The term “fintech” – the marriage of financial services with technology companies – has only recently come into vogue in Australia, with venture capital starting to flow into the sector. It was only around October 2014 that the term fintech started to appear in Australia’s mainstream media – rather late given it was just two months later peer-to-peer lending platform LendingClub listed on the New York Stock Exchange. LendingClub reached a valuation of US$8.5 billion in the closing days of 2014, making it the 15th largest US lending institution by market capitalisation at the time, the company’s estimated. Taken at face value, it would seem Australia has simply been late to the fintech party. But that is not really the case. There are four roles that financial services companies perform in any economy: they facilitate payments; create credit; manage wealth through investment platforms; and assist with risk mitigation through either insurance or facilitating price discovery in the traded financial markets. Outside of Australia – in the US particularly – startup fintech companies have launched a relentless assault on all of these functions. In every case, they have succeeded by offering customers a cheaper, simpler product, more suited to exactly the type of transaction customers were looking to undertake. This is the classic model of business disruption. To be clear, fintech companies are not just online banking platforms. Their products are unique. First, many platforms directly match buyer and seller, taking out the finance middleman and large balance sheets. Second, most innovate new ways to use personal information for product creation and sales – such as mining social media sites to support customer identification and credit scores. Finally, fintech platforms often cross-sell other, non-financial products to their customers, accruing value to the platform rather than to the product itself. This is an inversion of the traditional financial services model that asks customers to pay for products, and uses product revenue to subsidise its “free” distribution platform of branches, offices, salespeople and online transaction platforms. Australian banks have held back the tide Fintech companies have sprouted like mushrooms across the payments, credit, investment and markets space outside of Australia. Why are the first green shoots in Australia only starting to appear now? Three reasons spring to mind. One is that Australian financial services firms have been innovating from within, reducing the incentive for their customers to go in search of cheaper, more convenient options. Second is that traditional financial institutions have used their market power to maintain market share. Finally, Australia’s regulatory settings have been too restrictive, making it difficult for young startups to enter the market. This last point was particularly noted in the Murray Financial Services Inquiry, which recommended a more finely attuned regulatory structure to promote greater competition in the financial services sector. Perhaps the most noteworthy absence of fintech startups in Australia is within the payments system space. This stands in contrast with countries like the US, where PayPal’s dominance in online payments is unquestioned. Customers choose PayPal in the US because its banks never created a unified national online payments system and were too late to realise customers would rather transact online than write out and mail cheques. But PayPal is not alone. Google has launched Google Wallet, Facebook and WeChat in China have announced debit cards for online “sharing money", and AliPay in 2014 announced it had facilitated nearly US$150 billion in mobile transactions. Not all of these startups have entered Australia, and the reason may be that Australia already has one of the most advanced online and cashless payments systems in the world. The system – which most Australians will know as Eftpos (electronic funds transfer at point of sale), PayAnyone (online account-to-account transfers) and its compatriot BPay (online bill payments system) – are innovations created by a consortium of Australia’s major banks around the same time as PayPal’s founding in the US. Australian banks have remained competitive in this part of financial services. Where the gaps are The gap in the payments space is in international money transfers, where anti-money laundering regulations and compliance reporting are so onerous that the major Australian banks have closed their doors to remittance businesses. In their absence, we see firms such as CoinJar utilising digital currencies like bitcoin to transmit across borders. CurrencySpot offers a more traditional foreign exchange service, but also anti-money laundering compliance reporting on foreign exchange transactions. Competition is even hotter in credit markets. On what seems like an almost daily basis, another peer-to-peer (P2P) lender announces it is entering the Australian market. Local player SocietyOne has in the last 12 months been joined by RateSetter (UK), OnDeck (US) and Kiva (US), among others. But the P2P lending industry in Australia is still niche, emerging only in the spaces where the large Australian banks have voluntarily withdrawn: consumer lending and small business lending. The chart below highlights the extent to which banks have preferred to grow their loan books through mortgage lending – almost certainly driven, at least in part, by the preferential risk weighting on capital assigned to mortgage lending under the Basel III framework. Lending and credit aggregates in Australia In contrast, this chart below highlights the rather slow growth of business lending. Moreover, since the global financial crisis, new business credit has increasingly gone into loans of a size in excess of A$500,000 - a loan amount much more suggestive of a large corporate than a small or medium-sized business. In aggregate, the data suggests that credit from the banking system has not been flowing to either consumers (outside of housing) or the smaller end of the business market. Australia’s business credit flow by loan size The space left by banks is where P2P lenders are entering the market. SocietyOne (Australia) and RateSetter (UK) are operating in the consumer lending space, while OnDeck (US) and ThinDeck (UK) specialise in small business loans. MoneyPlace (Australia) handles both consumer and small business lending. A key advantage of P2P lenders – aside from their generally lower cost of capital and ability to use unstructured sources of data – is that they are able to vary the interest rate offered to individual borrowers in a way that is unrealistic for a large bank. While now a relatively small share of overall credit growth in the Australian economy, there is no question that the ability of the financial system to meet the credit needs of smaller borrowers – especially SMEs – is critical for economic growth. The experience in the US has suggested that, over time, established banks can work with the P2P community, using P2P platforms to identify new customers and benefit from a superior online customer experience. Similar trends are being seen in the financial investment market with “robo-advice” - investment advice that is online and automated by the use of algorithms to produce an individual’s optimal portfolio allocation. Other investment start-ups include names like Macrovue, which helps unsophisticated retail investors to diversify their portfolios and easily track returns. The number of robo-advice providers in the Australian market is still relatively small, but suits the estimated 80% of Australian superannuation fund holders who do not seek professional financial advice. The future here may also be one of accommodation, where financial advisers look to take advantage of tools made available by robo-advice to find a less expensive way to service their customers. Either way, it’s a competitive gain for consumers, and a productivity boost for the Australian economy. This article was originally published at The Conversation.
