Australians gamble more on the Melbourne Cup ($200 million, $9 per capita) than the entire venture capital industry invests in startups in a year ($100m, $4.55 per capita). This disparity is especially concerning when we consider that in the US, three companies (Apple, Facebook and Google) contribute $1.3 trillion to GDP, which is higher than the value of our entire ASX. All three of those businesses were once startups with the youngest being Facebook founded a mere 11 years ago. We rightly celebrate the success of Atlassian and REA Group, however, we need to create the conditions to drive a thriving and substantial ecosystem of startups. With this in mind Salesforce is supporting the recommendations of the StartupAUS Crossroads Report 2015, which provides an action plan for how Australia can develop a vibrant tech-startup ecosystem. According to the report, the impact that tech startups could have on the Australian economy, if nurtured and supported, is huge. Two key findings that struck me are: Each new technology-based job created adds five additional jobs in other sectors (3x a new job in manufacturing or extractive industries) 73% of a nation’s future wealth can be predicted by its Economic Complexity Index (ECI) – a measure of a nation’s ability to produce a range of goods varying in complexity from extracting and selling unprocessed natural resources to building and selling complex industrial products/services. Australia has “an amazingly primitive export basket”, according to Harvard economist Ricardo Hausmann, which means unless we start driving more innovation, we would predict low future GDP growth. Not only do tech startups positively impact the economy, they also provide the growth of the ecosystem through creating ‘unicorns’ – startups valued at over $US1 billion. The existence of unicorns raises the profile of entrepreneurship and creates a market of experienced and cashed-up employees who create and support new companies, attracting other hopeful entrepreneurs who want to be where the action is. Australia’s tech ecosystem has seen huge progress over the last three years and with just a few tweaks there could be a tremendous wave of growth in the nation’s Silicon Beaches. While all of the eight action items recommended in The Crossroads Report are important, in my opinion, there are two that are most pressing: Increase the number of people with ICT skills Improve access to startup expertise Recent research by PricewaterhouseCoopers indicated that 75% of the fastest growing occupations now require STEM skills. However, enrolments and completions in university STEM courses have remained flat over the period 2001 to 2013, while non-STEM courses have grown steadily. There is an increasing gap in the skills we need and the type of workforce Australia is producing. If we act now to produce the right work force and build our startup ecosystem, graduates educated in STEM will find many of their future jobs with the unicorns. Key to building up this ecosystem for the workforce of the future is providing the right support to our existing startups. Initiatives like York Butter Factory, Fishburners, and our own Salesforce for Startups program are all aimed at providing the right conditions, expertise and technology to startups as they scale. While the support currently available is valuable, there’s still more work to be done. If we want to build the next generation of unicorns we need both industry and government of all levels to work in concert to provide the right framework and support. Australia is now at a crossroads, it’s time for the nation to foster a viable environment for startups to not only operate in, but to thrive and succeed. Tom Karemacher is the regional vice president for mid-market and SMB at Salesforce APAC.
