So many new angel funds, what's going on?

[Jeromy Evans]

More than ever before (I think), new angel funds and incubators are
appearing for tech startups in Aus.

This is awesome, but what's the underlying reason for this? Most
industries are pretty low, consumer sentiment is pretty low and until
recently the Australian dollar was unattractively high. Despite the
high risk of failure, funding several tech startups with smaller
investments must be more attractive than other ways to use that money,
at the moment.

Is this a side effect of The Social Network and the recent high
profile high valuations in the US, or is there something else going on
here? Is there a groundswell?

cheers,
Jeromy Evans

[Andrew Quan]

Sounds like a survey would do the trick here. Would be greatly interested in the results.

--
You received this message because you are subscribed to the Silicon Beach Australia mailing list. Vist http://siliconbeachaustralia.org for more

Forum rules
1) No lurkers! It is expected that you introduce yourself.
2) No jobs postings. You can use http://siliconbeachaustralia.org/jobs


To post to this group, send email to
silicon-bea...@googlegroups.com
To unsubscribe from this group, send email to
silicon-beach-aus...@googlegroups.com
For more options, visit this group at
http://groups.google.com/group/silicon-beach-australia?hl=en?hl=en

[simran]

Hey Jeromy, 

Here's my 2cents worth (used to be only 2 paisa worth till 3 weeks ago :)

I've been in the startup space for a while, particularly in India for the last 3.5 years (and just came back home to Sydney). 

Dealt with some VC's there, and all the rage about developing nations, but having a lot of on-the-ground experience over there, i realise, you pay peanuts, but you do indeed get only monkeys! 

* Sydney/Australia is one the very few "developed" nations that is doing economically well and has very very good quality people willing to take chances

* Developing nations come with a whole set of challenges, and unless you know *exactly* how to navigate those, being a startup there is nearly impossible! The red tape itself kills you! Some people there are fantastic, but you can't be a one man band, context does change everything... 

Probably won't come as a surprise to people, but the good people there (be they few and far between) in some cases charge so much, that when i got outsourced work from Aus to India, i used it further outsource it to the US :) (especially for iPhone development). 

On another note, the context in developing nations is so different, that you need totally different solutions... so if someone (from the west) is investing in a startup to come up with solutions to problems that they understand, they must do it "in the west; or so far east that it's in australia :)" - in developing nations, the same issues just don't exist, and them problems will not lend themselves to being solved there. 

As every apple product says: "designed in california" - the design to solutions, the thinking work, must be in the context of where the problem is... the dogs work can be outsourced... and hence i suspect, the money raised by startups here, some of it will flow to other countries for execution anyway.

simran. 

simran.

On Wed, Oct 5, 2011 at 10:15 PM, Jeromy Evans <jerom...@gmail.com> wrote:

[Matthew Ho]

IMHO the more angels / incubators/ VC's the better.

there needs to be more capital here and people willing to take a punt.

I believe the funding of larger startups like Atlassian, 99 Designs,
OzForex and newer startups like Bugherd have drawn more attention to
the Australian startup scene.

We need more success stories like this for the Australian startup
ecosystem to flourish and the freeflow of capital and people.

VC's, angels and incubators need to also further extend their global
reach, spread their bets and find the next big thing.

Cheers,

Matt Ho
@inspiredworlds

[drllau]

http://startupgenome.cc/pages/summary-of-startup-genome-report-extra-premat

My impression is that internet web 2.0 (or whatever catchphrase du
jour) has been sufficiently derisked that angels are willing to step
in where fools have already failed. Thoughts ...

a) methodology - the new breed of agile lean startups around mobility,
UX, social media has been worked out that obvious failures are easily
weeded out.

b) exit strategy - again with the fast moving low-cost model, angels
can see either a trade-sale or else sufficient positive cash-flow to
make a punt (10-50k seed)

c) Australia - this is a harder question, why Australia and not say UK
or India. Here I'm wandering into speculation so I welcome any hard
facts.
- due to market size, Australia more prone to small scale, even
lifestyle micro-businesses
- legal environment decent, business support adequate, R&D talent
(erratic as in long-tailed but tolerable)
- culture of migrants allows non-locals to take a risk (similar to US)
- platforms out there allow successful punts to rapidly scale (IF
market traction or demand exists)
- pathway to globalisation ... because of the launchpads into
SiliconValley by some Australians, enough know-how from the school of
hard knocks (and US business is full-contact no-holds barred direct
growth-hormone) has filtered back that mentors can coach startups on
how to be an attractive acquisition target
- lifestyle reasons ... people who are good at above point have
decided for whatever personal preference that keeping a foot on this
side of the pond is worth the hassles of flying elsewhere (alas no
help from exorbitant submarine bandwdith costs for telecommuting)