General wisdom among tech entrepreneurs is that the ideal number of co-founders is two or three. There is a good reason for it – an analysis of a dataset of 100,000 startups by Startup Genome shows that solo founders take 3.6x longer to reach the scale stage, compared to a founding team of two. However, taking a co-founder on board brings its own risks. Here’s a short guide to picking the right person. 1. Find someone with a complementary skillset According to serial tech entrepreneur and Stanford lecturer, Steve Blank, startups are inherently chaotic, and finding a product/market fit in that chaos requires a team with a combination of skills. The skills you need depend on the industry you’re in but, in general, co-founders should have complementary skills. In mobile and web startups, that usually means great technology skills, great business and marketing skills, great UX design and product skills. Most people are good at one or two of these, but it’s very rare to find someone competent in all areas. 2. Find someone who shares your vision and values Co-founder disputes are very common and are a frequent cause of startup failure. A lot of these disputes stem from founders having different ideas about how to run the company and where it should go. One thing is to put your vision and priorities on paper; another is to live it day by day, especially when your original idea proves wrong and you need to change direction. Likewise, the values you live by will plant a seed for what becomes a company culture. The reality is that co-founders will have different values but, together as team, you have to define a common value system. Having done so will likely play an important role in taking your startup forward. 3. Find someone with grit Once you have an idea, you need to be able to pursue it, even in the face of adversity, if you want your startup to succeed. Frankly, entrepreneurship is extremely challenging, and to persist through those challenges, you need grit. Professor Carol Dweck, of the Stanford Department of Psychology, has done extensive research on the subject of grit, which she defines as ”the disposition to pursue very long-term goals with passion and perseverance, stamina and ability to win things over the long-term and work very hard at it”. According to her research, the key to grit is having the right mindset. Dweck observed two different mindsets among people: Fixed mindset: A belief that you either are talented or not. Failure is proof of your inability. Intelligence and talent are just fixed traits. Growth mindset: A belief that abilities are developed. Setbacks and criticism are a sign that you need to improve. You learn and grow yourself and think long-term. People with a growth mindset are more resilient to challenges related to their abilities and performance than those with a fixed mindset. 4. Find someone who stands out Founder personalities are important and often popularised. Many companies end up looking like founder cults – Steve Jobs is a great example. Peter Thiel, investor and founder of two billion-dollar companies (PayPal, Palantir), believes there is a connection between being a founder and having extreme traits. According to him, the key to PayPal’s success was the eccentricity of all founders: “Four of them were born outside of the United States. Five of them were 23 or younger. Four of them built bombs when they were in high school. Two of these bomb-makers did so in communist countries: Max in the Soviet Union, Yu Pan in China. This was not what people normally did in those countries at that time.” According to his observations, if all traits distributed in the population were aggregated on a normal distribution chart with extreme traits on the right and left side of it, you will find most founders on both ends of the curve, rarely in the middle of it. True or not, entrepreneurs like Richard Branson, Bill Gates, Warren Buffett or Larry Ellison certainly add a little substance to this. 5. Find someone with whom you have a history of working together In the case of startup ‘unicorns’: 90% co-founding teams of $1 billion+ startups comprise people who have years of history together, either from school or work; 60% have co-founders who worked together; and 46% who went to school together. Further findings reveal that teams that worked together have driven more value per company than those who went to school together. Only four teams of co-founders didn’t have common work or school experience, but all had a common thread. Two were known and introduced by the investors at founding/funding; one team were friends in the local tech scene; and one team met while working on similar ideas. The take-away? The most successful co-founder teams are the ones where the people have known each other in other contexts, prior to the company at hand. Sources: TechCrunch, Peter Thiel’s CS183: Startup – Class 18 Notes, Stanford University. This piece originally appeared on Appster’s blog.
Like all co-founders, Richard Hordern-Gibbings and I are working hard to make our startup Nexus Notes a success. Late last year we did two things to help us on our way: we pitched to be a part of the tech accelerator, Startmate, and the television series, Shark Tank. We were fortunate to be selected for both. This post explains a bit about both experiences. Startmate Sydney-based Startmate is a network of founders offering mentorship and seed financing to technical teams creating global internet startups from Australia. They invest $50,000 in seed capital for 7.5% of company equity. Some of the mentors include co-founders of tech giants like Atlassian’s Mike Cannon-Brookes and Scott Farquhar and SEEK’s Paul Bassat. In addition to the capital and mentorship, they also provide office space in an incubator for three months, access to key partners like Amazon and PayPal and introductions to US investors in Silicon Valley over a two-month period. The Startmate selection process is competitive. For the 2015 intake, over 200 startups applied, 25 teams were shortlisted for interviews and eight made it through. We were excited to be one of the eight companies chosen. We found this out in the middle of October last year and began to make plans to begin work in the program from January 5 this year. It’s worth mentioning that the Economist listed Startmate as one of the top accelerators in the world based on follow-on funding for alumni. Now in its fifth intake, half of the 29 companies who have gone through the program have raised seed capital. The average deal has been a $US1 million raise at a $US4 million valuation from a combination of Australian and American investors within six months of participating. Shark Tank Soon after being accepted into Startmate, we heard that Shark Tank were keen for us to pitch on their show. We hadn’t begun the Startmate program yet, so Richard and I sensed that the timing might not be ideal for the Sharks. After consulting our new mentors, the consensus was that we had nothing to lose in making the ask and so in December we did. The pitch to the Sharks was simple, “Nexus Notes has huge potential, invest now and pour fuel on the fire.” We asked for $300,000 for 7.5% of the company. One of the five Sharks, Steve Baxter, made an offer which we declined and the other four chose not to invest. Their view was that while they could see the potential in the business, our valuation was too high. Combine this with the fact that Startmate had already come on board and it was ‘no deal’. Richard and I want to grow a sustainable, global tech business that realises our vision of giving the best students the tools to teach. Our first product allows high-achieving students to publish their notes and we’re looking forward to launching our next products. We’re super excited to be a part of Startmate and have some fantastic mentors on-side. We were really proud to announce our advisory board last month with some tech all-stars behind us and it was awesome to pitch at the demo day in Sydney last week. If you’d like to be a part of our story as a user, then start by contributing or purchasing your first set of notes – we’d be pumped to have you a part of our community. If you’d like to invest, then email me email@example.com and I can talk to you about our current seed round. Hugh Minson is the co-founder and CEO of Nexus Notes. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Australia could build a startup ecosystem around the success of Atlassian, much like Silicon Valley did with PayPal, according to DN Capital founder and managing partner Steven Schlenker. Speaking to StartupSmart from San Francisco ahead of his appearance at Slush Down Under in Melbourne on April 22, Schlenker says it will be the knowledge Atlassian generates, not capital, that will have the biggest impact. “If you can build an ecosystem around one company – which happened with PayPal, but it could easily happen with Atlassian – it’s about getting people who were one or two layers away from the board of directors and have been crucial to the development of the business. Who then say ‘now I’m ready to go off and start my own startup’,” he says. “Or in some cases they join a venture capital firm and back the people they’ve known for the last five years.” Schlenker founded DN Capital in 2001, last year it raised €144 million ($A200 million) for its third fund. It’s headquartered in London, but has offices in San Francisco, where Schlenker spends the majority of his time. It focuses on Series A investments in software or software-related startups. Entrepreneurs need experience When investigating potential investments, Schlenker says he looks at the management team first – do they have experience leading fast-growing companies? He notes the development of such founders is often impeded when governments try and create an environment where everyone can be an entrepreneur. He gives the example of the United Kingdom where the Enterprise Investment Scheme and Special Enterprise Investment schemes have made it easier from a tax standpoint to fund startups. “Instead of people going through a mentorship process, being part of a great company like Atlassian, coming in as a director of business development, or VP of development level, and learning how to grow a fast-growing business. Those same individuals go directly into being a first-time CEO,” he says. “So you’ve deprived the great companies, the Atlassian equivalents, of having quality people. Those people waste several years because they haven’t had the proper mentorship and training to really excel in building a fast-growing company.” DN Capital has looked at a number of investments in Australia, but has yet to invest. Schlenker says, in general, more and more US-based venture capitalists are looking abroad. “What you’ve seen in the last 24-36 months is a large amount of capital raised for growth equity or pre-IPO rounds. Between $20 million and $200 million,” he says. “And in those cases businesses that already have traction are becoming increasingly popular with some of the larger funds. US-based VCs are looking more and more outside of the bay area. And that goes to valuation and the ability to pre-empt and get involved in companies before valuations go up. “It’s not all VCs though, there’s still a cadre of Silicon Valley investors that only want to invest within a 50km drive of their office. And want to be close to the company while they’re growing.” The blackmail business model DN Capital is looking for startups with the potential to become a global leader, that are currently working to gain local market share, but have a clear road map to expand across the globe. Schlenker has seen many pitches over the years, but one in particular stands out for all the wrong reasons. “It was actually about 10 years ago, I was pitched what I call the blackmail business model,” he says. “They said we will use wiki technology, to write business websites for people. Knocking on the door of small businesses, say you’re not currently on the online, you don’t have an online strategy. For a very small fee we will create you a web presence and do that through a crowdsourced wiki site. “Then they come back a week, two weeks, a month later and say do you realise that anyone can edit a wiki site? If you pay us additional money, say $100 or $200 a month, we’ll monitor that site and take down any negative things. “I told them I thought as a VC investor you have to be able to look yourself in the mirror and be happy with what you see, and happy with the types of companies that you’re supporting,” he says with a laugh. Follow StartupSmart on Facebook, Twitter, and LinkedIn. Buy tickets to the 2015 StartupSmart Awards.
“It was one of the worst experiences of my life": Four things Vend founder Vaughan Rowsell learnt from a “lousy” startup experience4:27AM | Tuesday, 7 April
Vend founder Vaughan Rowsell knows all too well the ups and downs of working in a startup. Prior to founding Vend, a point-of-sale software provider that raised $22 million in capital last year, in a round led by PayPal co-founder Peter Thiel, Rowsell was chief technology officer at online travel startup Vianet. Rowsell says Vianet was “Airbnb, before there was Airbnb”. It allowed users to rent out any form of accommodation “whether it’s a spare room in a house, a boat, or a hotel”. Vianet would eventually be acquired by Trade Me, one of the startup’s largest customers. And while an acquisition might look at first glance like a win for the startup’s founders – that wasn’t the case. “We made a host of mistakes in that business, basically burnt a lot of cash,” Rowsell told a Startup Grind Melbourne event recently. Unfortunately, those mistakes happened at the wrong time and money dried up just as the global financial crisis hit. “Every investor on the plant started stuffing their cash under their mattresses,” Rowsell says. “It was difficult to get much funding, so we had to have a fire sale. Trade Me was one of our best customers and we were powering all of their online booking services. So that sounds like it was great. But actually it was pretty lousy; the founders didn’t see much, or anything out of it. “We learnt a truckload, but it was one of the worst experiences of my life.” Here’s some advice Rowsell has for startup founders: 1. Be prepared for anything “Always have multiple plans. More often than not you’re in growth mode, you’re growing the business or investing in the business faster than revenue growth is catching up. We’re just going to go hard, grow grow grow, raise more money as we go to fund the growth. But you should always have a plan B. Because at some point you may not be able to raise that money. “It might be to slow down growth to get yourself into a cash flow positive position. Plan C might be selling part of the business. You need to have all of those plans and keep constantly monitoring them to make sure they’re all achievable.” 2. Trust your team “Trust people and they will trust you. Be OK with not knowing everything. Very quickly early on you’ll realise that you’re starting to max out all the stuff you know. And as your business grows, you’ll find there’s layers on top of what you know, that you don’t know, and you’re going to have to figure it out really quick. “You’re going to have to learn fast and learn to trust people. Bring people on board and hand over more and more stuff to people that are smarter than you and be OK with that.” 3. Be open and transparent “Be transparent and open with your team. Because being in a startup is tough. If you try and keep secrets from everyone it just creates this atmosphere of mistrust. You want to have that trust because you’ll have good times and bad times. So when you’re standing up in front of them, doing some hard stuff, they trust that you’re being open and honest with them about everything.” 4. Don’t spend money you don’t have “If you’re talking to investors, remember, you don’t have the money until you’ve got the money in the bank. So don’t start spending the money until one – they’ve signed a term sheet and two – there’s cash in the bank.” Follow StartupSmart on Facebook, Twitter, and LinkedIn. Buy tickets to the 2015 StartupSmart Awards.