Melbourne-based startup JellyChip wants to “gamify social good”. Early next month it will be launching a closed beta for its market research platform and has partnered up with World Vision Australia to help direct some of the profits it generates from that research to charitable causes. The platform enables its users to answer survey questions in return for in-app points, which can in turn be spent on those charitable causes. Co-founder Eric Chang says the old ways of charitable giving and traditional market research need to be disrupted. “We’ve always wanted to do something with technology that would benefit people,” Chang says. “So we talked about how we can leverage market research to do that.” Co-founder James Downing has some experience creating a similar socially minded app, a trivia game which directed advertising revenue to help purchase rice for the needy in the developing world. The duo combined that idea with Chang’s own experience helping develop a market research app for PricewaterhouseCoopers clients and came up with the concept for JellyChip. JellyChip also connects all of its users’ social media accounts in one place, Chang says, in the hope of becoming the first page its users visit when they head online. Users can earn points for logging on, interacting with others, and inviting new people to the platform. It’s similar to the manner in which Dropbox offers rewards and expanded features to its users for performing certain tasks. Those points can be spent in the JellyChip store which will go to the platform’s charitable partners. Between 25% and 30% of its profits will go to charity. “We believe innovation, social good and business needs can all be met if everyone wins,” Chang says. The startup has raised investment from private individuals, Chang won’t say exactly how much, but it’s a bit less than $500,000. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
A new consumer-to-consumer bitcoin exchange has launched, looking to take advantage of the vulnerability of exchanges that sell directly to users, caused by the Australian Tax Office’s decision to treat bitcoin as property. Independent Reserve, launched on Tuesday, is backed by “a group of private investors in Australia and Asia”, promising to be the cheapest Australian bitcoin exchange. Other bitcoin exchanges, which sell bitcoins directly to users, are required to charge 10% GST on the total amount of bitcoins being provided. So $1000 worth of bitcoin will cost $1100 plus any commissions they might charge. Independent Reserve charges a .5% commission on exchanges, and absorbs the 10% GST it’s required to charge on that commission. The startup’s head of business development, Lasanka Perera, says while the ATO ruling is good for Independent Reserve, it’s not ideal for the state of bitcoin. The exchange has been in development since early 2013 and Perera says the decision to operate a consumer-to-consumer exchange was not influenced in any way by the ATO decision. “We couldn’t have foreseen the GST ruling from such a long way out,” he says. The exchange is trading in US dollars in an effort to make it more appealing to global bitcoin buyers. Perara says his experience in foreign currency exchange means Independent Reserve is able to offer competitive exchange rates, so the decision to trade in US dollars won’t hurt Australian consumers. “We’d love to be in Australia’s biggest and best marketplace for bitcoin in three to six months’ time,” Perera says. In the coming months, Independent Reserve will be looking at developing a consumer app as well as entering the merchant point-of-sale space. The startup is based in Sydney and chief executive Adam Tepper says Australia is a good regulatory environment from which to operate. “Australia is politically stable with a strong regulatory regime,” he says. “We have spoken consistently with ASIC and the ATO as Independent Reserve has developed, as well as had the company audited by PricewaterhouseCoopers. We’re very comfortable that we have the right settings here to ensure its safety and success.” Follow StartupSmart on Facebook, Twitter, and LinkedIn.
It has been a tightly held figure, but we now know just how much search engine giant Google rakes in each year from advertising revenue in Australia—and just how little the company pays in tax. With the government hinting at a tax crackdown on multinational tech companies such as Google, research released this week in PricewaterhouseCoopers’ annual Australian Entertainment and Media Outlook report shows the extent of Google’s profits and its tax bill. The search giant generated advertising revenues of $1.804 billion in Australia last year, and is expected to grow revenues by another $2.072 billion this year, according to IT Wire. Yet Google Australia declared a profit of just $46.5 million to the Australian Securities and Investments Commission, and paid just of $7.1 million in tax, or 15% of that income. Google records the majority of its income in its headquarters in Ireland, which allows it to report its earnings in other countries as ‘service providers’ to the Irish arm of the company. It also bills its advertising customers out of Singapore, according to IT Wire, where tax rates are much lower. According to the PwC report, Australian entertainment and media market is forecast to grow to $39.8 billion by 2018, a compound annual growth rate of 3.4%. Advertising spending is set to reach $14.4 billion by 2018 and, in by that same year, internet advertising will be largest ad sector in the country, reaching $5.7 billion. This article originally appeared on SmartCompany.