There's an argument that I seen repeated that Australian companies are
small enough that the founders need to cover all the bases (core tech -
> sales), which means when they scale up, they have enough general
experience to be able to pick up specialists unlike larger firms in US/
Europe which are more knowledge silos. However, I'd also point out the
structural problems of the eco-system (again personal view from
obervation)

a) hard to see a Nokia/Ericson, much less Microsoft being purely
indigenous ... lack of breadth of R&D + early trade sales make
startups more likely to be absorbed (see GoogleMaps)

b) still hard to cross the valley of death between early stage success
(<100k) and pre-IPO VC funding (10M+) ... there's a distinct shortage
of local superangels (and syndicates)

c) as a developed country that bounces around banana republic status,
missing out on the biggest untapped global demand segment at the
bottom/middle of pyramid (low - cost, moderate complexity, mixed tech)
which means that cloners out of India/China are eventually going to
cleanup doing a fast follower strategy

d) talent coverage in key areas (UX, multi-core algorithms, soft IP
cores) is sparse to spotty ... Adelaide and to some extent Brisbane
shortage of people will limit growth

e) doesn't work so-well for non-web startups ... anything hardware or
engineering related is still struggling.

Lawrence
http://nz.linkedin.com/in/drllau

[Kate Kendall]

I think it's a natural part of the current startup hype/over-enthusiasm/bubble and subscribe to Eric Ries's thoughts in his recent post: 'Winter is coming'

--> http://www.startuplessonslearned.com/2011/08/winter-is-coming.html

Some quotes below:

"Those people working to nurture and support new startup hubs may see all of their hard work destroyed. I am especially worried about the burgeoning scene in places like New York. [aka Australia] Will Union Square become another Silicon Alley? I hope not. We need to be thinking about this now. The endless networking groups that thrive on hype and sizzle will suddenly wither. Do we have enough groups that are focused on the nuts-and-bolts of real entrepreneurship to keep those ecosystems vibrant? Which kind of group are you investing your time and energy into right now?

I expect that a shocking number of the current crop of incubators, accelerators, and other startup-support programs will suddenly disappear. In summer, it's all-too-easy to have your program look like a success, because there is an endless supply of talented people becoming first-time entrepreneurs and an endless supply of investment dollars chasing them when they graduate. It's hard to know, in summer, which of these programs actually add value and which are glorified admissions officers. Winter will tell. If you depend on one of these program for support, be ready."

---

I know, it's quite drastic but it's also beautifully pragmatic.  

Also, I saw an article the other day on StartupSmart that listed the top 10 incubators worldwide. It included some of the recent ones in Australia, and while it's obvious that these are fantastic initiatives for the community, we should be cautious about patting ourselves on the back and saying job well done. Most of these haven't released actual startups yet, let alone failures or successes, so only time will tell regarding their ongoing place.  

Link: --> http://www.startupsmart.com.au/funding/top-10-start-up-incubators.html

I still think the best stuff happening comes from independent people with their heads down doing and less with the continual collaboration and conversation. That said, assistance always helps nurture.

Cheers,

Kate

[Patrick Collins]

My first question is, are you sure it is higher than normal? Or are you just noticing it more? Are there others on the group willing to confirm Jeromy's observation?

Assuming it is higher here are some random thoughts.

While the Australian environment might not look all great, it is certainly looking less risky than placing investments in Europe or the US. It is possible that a lot of Australian dollars have been pulled out of the international scene and are seeking a home in Australian investments. That coupled with the du jour of being an angel investor could be a strong reason.

I don't think the Social Network effect would have much of an influence on the demand side (the investor). It would certainly have an effect on the supply side (the entrepreneur)... but then I think entrepreneur supply has been in surplus for quite a while in Australia. So I doubt that the Social Network effect is the cause of the increase in investor activity.

The question I would ask the group is, "who cares why? If there is so much right now... should you exploit it? how do you exploit it? And is it "good" money?"

Patrick.

[David Lyon]

Way to go Matt,

.. and not just only Silicon Beach drinks in Sydney, Melbourne and the Gold Coast
but further afield..

It would be great to have something like silicon beach spread to the aussies
hiding out in China, UK, States and so forth.

Even if they were just once a year or bi-annual events..

Speaking of which, I'm off to Tokyo in a few days. To see what sort of
technology is saleable there from an Aussie viewpoint.

I just regret not being able to take a big tuna fish on the plane.. it's nice
making a business trip to a country and coming back with more cash
than when you left..