Popular torrenting website Pirate Bay is back online, two months after its servers were raided by police in Stockholm. While the site looks similar to how it did in December, moderators will no longer be able to access the site in an attempt to minimise the risk of it being shut down again according to Torrent Freak. Swedish authorities raided Pirate Bay’s servers in December, targeting computers and other equipment. The website has been operating since 2003 and has survived a number of high-profile attempts to shut it down. Snapchat launches weekly web series Snapchat has made the leap into the media production space with the launch of its own weekly web series. The show – called Literally Can’t Even – will be released in five-minute segments and will star Steven Spielberg’s daughter, according to Fairfax. Last week, the social media platform announced it was introducing a news and entertainment service with partnered organisations such as Vice and CNN. PayPal-backed marketing startup raises $1.2 million A marketing startup based in Menlo Park has raised $1.2 million in funding led by PayPal and customer science company Dunnhumby. Pulsate is a contextual marketing platform that delivers content for brands based on a user’s location and preferences. Chief executive Patrick Leddy said in a statement the funds will be used to accelerate product development and ramp-up brand awareness. “We are already attracting a lot of customers in this space and with this support we look forward to becoming the industry leader in context marketing,” Leddy said. Overnight The Dow Jones Industrial Average is down 1.45%, falling 251.90 points to 17,164.95. The Australian dollar is currently trading at US77.77 cents. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
PayPal’s John Lunn on how digital currencies will disrupt the way “inefficient 30-year-old banking services move money”1:00AM | Thursday, 29 January
The potential for digital currency to move money around the world more efficiently is huge, according to PayPal developer network global director John Lunn. Last month PayPal made a submission to the Australian Senate inquiry into digital currency arguing that digital currencies themselves shouldn’t be regulated, but the entities that use them should. PayPal, through a deal between its subsidiary Braintree and Coinbase, began enabling all US merchants using its platform to accept bitcoin payments. Lunn says the primary driver behind PayPal and Braintree’s decision to implement bitcoin payments is not so much an endorsement of digital currencies, rather a reaction to PayPal and Braintree merchants who wanted consumers to be able to purchase with bitcoin. “We thought, let’s look at it and let’s get some real data about who’s going to use this, are people going to use this to buy real products in the real world,” he says. Braintree only added bitcoin to its merchants’ payment options this month, so there’s not yet enough data to examine whether consumers are embracing bitcoin as a means to purchase. Lunn was a bitcoin miner up until recently, “for scientific purposes”, he says with a chuckle, before adding: “One of the things I always think about bitcoin is can I explain it to my grandmother? I can’t and I don’t think my grandmother will ever use it.” “Which is a barrier; until someone comes up with a smoother and easier way to use it, I think it’s a barrier to mass adoption. “I’m fascinated with the concept of digital currencies and a shared ledger. I think it’s important and there’s so many things you could do with it, which aren’t necessarily how it’s being used at the moment. “I think it’s going to disrupt the way a lot of inefficient 30-year-old banking services move money.” Lunn is in Melbourne this weekend as a judge for the Melbourne leg of PayPal and Braintree’s BattleHack. The hackathon tasks developers with building mobile applications to solve a local challenge incorporating the PayPal API or the Braintree SDK. The winner will be flown to the finals at PayPal’s headquarters to compete for the $US100,000 grand prize. “We’re thrilled to bring BattleHack back to Australia and give local developers a chance to showcase their skills and creativity. We chose Melbourne as one of the cities due to its status as a technology and innovation hub.” For more details, visit https://2015.battlehack.org. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
As large online payment startups increasingly turn their attention to Australia, Melbourne and Perth-based startup Pin Payments continues to grow both in terms of revenue and merchants on its platform. Stripe launched in Australia earlier this year, while PayPal and Braintree brought their Startup Blueprint program to Australia in September in an attempt to encourage more Australian startups using their platform. Pin Payments director of sales and growth Chris Dahl says the size of the opportunity in online payments is so vast – a recent NAB state of the net report estimates online retail in Australia is the equivalent of 6.7% of traditional bricks and mortars retail, a figure that’s growing with no signs of slowing down, that there’s room for many players. “What we’re finding is that lots of small businesses are starting to take payments for the very first time,” Dahl says. “We know Stripe launched a few months ago, and in developer circles that might affect us a little bit, but with all our metrics increasing, it’s hard for us to say what’s had an impact when things are going up. That plays to just how big the opportunity in online payments is here in Australia.” Last week Pin Payments passed $50 million in annualized transactions, which Dahl says is an important milestone, and one they’ll use as evidence of traction when pitching to investors for an upcoming Series A investment round. The startup says its transactions have been growing at over 300% per annum. Pin Payments, which was founded in 2011, has raised two separate seed rounds, the first at the end of 2012, and the second at the end of 2013, totalling roughly $1.5 million. It’s looking to raise $5 million in Series A capital. “We’ve started talking to interested parties over the past couple of weeks, and will be pitching in the next couple of months,” Dahl says. “For us, what we’re looking to do here is really bed down Australia; penetrate the market here a lot more than we already have. We think there’s a lot more opportunity to get merchants here in Australia. “But we’ll be looking to expand to Asia as well, markets like Singapore, Malaysia, Hong Kong, they’re very attractive to us. We’ve been getting requests from there, but haven’t extended out to get into those regions yet.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Neuroscientists are fed up with the brain training industry, Michael Byrne reports in Motherboard. According to Byrne, neuroscientists object to the claim that brain games offer consumers a scientifically grounded avenue to reduce or reverse cognitive decline when there is no compelling scientific evidence to date that they do. Sorry Lumosity, Fit Brains and Brain HQ. Sadly there doesn’t appear to be an app which can make you smarter. How Yelp revolutionised customer feedback Yelp’s presence in Australia may still be small compared to the United States but David Kamp’s article in Vanity Fair ‘How Yelp chief executive Jeremy Stoppelman created a revolutionary product’ is still a fascinating read. Kamp reports that “something funny happened shortly after Stoppelman’s project at PayPal, Yelp went live: its users embraced the site’s “Write a review” feature to a degree far greater than anticipated.” “A few weeks of hasty re-coding later, Yelp was reconfigured to make reviewing its raison d’être, and Stoppelman has never looked back. “Ten years after its founding, Yelp is the web’s premier site and app for customer reviews—not just of restaurants, but of shops, kiosks, food trucks, parks, bus lines, funeral homes, D.M.V. offices, and even human attractions. (The Naked Cowboy in Times Square was averaging four stars out of five at press time.)” Dealing with toxic people In Inc, Jessica Stillman outlines ‘7 Ways To Deal With Toxic People.’ She says the sad reality is that toxic people are common. “Equally troubling is the effect those individuals – who like to push others' buttons, stymie projects, and inject pessimism into every situation – can have on their better-adjusted co-workers,” Stillman says. She outlines seven strategies for managing this noxious breed. Tim Cook’s personal statement Apple CEO Tim Cook has taken a step away for a moment from the rigours of running one of the biggest companies in the world to write in Bloomberg Businessweek about being gay. “While I have never denied my sexuality, I haven’t publicly acknowledged it either, until now. So let me be clear: I’m proud to be gay, and I consider being gay among the greatest gifts God has given me.” It’s an understated but proud proclamation by Cook about his sexuality and about his pride in Apple’s history and continued commitment to human rights and equality.