The National Commission of Audit report’s contention that government support of startups provides no real benefit to the community is flat-out wrong, according to a number of startup industry figures and two major reports into the industry. Rui Rodrigues, investment manager of Tank Stream Ventures, says the commission’s suggestion is ridiculous. “It’s a very short-sighted view and there isn’t any logic behind it,’’ he says. “They’re essentially saying that the thousands of jobs created through startups and technology have had no impact on the economy.” It’s an opinion echoed by Sydney Angels management committee member Richard Dale. “The verdict’s been in for quite a long time, a startup, as long as it’s a high growth potential venture and not a lifestyle business, is a net creator of jobs,’’ he says. Last month peak not-for-profit StartupAUS released its report Crossroads: An action plan to develop a vibrant tech startup ecosystem in Australia which highlighted that startups play a big role in job creation – three million new jobs are added to the US economy each year by new firms, while existing firms lose a total of a million jobs per year. The Crossroads report noted Harvard professor of economics Ricardo Hausmann’s observation that Australia has “an amazingly primitive export basket”, which he says will lead to Australia becoming one of the worst performers in the region in terms of GDP growth. StartupAUS board member Bill Bartee, who is also a co-founder and managing director of Blackbird Ventures and Southern Cross Venture Partners, believes the commission is taking the wrong position. “Well I don’t know where they’ve been or where they’re getting their data,’’ he says. “It’s pretty clear when you look across the OECD and the US that there’s been lots and lots of job growth from startup and tech companies that build real businesses. “The eBays of the world, all of these very, very large tech companies that drive the US economy in a lot of ways were once very small companies. “It’s not as if the government is assisting a dying industry.” artee says he’s a firm believer in the need to support tech startups by providing capital, both human and financial. Last year, The Startup Economy, a report commissioned by Google and carried out by PricewaterhouseCoopers, found high-growth tech companies have the potential to contribute 4% of the Australia’s GDP by 2033 while adding 540,000 new jobs. Currently, startups contribute just 0.2% to the nation’s GDP. The commission’s recommendation that the government abolish Commercialisation Australia and the Innovation Investment Fund would leave Australian startups in a weaker position, says Dale. “Do they benefit? The answer is yes, these programs are putting experience, talent and money into the startup ecosystem,’’ he says. “Are they perfect? No. Do they help? Yes. Does taking them away have an impact? Yes, absolutely. Are they the best way of reducing barriers startups and early stage ventures face? Probably not. “All programs, all solutions can be improved, but we have programs at the moment that are functioning, providing benefit – so don’t turn off the tap. “The two years it will take to design, approve and implement a new program, that’s two years of lost opportunity.’’ Startup Victoria CEO Lars Lindstrom added to the chorus of startup community voices speaking out against the Commission of Audit’s recommendation. “In our view CA (Commercialisation Australia) has been doing a good job and the IIF(Innovation Investment Fund) structure of government matching investment 1:1 mirrors successful initiatives elsewhere such as in Singapore,’’ he says. “I don’t agree that it’s as simple as saying ‘finance can be acquired from the private sector’, VCs have had poor returns and therefore funding is in short supply.” “It may be short-term cost-saving but in the long run it would be highly damaging to the Australian economy.’’
Microsoft has today released a report calling for an urgent review of how the Australian innovation ecosystem works, in order to make the most of the burgeoning tech innovation movement. Joined-Up Innovation outlines seven steps Australia can take to boost the fragmented innovation workforce. The recommendations included breaking down silos within the innovation community, fixing slow-moving processes, improving knowledge sharing, proactive upskilling programs and encouraging mobility. The third recommendation of the seven was to “look beyond startups” when it comes to innovation, as a vibrant and productive innovation system needed to transcend just young businesses. This is despite the fact the report defined innovation as new businesses built around breakthrough ideas. The fourth recommendation, transforming our culture, is one the Australian startup ecosystem has been campaigning about for years. The report includes a number of cultural obstacles that are already preventing our innovation ecosystem from operating as smoothly as it could. “These include low acceptance of business failures, which can make potential; innovators reluctant to launch ventures for fear of harming their reputations,” the report finds. This fear of failure seems to emerge early, with president of the Australian Academy of Technological Sciences and Engineering Alan Finkel claiming the flow from university into startups is a pressure point. “We’ve cut it off at the knees by having this tendency to think it’s a failure if you leave university and go into industry – and it’s a double failure if you go from university to a startup and the startup isn’t a successful one.” The report also cited either the ‘tall poppy syndrome’ or ‘fear of being placed on BRW’s Rich List’ may be having a net result of few equivalents of Facebook’s Mark Zuckerberg or Microsoft’s Bill Gates. The report was created from roundtable discussions of over 15 innovation experts including Microsoft Australia’s managing director Pip Marlow, Commercialisation Australia’s Doron Ben-Meir, Australian Information Industry Association’s Suzanne Campbell, ATP Innovations’ Hamish Hawthorn and consultant Sandy Plunkett. In a statement, Marlow says Australia had amazing strengths but untapped potential. “But if we want to maintain – and preferably improve – our competitive position, we need to reinvent our innovation ecosystem for the information age rather than sticking with models developed in the industrial age,” Marlow says. The report also included new findings from PricewaterhouseCoopers that demonstrate how equipping Australia’s significant small to medium sized business community with greater tech skills could increase GDP by nearly $6 billion (0.4%). Image: Microsoft chief executive Satya Nadella.
