want equity
they were willing to give up for that as part of the application
process.
On capping, I think its best to get 50 smart people as part of this -
so if we can get to the $25k without needing people to invest more
than the $500. Of course, if we're short of people and some are
willing to take two shares than all well and good.
Phil Sim
Chief Executive Officer,
MediaConnect Australia Pty Ltd
www.mediaconnect.com.au
phi...@mediaconnect.com.au
Ph: +61 2 9894 6277
Fax: +61 2 8246 6383
Mobile: 0413889940
David Jones
Michael Harries
Michael
__
Michael Harries
Rai
I think it might be best for registrations of 'I'm in' to go in there.
mspecht
the devil is in the detail. Having said that I'm in.
On Feb 12, 1:41 pm, Rai <dekraz...@gmail.com> wrote:
> I've started a page in SB Confluence:http://confluence.siliconbeachaustralia.org/display/general/Silicon+B...
Riges Younan
Riges
CEO | 2Vouch
+61 419 932 392 | +613 8683 0124
Suite 405, 493 St Kilda Rd |Melbourne
VIC | Australia | 3004
web: http://www.2vouch.com
blog: http://blog.2vouch.com
email: ri...@2vouch.com
skype: riges.younan
Twitter: http://www.twitter.com/rigesyounan
LinkedIn: http://www.linkedin.com/in/rigesyounan
gradconnection
Great idea!
| Mike Casey Director Level 5, 95 Pitt Street Sydney New South Wales 2000 P: +61 2 8005 0266 M: +61 4 4997 6059  |
Phil Sim
I would encourage anyone on the group who have contacts within the
angel/vc/investor community to pass this message on and encourage
involvement. Part of the attraction of this idea is that there are
people within the 50 who might be potential later-stage investors and
can kick off an angel funding round when the startup reaches that
point. I think its very important that we provide a pathway to further
funding because seed capital is only going to get you so far.
Phil Sim
Chief Executive Officer,
MediaConnect Australia Pty Ltd
www.mediaconnect.com.au
phi...@mediaconnect.com.au
Ph: +61 2 9894 6277
Fax: +61 2 8246 6383
Mobile: 0413889940
Sriram Panyam
I am in too. Great idea.
cheers
Sri
Blog: http://panyam.wordpress.com
URL: http://www.geocities.com/spany_1
Tyrone Castillo
Julian Tol
Is there someone who can take the proposal and place it on a part of the site viewable by non-SB members and non-users of Confluence?
Account and login will of course be required for enrollment / expression of interest, but I see no reason why the program itself cant be widely distributed.
When that's done, I'll distribute the link to my investor contacts.
cheers
Julian
Nick Gonios
glen
Glen Maddern
0423 118 405
Riges Younan
Just had a chat to Jordan Green of http://www.aaai.net.au/ about this and
he's going to take a look at it. He raised some interesting points about
ASIC's view of this kind of structure but in any event these guys are now
aware of it.
Cheers,
Riges
On 12/02/09 2:31 PM, "casey" <ca...@britestar.net.au> wrote:
>
> Make that $5500. I'm in
> On Feb 12, 2:22 pm, Phil Sim <philip...@gmail.com> wrote:
>> I think that makes ten. $5k raised in about an hour!
>>
>> I would encourage anyone on the group who have contacts within the
>> angel/vc/investor community to pass this message on and encourage
>> involvement. Part of the attraction of this idea is that there are
>> people within the 50 who might be potential later-stage investors and
>> can kick off an angel funding round when the startup reaches that
>> point. I think its very important that we provide a pathway to further
>> funding because seed capital is only going to get you so far.
>>
>> Phil Sim
>> Chief Executive Officer,
>> MediaConnect Australia Pty Ltdwww.mediaconnect.com.au
>> phi...@mediaconnect.com.au
>> Ph: +61 2 9894 6277
>> Fax: +61 2 8246 6383
>> Mobile: 0413889940
>>
>> On Thu, Feb 12, 2009 at 2:06 PM, gradconnection
>>
>>>> | grep "I'm in" :-p
>>
>>> Great idea!
>>
>>> mspecht wrote:
>>
>>> I am just catching up on this thread & really like the idea, of course
>>> the devil is in the detail. Having said that I'm in.
>>
>>> On Feb 12, 1:41 pm, Rai <dekraz...@gmail.com> wrote:
>>
>>> I've started a page in SB
>>> Confluence:http://confluence.siliconbeachaustralia.org/display/general/Silic
>>> on+B...
>>
>>> I think it might be best for registrations of 'I'm in' to go in there.
>>
>>> --
>>> Mike Casey
>>> Director
>>
>>> Level 5, 95
>>> Pitt Street
>>> Sydney
>>> New South Wales
>>> 2000
>>
>>> P: +61 2 8005 0266
>>> M: +61 4 4997 6059
> >
Rai
The Confluence page is open to the public - ie viewable by anyone.
Do you mean that you need something written in a more 'formal' manner?
Rai