Some time back, I created a list of website features – or more accurately website platform features – required by retailers to run a professional e-commerce operation. But like all things digital, the landscape soon changes, so I thought it worth re-visiting just to ensure retailers had the latest information at their fingertips. This list is by no means exhaustive – each retailer has different specific requirements. But for the smaller retailer embarking on their online journey, or perhaps streamlining it, this will provide a handy guide to what online tools you are going to need to make a fist of your e-commerce website. As their business model is relatively similar, wholesalers are likely to require similar functionality. 1. Content management system (CMS) An absolute fundamental for your website. Having your web professional alter and edit your website whenever you need it adds unnecessary cost and delays when a CMS makes this relatively easy and convenient. In fact, a CMS is so easy to operate these days that a reasonably computer-savvy shop assistant should easily be able to do this task if you don’t wish to do it yourself. Don’t even consider arranging a website without this fundamental editing and website management tool. 2. Integrated email marketing system (EMS or EDM) Despite social media very much being the flavour of the month, not everyone uses social media regularly, unlike email, which most people use on a very regular basis. But the days of sending your specials to a group within Outlook are long gone. An EMS or electronic direct mail system ensures your email campaign will look great, be personalised and be integrated with the statistics you need to ascertain its effectiveness. And by being integrated with your website platform, you cut out considerable time in having to keep lists up to date and synchronised. Better still, your customers can alter their details themselves, saving you even more time. 3. Integrated customer relationship management system (CRM) Of course an EMS without a CRM is a wasted opportunity and something of a waste of time. A good CRM will allow you to integrate your customers so that you can seamlessly send emails, keep purchase records and have a record of website visits, among other things. This approach saves having to keep such data in a myriad of different unconnected places and the time involved in maintaining each one. 4. Secure shopping cart It goes without saying really, though for those not quite confident enough to take this plunge, they can start with basic product information via a CMS before going the whole cart route. Just ensure that your website platform allows you to upgrade to cart/e-commerce functionality very easily and affordably. Your cart will need to be hooked up to a payment gateway – the secure encryption technology that allows funds to be transferred securely and safely. At its most basic, PayPal provides a great and affordable way to do this. 5. Auto-homepage capabilities There are few things worse in the online world than visiting a website some time after your previous visit, only to find that nothing has changed and that the so-called “coming soon” specials have never eventuated. Auto-homepage capabilities allow you to bring new product, specials and so on to the front page of your website without having to physically alter it. In other words, by literally ticking a box the featured item brings itself to the front page of the website and keeps it fresh, interesting and above all, likely to result in more sales. 6. Australia Post delivery integration Managing delivery costs can be a major frustration for website operators as they constantly need to be updated to reflect changes in postal charges and product dimension, etc. But a good cart system will be integrated with Australia Post delivery charges. This allows real-time integration of the latest delivery charges so that you never need to alter it beyond your initial inclusion of the product leading to fantastic time and cost savings. 7. Currency conversion The truth is very few Australian retailers consider making interstate sales let alone those from overseas. But why not? A customer is a customer is a customer, no matter where they’re located. And if they’re prepared to pay the delivery charge, even better. If you can’t achieve automatic currency conversion, at least have a prominent link to one so they can do the math themselves. 8. Financial software integration This capability is not critical to many retailers because online sales can be categorised as such on their financial software and entered periodically with a refer online sales report memo. Others prefer complete integration with their software. Either way, such an integration is becoming increasingly viable with today’s cart solutions. 9. Social network integration Every retailer should fundamentally not let a customer leave their store – online or on-street – without either selling them something or getting their contact details. Just because they didn’t buy this time, doesn’t mean they won’t buy from you later. Social networks provide a convenient, seamless and affordable way for customers to engage with you and for you to promote your wares for essentially nothing. So links to the major social networks should be prominent on your page. Miscellaneous others There are numerous other website features a retailer could benefit from depending on the level of sophistication / automation required. Some of these include: Inventory management – this can be used for all stock whether sold online or in-store Gift vouchers – an automated gift voucher system which bypasses the need to send a physical voucher Affiliate programs – others can promote your product and earn a commission for doing so Drop shipping management – orders can be despatched automatically to manufacturers and wholesalers for drop shipping Download sales – sell an audio, pdf or other file and allow immediate download following purchase. Product image zoom – allows you to zoom in on a product image for detail Wishlists – allows visitors to create a wishlist for gifting, etc, purposes Larger retailers will find this list somewhat primitive as they embark on exciting new capabilities like personalisation, virtual fitting and so on. But smaller retailers will certainly be able to operate a professional online outlet if they ensure their website includes these capabilities. The fantastic news about so much wonderful functionality is that it is so affordable these days. There really is no excuse not to make your product available for online purchase. Don’t forget too that these websites are invaluable at promoting in-store purchase as well for those who are in your vicinity. In fact, the sales generated in-store from your website may well exceed those made online, giving you even more online bang for your buck. In addition to being a leading eBusiness educator to the smaller business sector, Craig Reardon is the founder and director of independent web services firm The E Team which was established to address the special website and web marketing needs of SMEs in Melbourne and beyond. This article originally appeared on SmartCompany.