For people considering getting into business for themselves, especially in the New Year, franchising is one option many will likely investigate. Franchise businesses make a sizeable contribution to Australia’s economy, turning over around $131 billion in revenue annually, according to the Franchise Council of Australia. It says there are around 73,000 franchise businesses in Australia that employ around 400,000 people. General manager Kym De Britt says franchising has grown at a better rate than other small businesses, citing a PricewaterhouseCoopers report that says franchises have seen average annual revenue growth of 10% recently. “That generally comes because when things are tough, franchise systems have better support and marketing systems to help franchisees sustain the difficult times better,” he says. De Britt tells StartupSmart that the main attraction for people getting into franchising is for the support. “Rather than just taking that big step of going into business for themselves, they have a level of support behind them.” Franchisees receive training in how to run the business and have someone to go to if there are problems, De Britt says. “It’s working for yourself but taking on an established system and having support.” But he warns that franchising is not for everyone and that it may not suit people who want to “do it for themselves”. “For those kinds of people, franchising is not the right way to go because at the end of the day you have to follow the model because it’s been proven,” De Britt says. He also recommends anyone considering a franchise to get legal and financial advice and to understand that it can’t be considered a means to semi-retirement. So what types of franchises are most likely to see growth in 2014? De Britt says people can get a sense for what business areas will be successful by looking at the media for trends, but here are his picks for areas to consider: Aged care services Aged care is growing because of Australia’s ageing population, De Britt says. A recent Productivity Commission report says that the number of people aged 75 years and more is expected to rise by 4 million from 2012 to 2060, increasing from about 6.4% of the population to 14.4%. “Demand is going up for services for aged people,” De Britt says. Courier services Growth in online retail spending has also seen growth in demand for services to deliver people’s purchases. According to the National Australia Bank’s Online Retail Sales Index, Australians spent $14.4 billion online in the 12 months to October, equivalent to 6.4% of traditional retail spending. “The boom area there is the courier business,” De Britt says. “They’re all actually struggling to keep up with the demand at the moment.” Health With Australia ranked among the fattest in the world, health services that aim to address the issue will remain popular. De Britt says the fitness industry, and particularly personal trainers, are likely to continue to thrive. A report by market researcher IBISWorld says the personal trainer industry turns over $390 million a year and has seen annual growth of 11% between 2009 and 2014. Work life balance/home services De Britt says as workers seek to develop a better work/life balance, they’re outsourcing tasks such as home cleaning, gardening and pool cleaning. Food retail Food, and particularly fast food, is a mainstay of the franchise industry. “They’re always going to be very popular,” De Britt says. He says two trends that have swept through food franchising are Mexican food outlets and frozen yoghurt. Mexican food is big in the US and Australia generally tends to follow the trends there while yoghurt is seen as a healthy alternative to other snacks, De Britt says. He says he recently attended a conference in Dubai and the “two big kids on the block were yoghurt and Mexican food”.
