The director of Sydney clean tech start-up enLighten has outlined some key tips for companies doing business in the United States, after attending the Cleantech Open Global Forum.
enLighten, led by director Tony Fehon, designs and supplies energy-efficient LED lighting for commercial and residential buildings. It was launched in 2008.
Earlier this year, enLighten won the 2012 Australian Clean Technologies Competition.
enLighten was invited to attend the Cleantech Open Global Forum, held in the US earlier this month.
Along with the six other Australian finalists, enLighten went to the forum in the hope of securing overseas investors and customers.
“We thoroughly enjoyed participating at this event and got a substantial amount from it, not least the sheer size of potential that the US market offers,” Fehon says.
“We are now in further discussions with several potential investors… as well a number of distributors who approached us.”
Fehon outlines some of his key tips for other companies:
Pitching to US investors
As part of the Cleantech Open Global Ideas Competition, enLighten was invited to the Investor Connect session, which links the most promising start-ups to corporate investors and VC funds.
The process included a pre-forum online review, matching process and intensive face-to-face showcase meetings, allowing each company seven minutes to pitch to up to 12 investors.
“We were looking for stage two expansion capital to fund further product development and international market entry,” Fehon says.
“The potential investor questions focused on several key areas: our market analysis and understanding, US market plans and entry potential, production capacity, competition defense mechanisms, and design patents and IP protection quality.”
“The line of questioning proved that in this mature market, potential investors are both highly knowledgeable and street smart.”
“The bottom line is you need to come not just well prepared but with a business strategy that covers the entire commercial ‘what ifs’.”
Raising capital in Silicon Valley
“Our first observation is that there is normally an extra ‘0’ in discussions related to investment amounts. This is a big country with big demand and big orders,” Fehon says.
“Secondly, US investors are astute and quick to work out if your business is within their sphere of expertise or interest.
“Given its size, the US venture capital market has more niche segments and therefore you have to meet a lot of people before finding the right ones.
“Despite this, we observed significant numbers of investors with the capacity to look at deals and ‘do it’.
“Australian investors are more relationship-focused and, as a result, deal with the issue of getting to a scalable market.”
“The US investors are making that decision for the much larger local market, where success leads to significant company returns.”
Opening a US office
The question of whether Australian companies should establish offices in the US was, to a large extent, answered by Viki Forrest, chief executive of ANZA Technology Network.
“She stated that virtually any service or product that is a success in the home market is ripe to reap huge rewards in America,” Fehon says.
“But to make this happen, your sales and marketing team need to be close to your customers.
“While Skype and email are great, they are no substitute in the early and critical days of relationship-building that goes into securing a new customer or raising capital.
“For entrepreneurs who wish to have a real and meaningful impact in a market the size of the US, there is no substitute for showing up in person.
“The digital world may be fast evolving but seasoned business folk know that in successful business, personal relationships still come first.”