If you want to flag a trend in Australian startups, then Tech23 is a good place to spot it. From the line-up last week it looks like Australian startups have embraced enterprise software, something it seemed reluctant to do for a long time, preferring to try to make more ‘sexy’ consumer plays, despite the success of Atlassian. The line-up showcased a huge mix of companies from “smart” rowing equipment, to GPS-enabled sunglasses that promises you can never lose them, to aged care avatars that help remind you to take your medication, but undoubtedly the theme seemed to be around enterprise solutions – getting down to the basics of helping industries and businesses become more efficient. Intelligent Fleet Solutions, Maestrano, and Red Eye kicked off the Tech 23 event, setting the tone for the types of technology companies that dominated the day. The three were joined by Peepable, the only truly consumer focused software startup of the day, which is aiming to make video more searchable. The day really belonged to Tzukuri’s 20-year-old founder Allen Liao, who stole the show with his cool and collected presentation on sunglasses you can’t lose, taking away the Tech23 2014 People’s Choice Award. Liao has already been approached by Apple to distribute his product through Apple stores next year, and is working on partnerships with large fashion brands. He’s not currently taking investment. Now in its sixth year, Tech23 2014 confirmed the event’s status as a benchmark for the Australian startup community. Industry leaders, enterprise and start-up sponsors, and Tech23 alumni companies came together to donate prizes including thousands in cash, meetings with influential people and trips overseas, after government funding for the event was pulled. “The scope and impact of Tech23 continues to grow exponentially,” says event founder Rachel Slattery. “This year we had companies from six states representing products and services that range from big data technology to location services, enterprise applications to healthcare.” “I’m consistently amazed by the level of innovation and ambition our Tech23 show. The technology on display today boasted benefits for business and community alike.” The Tech23 Innovation Excellence Award went to Intelligent Fleet Logistics for their vehicle routing and scheduling optimisation technology. The Tech23 Greatest Potential Award was won by Clipp for their bar tab app. They also won a $5000 cash prize from PayPal. Doarama, creators of a 3D GPS track visualisation program, has won a trip to Silicon Valley thanks to ATP Innovations. Bluedot Innovation, a technology for precise, battery friendly location services, has won a trip to Boston thanks to Bigtincan; and $5000 cash from REA Group. REA Group also awarded a second $5000 cash prize to Sound Scouts, a game which detects hearing loss in children. Clevertar was awarded $3000 cash from NRMA; Global and Smart won $2500 from Bendigo and Adelaide Bank. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
An Adelaide-based startup is looking to make it easier for businesses to turn regular customers into recurring revenue. Payhero, the latest product to be launched by software startup Getyo, is aimed at helping companies start their own recurring billing and subscription services. Co-founder Chhai Thach told StartupSmart Payhero is “filling the gap” left by services such as PayPal, Etsy and others by allowing businesses to set up and manage a subscription or recurring billing service. Thach says he has experienced first-hand how difficult and time-consuming it is to send out membership or subscription renewals. In a previous job he would first customise the invoice, generate the PDF from the members’ database and then somebody else would print it out and post it in the mail. In all, it was a very laborious process. “It’s an expensive task and for them to automate something like that would cost them thousands,” he says. “This automates the processes for the business as well as the customer. It frees up your time so you can enjoy things you want to do with your friends and family instead of worrying about the little things.” The startup is in an early stage beta and plans to build up “a really strong brand” before scaling accordingly. Thach says while smaller businesses and sole operators would benefit greatly from Payhero, the product is not aimed at a particular sector – big or small. “All sorts of businesses can take advantage of this,” he says. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
PayPal and Braintree’s Startup Blueprint, a global program to support startups making mobile web software or services, has launched in Australia. The program was also launched in seven other markets in the Asia-Pacific including Singapore, Hong Kong, Indonesia, Japan, Malaysia, Philippines and Taiwan. The Startup Blueprint program partners with startups from incubators and accelerators around the globe to help the next generation of mobile and web companies to monetise their businesses and connect with 152 million active account holders. Its Australian partners include Startmate, Blackbird Ventures, ATP Innovations and Oxygen Ventures. Through the program startups get free payment processing for up to a transaction value of $US1.5 million with PayPal and $US100,000 with Braintree. The startups will also get access to a team of startup advisors who will provide one-on-one mentorship, workshops and support. To be eligible for the program startups must focus on making mobile or web software or services, be privately held and make less than $US3 million annually or be less than five years old, and be nominated by a Startup Blueprint partner. The program has been operating since late last year and has helped nurture successful startups including Memebox, Blitsy, Telnyx and Swivl. Founder of Startmate and Blackbird Ventures Niki Scevak says both are thrilled to be Startup Blueprint partners. “It’s programs like these that give our startups an edge when launching global businesses from Australia.” Senior global director, PayPal and Braintree developer and Startup Relationships, John Lunn says it’s a way for the companies to give back to the startup community. “We know every cent matters and we do not expect anything in return. PayPal and Braintree are driving Startup Blueprint because we have been there,” he says. “We want to help startups get up and running. This program empowers payment capabilities and supports each startup’s growth.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Apple has now released its iPhone 6 and 6 Plus smartphones in Australia, and the near inevitable crowds are – once again – lining up around the block. So what does the news mean for Australian software studios and app developers? Is this likely to be an “insanely great” development that will boost revenues and sales for local startups? Perhaps it will mean more headaches for developers? Or will this mean less than some would anticipate? We asked a number of developers and entrepreneurs to find out: Clipp co-founder and chairman Greg Taylor It looks like a bigger iPhone 5s – but with some amazingly beautiful and innovative new rounded edges! The best part for Clipp is Apple Pay. Apple Pay will provides our customers with another payment option to credit card and PayPal, the major benefit being customers not having to enter their credit card, overcoming any concerns of credit card security. Apple Pay will be a huge driver to mobile payment adoption, which is great for Clipp. Anytime Apple releases a new iOS, I get very nervous, particularly a major release like iOS 8. There is a strong history of many apps not working on each major release. I have already received an email from a widely used app this morning warning customers not to upgrade to iOS 8. Apple don't give developers much time at all from releasing the final version until consumers can download it. If something does not work, there is not enough time to fix it, test it and put it through the App store approval process (approximately two weeks) prior to it hitting the market. Tapit co-founder Jamie Conyngham The fact that NFC is in the iPhone 6 is a huge reversal for Apple, and we are super excited by it. As recent as 12 months ago TechCrunch reported that Apple was never going to take NFC up so we're really glad to see it's there. The fact that they have put it in for payments is amazing for the industry and we are already feeling the shock waves. People now understand that everything is going to be NFC payments in a short amount of time. We have been waiting for the banks, credit card companies and retailers to begin educating the mass market about NFC for payments for a while, as it was always going to be a big driver for the technology so it will be a great opportunity. Organisations are finally realising that NFC services are coming and they are all going to start planning for it. Unfortunately, it won't be available for other great NFC applications like tag reading/pairing and apps for about 12 months. In the meantime, Tapit will continue working with open NFC partners like Samsung to improve and innovate on new ways to use NFC, as well as executing bigger information and advertising projects. Tapit will also