This year was a good one for start-up investment. Globally, early stage seed funding rose by 375% and the local industry welcomed some new funds, along with the rise of crowd funding and the coming wave of crowdsourced equity. Here are some of the most notable investment stories of 2013: State of the venture capital scene at the end of 2013 Over 60 venture capital industry leaders gathered for an event held by PricewaterhouseCoopers in October to explore the state of the sector and possible future directions. StartupSmart was there and reported on the event here. Kar-Mei Tang, head of research at national venture capital industry association AVCAL, told the room the sector was set for significant changes in the coming years as the start-up ecosystem developed. “The start-up sector has been an emerging force over the last three years and we’re starting to see more founder investors and super angel activity which will filter through to venture capital,” Tang said. New major firm Square Peg Capital launches Two investment groups merged to form Square Peg Capital, an initiative with Seek co-founder Paul Bassat. He told StartupSmart they were keen to fill the Series A and B gap in the local funding scene. “We’ve got the capacity to invest several hundred million dollars over the next few years,” Bassat says. “We have a really good pipeline at the moment. Our investments so far give some indication of the opportunity; although it’s possible we’ll make slightly fewer investments but they’re likely to be a bit larger.” The two funds prior to the merger had invested $20 million in 12 companies including Canva, NinjaBlocks, bellabox and Vend. Investment insights Global investment trends indicated the venture capital and games boom may be ending, with leading start-up investor Jonathan Teo visiting Australia in late 2013, and shared which metrics he cares about when assessing start-ups, and why he backed Instagram, Twitter and Snapchat. Blue Sky Alternative investments launched a $10 million fund earlier in the year. Their venture director Dr Elaine Stead shared what they look for in the start-ups they back and how the venture capital industry is changing. Blackbird Ventures also launched this year, and have made 11 investments so far. Managing director Rick Baker shared their insights and investment preferences here. Crowdfunding and interest in crowdfunded equity skyrocketed While crowdfunding continues to boom, interest and opportunities for start-ups to explore crowdfunded equity are also increasing, with a new platform launching in December, and visiting Israeli investment expert telling investors the world needed to brace itself for an “unstoppable wave” of crowdfunded equity. Australian start-ups announcing investments almost weekly As the start-up ecosystem matures, more and more Australian start-ups are announcing investment deals and expanding internationally. There are too many deals to list them all here, but notable technology start-up deals include Zenogen, BugCrowd, Recruitloop, Design Crowd, Kickfolio (now called App.io), Kounta, BuyReply, Ingogo, Tiger Pistol, Paws for Life, CoinJar and LiquidState. For those aspiring to raise investment in 2014, we spoke to one of the Kaggle founders about how they raised $11 million in a few weeks in Silicon Valley and from veteran start-up consultant and investor about his top five tips to genuinely prepare your start-up for investment.
A strong and growing start-up sector and the international rise of crowd-sourced equity are set to shake up the Australian venture capital ecosystem for the better in coming years. Over 60 venture capital and private equity investors gathered in Sydney today to explore the future of the Australian venture capital at the first of three national events coordinated by accounting and research group PricewaterhouseCoopers. Kar-Mei Tang, head of research at national venture capital industry association AVCAL, told the room the sector was set for signficant changes in the coming years as the start-up ecosystem developed. “The start-up sector has been an emerging force over the last three years and we’re starting to see more founder investors and super angel activity which will filter through to venture capital,” Tang said. According to a PwC and Google report on the start-up ecosystem released earlier this year, there are over 500 angel investors, 10 angel groups and one sidecar fund, and almost $600 million in management by 20 venture capital groups. According to Tang, the emergence of new funds has mostly alleviated AVCAL’s concerns about a Series A funding crunch, but the concern is now for the later rounds. “It’s very important not to leave this gap unplugged,” Tang said. “It matters because we know venture capital works to drive innovation, and we know it works in Australia with venture capital backed companies having far higher job creation rates than standard companies.” She added 10 new smaller funds have launched in the last few years, and the sector was on track to see a 20% increase in venture capital activity. The venture capital funds are gathered around the eastern seaboard, and different cities have different strengths. “Sydney is still the place to be for start-ups in the technology space,” Tang said. “Victoria is leading in life science and environmental investment, probably due to supportive strategies and policies of the state government there.” Tang added AVCAL would continue to encourage the federal government to create a workable employee share schemes system, to be supportive of innovation and continue policies such as the Innovation Investment Fund and to increase wider awareness about the critical role of venture capital in moving Australia forward by enabling innovation. Director of legal services at PwC, Steve Maarbani, said the future was bright for start-ups and local venture capital investors, but they needed to increasingly focus on Asia, specifically Indonesia as vast new markets to tap into for fundraising. “It’s fair to say the federal government policies around start-ups and venture capital are strong,” Maarbani says, citing the early stage venture capital limited partnership tax treatments, research and development grants, innovation grants, national broadband network as effective policies. Maarbani said the concerns around the future of the Innovation Investment Fund, sparked by GBS Investments returning their funding this year, had been resolved. “There was concern that it would be reconsidered, and it was. But they’ve come out with the largest commitment of funds ever, with $350 million on the table next year,” Maarbani says. The Innovation Investment Fund allocates several million to venture capital firms, who then raise funds to match the amount. Maarbani added the growth of the tech start-up ecosystem has caused a significant change in the investment landscape. “We’re looking at a significantly different venture capital ecosystem compared to even 12 months ago. I use the term ‘groundswell’ very intentionally,” Maarbani said. “Early stage financing deals are being done much earlier now, with angel deals are becoming more important. This means start-ups can prove they have traction before a venture capital investor even sees them.” Angel investment has grown significantly in the last few years. In 2011, $4 million worth of deals were made. This increased to $8 million in 2012 and $21 million in 2013 so far. Describing the environment for investors and entrepreneurs as very positive, Maarbani noted the challenges of working with risk-shy institutional investors, but said fund managers needed to look to Asia to raise their funds. “Instead of endlessly lamenting capital markets moving their cheese, you can work on a better value proposition, or find new cheese,” Maarbani said. According to PwC research, over 50% of the world’s financial assets will be based in Asia by 2050. “As the balance of global financial power shifts to Asia, and it is, as the Asian universities start outperforming the rest of the world, and they will, it’s becoming absolutely imperative for fund managers to have an Asian strategy,” Maarbani says.