continue using beacons and QR for Apple users in the meantime as well. Outware Mobile director Danny Gorog “iPhone 6 and iOS 8 are an incredible opportunity for Outware. Many of our clients including ANZ, Telstra, AFL and Coles are excited about the new larger displays and the added flexibility that iOS 8 provides. We’re already well underway to ensure our clients apps are fully iOS 8 and iPhone 6 compliant. As specialists in large scale finance and insurance apps, we believe the new NFC capabilities in iPhone 6 will change the mobile payment landscape and the way Australians want to pay and shop. Australia has one of the highest penetration rates of tap and go terminals in the world so we are a perfect fit for this technology.” Squixa chief executive Stewart McGrath Devices like the iPhone 6 are a response to the consumer demand for easier access to more content. In the last four years, the average webpage size has nearly tripled while average connection "speeds" have only doubled. This is putting great pressure on website owners to utilise better ways of delivering increased content to these devices but still maintain a quality user experience. The challenge to keep pace and make use of the attributes of these devices is now being pushed back onto website owners. Higher resolution screens mean images need to be sharper and improved processing capacity means laggy web content delivery is more noticeable for a user. We expect the consumer demand for content to grow at an exponential rate and platforms like the "six" are the hardware manufacturers' answer. The pressure is on website owners now for sure. The ones who are responding are setting themselves apart from their competition. Will Heine, Wicked WItch Software Again the new iPhone launch has been very successful, so there will be more iPhones in the marketplace and new consumers that can enjoy our games like Catapult King. As well as more users, the new devices are again more powerful, which allows more advanced features of our game engine technology to run on mobile and tablet devices, resulting in improved graphical and gameplay quality in all of our upcoming titles. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Melbourne startup Appster has opened a capital raise to fund its ambitious vision to create “an unprecedented development hub for the greatest ideas and innovations in the world”, according to co-founder Mark McDonald. The startup has offices in Australia, India and the USA. “We aspire to be the world’s first ideas company, that sounds lofty but working in San Francisco you are exposed by osmosis,” he says. “It’s also our beachhead into the US market which we’ve been growing month on month.” The software development startup is raising capital to achieve that goal, although it’s in no rush. As the business is profitable, it’s in the position to wait for the right partner to help it “scale aggressively”. That innovation hub will be AppsterX, the company’s product arm. McDonald says the company is looking to partner with a select few companies, between one and two per year, and takeover everything – commercialisation of intellectual property, building executive teams, raising capital, growth and product engineering. “It’s different to an incubator or accelerator in that we’re not nurturing talent but instead starting these companies for them and taking a lion’s share of the equity,” McDonald says. “We believe this model will work better than an incubator one as we are most vested in the ideas; bring world-class execution and only present VCs with startups that have incredible traction already, “Appster is uniquely positioned to pull this off because we have a large development team, global reach and growing capabilities with finance and growth hacking.” McDonald says the startup has always been slightly different to other app developers, describing its role similar to that of being a technical co-founder without equity, as opposed to a fee-for-hire digital agency. “We’ve worked hard to build a brand and operational economies of scale globally to build the technology behind many of Australia and the world’s most disruptive technology startups.” Recently, former PayPal executive David Jacques and the former chief commercial officer at Virgin Australia, Liz Savage, joined Appster as strategic advisers. “We believe we have incredible executive skills but one weakness was experience in the US capital markets,” McDonald says. “David is a financial and operational expert and a very well-respected person in the industry.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
A late night hunt for a replacement Raspberry Pi and a sleepless night led to victory for a team of developers known as Gearbox in PayPal and Braintree’s Sydney BattleHack. The team won the 24-hour hackathon with an Internet of Things solution that allows users to open a secure box, which would be placed in public parks and enable access to sports equipment that could be paid for using PayPal. The team cooked the Raspberry Pi they were using during the hack, which sparked a frantic online search for a replacement. A shout out on social media found an eBay seller willing to meet them late on Saturday night and the project was saved. #GearBox just blew a @Raspberry_Pi at the @PayPalDev #battlehack in Sydney. Can anyone locally sell us one?— Tom Frauenfelder (@tomfrauenfelder) July 26, 2014 The senior global director of the PayPal and Braintree Developer Network, John Lunn, who was also one of the competition judges, chuckles when recalling the team’s frantic search, but says it’s all part and parcel of a hackathon. “We had some dramas, but we had a fun time,” he says with a laugh. BattleHack Sydney is one of 14 BattleHacks around the globe and the Gearbox team will now be flown to San Francisco to compete in the BattleHack World Finals in November with a $US100,000 prize up for grabs. It’s the second year BattleHack has been running, but the first time it’s visited Australia, and Lunn says the Gearbox team should have a good chance in the world finals. “We didn’t know what to expect, but were happy to get the a variety of different people, from young university students to more senior people from university, people that worked corporate jobs at large companies in Sydney and people who were working on their own startups,” he says. “The quality was fine. We had a nice mixture of hardware and software and a good completion rate, the hacks we saw were finished.” Midnight is here and so are many of the hackers #BattleHack #Sydney 13hrs to go. pic.twitter.com/KotmO7r0qi— Jason Cartwright (@techAU) July 26, 2014 BattleHack teams were tasked with coming up with a solution to a local problem that would make their city a better place to live, using a mobile application that incorporates PayPal or Braintree. Lunn says there was a great mix of ideas, including a number of which aimed to help the homeless, one of which looked at how homeless people could take donations once the world moves away from physical money, while others dealt with street art and crowdfunding. “I am so pleased we could bring BattleHack to Australia this year to give Aussie developers a chance to show off their skills,” he says. “The creativity and quality of code we saw proved that Australia has world-class developer talent.” Follow StartupSmart on Facebook, Twitter, and LinkedIn
Amazon is reportedly set to launch its own mobile credit card reading technology, according to internal documents from the office supply store Staples, obtained by 9to5mac. The documents say Staples stores are preparing to stock a new product called the “Amazon Card Reader” alongside existing card readers from Square, PayPal, and Staples’ in-house brand. Amazon recently launched a new wallet app for smartphones and 9to5mac speculates that Amazon’s card reader will likely connect to that. Rocket Internet’s Easy Taxi raises $40 million Easy Taxi, a taxi calling app from Rocket Internet, has raised $40 million in a Series D funding round. The company launched in 2011 and has roughly 185,000 drivers, with 150,000 of those added over the past year. It’s available in 160 cities across 30 countries predominantly in Latin America, Africa, the Middle East and Asia. Easy Taxi co-CEO Dennis Wang says the funding will allow the startup to continue its growth in existing markets, while also scaling its operations and improving its service so as to appeal to “more audiences and geographies”. US cable companies say Google and Netflix biggest threat to net neutrality In a filing to the US Federal Communications Commission, Time Warner Cable claimed that the controversy over internet providers potentially charging websites for access to “fast lanes” on the internet is a “red herring”. It says the real danger is that Google or Netflix could start demanding payments from internet providers, as customers expect access to the most popular websites, an internet provider would have no choice but to pay. The National Cable and Telecommunications Association says a relatively connected group of large internet companies such as Google, Netflix, Microsoft, Apple, Amazon and Facebook have enormous and growing power over people’s ability to access what they want on the net.
During the ‘90s and most of the 2000s, there was little doubt about which device was primarily used to access the internet: the PC. Sure, there were other devices you could use to access the internet. The web has been accessible in some form on mobile phones since the early 2000s. There were also early tablets, some PDAs and web TV devices with internet capabilities. But the office desktop, laptop or home computer was the primary device – and often the only device – most people used to surf the web. During the recent Google I/O developer conference, the tech giant revealed that it now views smartphones, rather than PCs, as the primary device people use for accessing the internet. Of course, mobile-first doesn’t mean that people aren’t choosing to use other devices when they have the choice – quite the opposite. It is certainly far more comfortable editing an Office 365 document on a PC or laptop than on a mobile. Likewise, reading an e-book is far more enjoyable on a tablet than on a smartphone. But people aren’t likely to be carrying these devices with them at all times. For most people, assuming nothing better is available, the first device they’ll grab to check for new emails, quickly look up a fact in Wikipedia, take a photo of their restaurant meal or send a tweet will be their smartphones. In other words, their mobile is their first “go-to” device for accessing the internet. Just to be clear, by “the internet”, I’m not just talking about the web. I also mean email, cloud-based services, apps, streaming video, and everything else on the internet. This shift has taken a number of years – it’s certainly not a new trend – and has a number of profound implications for how people use the internet. In turn, these implications have massive implications for many businesses. Here are five of the fundamental and profound differences between the old PC-first internet and the new mobile-first internet: 1. It’s always on and always connected The first is that the internet – including apps, the web, emails, cloud services – is now always instantly accessible. The smartphone – and through it, the internet – is permanently connected, always on and always carried. In the past, even if people carried their laptop around with them in a bag, few would bother to pull out a laptop and boot it up to quickly look something up in the middle of a dinner party. But with a smartphone, whipping it out and quickly checking Google to settle an argument is an everyday occurrence. So long as your customer is awake, you can now assume they have almost immediate internet access. 2. Built-in billing Aside from always being available, by its very nature, there’s also a number of billing systems built-in to smartphones. At the most basic, there’s the carrier bill or the prepaid credit. On top of this, there are the various app stores, as well as services such as PayPal. Unlike on the PC, a purchase is always potentially just a tap away. 3. Tap for customer service Likewise, tapping on a phone number in many mobile browsers will result in a phone call being made. This means making a call is potentially part of the built-in experience of every mobile app or website, unlike when PCs dominated the internet. So placing an order or a customer service phone call from a website is now just a tap away. 4. A location-aware personal media form Unlike on a PC, where people often shared a device or even an account, the smartphone is a strictly personal media form. Smartphones, by their very nature, are also location aware. Even the most basic of ‘90s 2G feature phones had to know which cell tower it was connected to at any given moment. This ability to target consumers by location at all times just wasn’t there in the days when most people relied on a desktop PC. It is now. 5. Incredibly accurate audience information The combination of the mobile as a strictly personal media form and information about the location and context of media that is being consumed means smartphones can produce the most accurate audience information of any media form in history. TV ratings or newspaper readership (the number of people to read a paper, rather than the number of copies circulated) was always a best guess effort. Smartphone analytics tell you the precise number, location, device type and time your customers view your content. And all in real time. Massive opportunities As a result of the ubiquity of the smartphone – and recent ACMA figures show 12.07 million Australians now own a smartphone – it can now almost be assumed that anyone accessing the internet also has access to all the functionality of the internet on a mobile device. So here’s a question: Is your web presence built for the old PC-first internet in mind? Or do you have mobile (or responsive) websites and apps that take advantage of the mobile-first internet? If you don’t have a mobile- first strategy, there are a range of opportunities your business is missing out on. This article first appeared on SmartCompany.
Medium and small businesses, including startups, need better access to growth capital funding, including venture capital and private equity, the Financial System Inquiry interim report has found. The report, which was released Tuesday morning, says Australian venture capital funds have not provided investors with adequate compensation for associated risks. Australian venture capital funds formed between 1985 and 2007 had a pooled internal rate of return -1.4%. It says barriers to generating significant investor interest include the aforementioned underperformance of VC funds, as well as the fee structures of VC and private equity funds, the tax treatment of venture capital limited partnerships, and scale. “The Australian market may be too small for some ventures to be viable, particularly when it comes to commercialising a product,” the report says. “In addition, certain cultures, particularly relating to risk, and extensive networks need to be developed to facilitate a thriving venture capital industry.” The inquiry notes it received submissions suggesting superannuation funds should be encouraged to invest in securitised SME loans and venture capital funds. “A mandate requiring superannuation funds to do so may also involve an implicit guarantee by the Government, which the enquiry does not consider to be appropriate,” it says. “Superannuation funds could consider investing in venture capital funds as part of a broader approach to diversifying their asset portfolios.” It says changing the research and development tax credit system to a quarterly basis for new ventures, which VC funds argue would help alleviate cash flow constraints, is an issue that should be considered as part of the Tax White Paper process. In a statement, Australian Private Equity and Venture Capital Association chief executive Yasser El-Ansary says if those barriers are removed, private equity and VC funds could play a more significant role in supporting startups. “Australian venture capital funds are currently invested in around only 200 startups and early stage ventures,” El-Ansary says. “There is substantial scope for the industry to play a greater role in building Australian businesses and creating new employment opportunities – especially in new high innovation industries of the future – if the enquiry makes recommendations for changes to some existing policies and regulations later in the year.” Technology and the financial system The report also highlights the role technology is playing in opening up the financial sector to non-traditional players. “Incumbents in the Australian payments industry are facing competitive challenges from new market entrants, such as PayPal, POLi, PayMate and Stripe,” it says. “Closed-loop pre-paid systems operated by companies outside the financial sector outside the financial sector, such as Apple, Skype and Starbucks, are holding growing amounts of customers’ funds. “Apple has also recently signalled its interest in mobile payments more broadly and recently developed fingerprint biometric authentication for its phones.” The inquiry received a number of submissions highlighting the potential risks virtual or crypto-currencies like bitcoin present to the current financial system. Those risks include the safety of the funds stored in such a way, which it says are at risk of system collapse or fraud, the highly speculative nature of virtual currencies which could lead to investor protection issues, their pseudonymity and the money laundering potential that comes with it, and their cross-jurisdictional nature. “Whether new entrants should be brought within a regulatory perimeter depends on the nature and scale of the risk they present, and who bears the risk,” the report says. “Government needs to strike a balance that allows the benefits of innovation to flow through the financial system, while maintaining stability.” The report concludes that government and regulators should take a flexible and technologically neutral approach to regulation, which is not currently the case as some federal and state regulations require the use of certain forms of technology.