The election is over. The Coalition has won. Now what does it mean for Australia’s start-up sector? Unfortunately, it’s not entirely obvious. It’s something that’s been picked up on by members of the start-up community who are wondering what attention their industry will attract now that Australia has a new government. Dean McEvoy, who launched Australian group buying website Spreets.com.au, published on his blog an open letter to Coalition broadband spokesman Malcolm Turnbull last week highlighting the opportunity around start-ups that “at the moment nobody appears to own”. “There is an opportunity with the right incentives to inspire a generation of technology entrepreneurs,” he wrote. His letter was supported by other leaders in the start-up community, with Pollenizer co-founder Mick Liubinskas commenting that “supporting start-ups shows real leadership”. Blue Chilli co-founder Sebastien Eckersley-Maslin added: “Thanks for the open letter Dean and I agree that we have a golden opportunity to support the emerging economy and again draw attention to the report by PwC on the impact this industry can have on the Australian economy if the sufficient support is done correctly now.” At the Coalition’s e-government and digital economy policy last week, the policy document recognised that “policies encouraging innovation, funding research and providing incentives for entrepreneurs are very important over the medium term in developing a more sophisticated economic base”. In April this year, a report by PricewaterhouseCoopers, commissioned by Google, said Australia’s tech start-up sector had the potential to contribute $109 billion, or 4% of gross domestic product, to the Australian economy and 540,000 jobs by 2033 “with a concerted effort from entrepreneurs, educators, the government and corporate Australia”. The Coalition’s policy said that while a vibrant start-up community would be very encouraging, “there are limits to the capacity of governments to will this into existence, and, even if they could, it would not be material to the broader economy for years”. When StartupSmart asked Coalition communications spokesman Malcolm Turnbull’s spokesman for its policies relating to start-ups, we were referred to speeches Turnbull had made earlier in the year. Turnbull told the Kickstarter conference in February: “What we really have to do is to make sure we create an environment and some judicious support whether it is by way of R&D (research and development) concessions or supporting venture capitalists; we’ve got to make sure that what we are doing is really supporting you and your counterparts around Australia because you are the future of the industry.” He also said the Coalition was committed to making it easier for businesses to get on without excessive regulation and has pledged to cut the cost of red tape by at least $1 billion for each year it is in office. McEvoy suggested fixing tax laws that don’t incentivise people to take risks and be entrepreneurs and inhibit experienced people from helping start-ups. “The second and most important thing is to take ownership of this opportunity. Let it be known that you are aware of this opportunity and will sit down and help work out policies that make it thrive, not let this massive opportunity slip through the cracks,” McEvoy wrote. The start-up sector’s wishlist for the election included action on employee share scheme arrangements by making them simpler and their tax treatment more start-up friendly, more early stage funding available for start-ups, and a focus on educating more computer engineers. A review is underway into employee share schemes, with incoming Treasurer Joe Hockey saying in July that the Coalition would consider making changes. StartupSmart also asked a spokesman for Coalition industry and innovation spokeswoman Sophie Mirabella for a list of policies relating to the start-up sector, but didn’t receive a response. The Coalition has also pledged to protect medical research funding and provide “long-term” policy stability and that there needs to be better links between government, business and research institutions. With the election now over, and the business of governing now in the Coalition’s hands, the start-up community will be watching closely to see what changes, if any, come to help their sector.
When it comes to rebranding, I have one word for you: Monday. It was, in fact, a Monday in 2002 that the (then) PricewaterhouseCoopers spun off its consultancy arm under a new brand, the aforementioned ‘Monday’. The jokes wrote themselves then as they do now, and as the BBC news website announced in its obituary on July 31, 2002: “Monday passed away quietly on Tuesday after a short but controversial life.” It was a terrible name and a silly concept for a reputable accountancy firm with such a strong history. What were they thinking? I can only imagine what the first brand presentation looked like: As branding firm (Wolf Olins in this case) whipped the sheet off the easel with great fanfare, everyone sniggered. Then they thought no, no, let’s hear this out, and so they heard about how cutting edge this really was, how ahead of the curve, how they would be seen as the most innovative accountants on the block. They started to question their gut feel, suppress it a little more. And *poof* before you know it the virus has spread and the emperor has new clothes. (Don’t even talk to me about iSnack 2.0 – RIDICULOUS.) The point is that even for a start-up, think twice before you undertake a rebrand; consider the value of the business you have already created and the reputation you’ve built in your market. Can you afford to throw all that away because someone suggested you could do with a better name and logo? Very often when I speak with companies the conversation leads to rebranding. It’s usually coming from another place and, actually, they don’t mean rebranding at all. What they’re looking for – or just what they could do with – is a brand revitalisation: Breathing a new lease of life into the business without changing everything that made it unique in the first place. For your company to have reached this point of growth, you must have done something right, so why get rid of all that? When I first started in marketing, I was one of those design-led marketers too and will put up my hand and admit I talked excitedly about redoing logos as an Absolute. Business. Imperative. How wrong was I? Your business imperative is to build on the things that sold your customers on your brand in the first place. Always be better at them than the competition and communicate that through your marketing strategy. I love great design and I love working with great designers, but great companies are not built on visual creative alone and certainly not as a priority to real business and marketing issues. By all means, strive to improve the look and feel of your company. Don’t look like a start-up whose teenage nephew built your website. Especially when you’re trying to tell the market you’re a cut above the rest. But before making cosmetic changes, ensure they come from a place that is bang on target with who you are as a company.
Two legislative changes entrepreneurs have been calling for are on the cards, but might be months or possibly years away from being implemented. With a discussion paper for employee share schemes review due in December this year, entrepreneurial focus has turned to proposed changes to venture capital fund registration requirements. The main development that could boost the start-up sector is changes to the Early Stage Venture Capital Limited Partnerships (ESVCLP) program. An update was announced on February 17 this year, as part of the government’s Venture Australia package. Under current legislation, early stage venture capital groups must have more than $10 million and less than $100 million to be eligible for ESVCLP registration. The change proposed in the Venture Australia package is to drop the minimum from $10 million to $5 million. Registration entitles a fund’s investors to receive a series of tax concessions. A registered fund receives flow-through tax treatment and the investors receive complete tax exemption on their share of the fund's revenue and capital. This would make it more likely for high-net worth individuals and networks to create venture capital funding programs. Steven Maarbani, director of legal services at accounting firm PricewaterhouseCoopers and board member of Sydney Angels, told StartupSmart the decision isn’t necessarily a win for Australian start-ups. “I’m confused why the number has been reduced. More money for start-ups is always a good thing, but I’m more aligned with the original vision that required $10 million and was about building a world-class funds management sector,” Maarbani says. Maarbani attributes the decision to the lobbying of angel investors, who help the entrepreneurial sector but have previously received no tax breaks for their activities. “I’m a big believer that angels make a big difference to start-ups. But I’m not sure it’s really a good idea for the industry to have a whole lot of tiny funds out there,” Maarbani says. Maarbani says he’s not sure if it will open up new opportunities for start-ups, but says the funds already listed on the AusIndustry ESVCLP list as “conditionally registered” may be able to fully register and start funding start-ups. “Many of them are conditionally registered because they haven’t raised the 10 million bucks yet, so it’s possible when it’s reduced to five million, they may have that and will be able to get them going,” Maarbani says. Robert Jones, a founder of the Australian Clean Tech Innovation Partnership, which is conditionally registered on the list, says the lowered minimum is good news for angel investors who play a key role in the entrepreneurial eco system. “This is about fair funding for start-ups. There is a gap in the market place as the venture capital community doesn’t seem to want to fund start-ups without a promised 10-to-1 return or the advantage of tax breaks. ESVCLP is therefore to take advantage of the profitability before exit,” Jones says. “It’s a good idea because it’s a bit difficult to achieve the higher amount with the conditions of the spread,” Jones says. “There will be more people in the market and it’ll be more attractive. I don’t necessarily think there will be more money available, but it’ll be easier to achieve the minimum.” The legislation to enable this change has not yet been introduced to Parliament. StartupSmart understands it is due to be implemented and passed by July 1, 2014.
A mine operations planning system, online music community and news recommendation program are among eight start-ups to have been selected to take part in the first-ever intake for the Newcastle-based Slingshot Accelerator program. Trent Bagnell, one of the co-founders of the program, told StartupSmart the team’s focus was on quality founders who would build sizable companies. “Quality founders was number one. Their ideas were good, but ideas are cheap and execution is everything,” Bagnell says. “It’s not about putting ideas through an accelerator. We’re trying to build significant companies into the future that employ significant numbers of people who will make a real difference to the Hunter Valley start-up ecosystem.” More than 150 tech start-ups from interstate and overseas applied for the program. Four of the eight companies selected come from the Hunter/Newcastle region. The companies selected include online community Chinese Whispers Music, mine operations planning software Fewzion, and news recommendation engine NewsMaven. This is the first intake for the program, which plans to accelerate 100 companies in the next five years to develop the start-up ecosystem in the Hunter region. “I see a real opportunity to move people into innovation,” Bagnell says. “There is a real grass-roots movement growing for innovation in the Hunter, and that’s at all levels. “There is a real opportunity to augment the underlying core industrial mining focus we’ve had and move more into the innovation and technology.” The program is supported by a range of companies and educational providers including PricewaterhouseCoopers, the University of Newcastle, and Hunter TAFE. The educational partners have led to a strong focus in the program on design, which Bagnell describes as the missing piece for many tech start-ups. “Historically you’d find a technical founder and maybe a business founder and they try to add design into the team. It’s becoming more and more important over time,” he says. The 12-week program will finish up in August with a demo day. Nick Trkulja, the chief executive and cofounder of FlightBids, an online auction site for flights and one of the eight selected companies, told StartupSmart that getting into the Slingshot program will speed up the growth of their company and offerings. “One of the big lures of the program is the fact you can access brains around any business asset you’re having difficulties with. You can make months or years of mistakes trying to get things right, but mentors can guide you from day one,” he says.
Tech start-ups have the potential to contribute $109 billion to the Australian economy, or around 4% of GDP, by 2033, according to a new report, which identifies four key ways to unlock the potential of the sector. The report, titled The Startup Economy: How to support tech startups and accelerate Australian innovation, was commissioned by Google and prepared by PricewaterhouseCoopers. Preliminary findings of the report, which provides a snapshot of Australia’s 1500 tech start-ups, were released in March. Google commissioned the report after helping form #startupAUS, a new industry group that is working on a national campaign to promote the Australian tech start-up sector. The group is led by Google Australia engineering director Alan Noble, Freelancer.com founder Matt Barrie, Shoes of Prey co-founder Michael Fox, Fishburners’ Peter Bradd, Southern Cross Ventures’ Bill Bartee and Startmate founder Niki Scevak. Google and PricewaterhouseCoopers have now released the findings of their report, which shows start-ups have the potential to contribute $109 billion or 4% of gross domestic product – and 540,000 jobs – to the Australian economy by 2033. According to PwC partner and economist Jeremy Thorpe, the findings will prove useful as the start-up sector continues to grow. “There is no comprehensive catalogue of start-ups in Australia [but] we believe there’s 1500 start-ups in Australia… The majority are in Sydney,” Thorpe says. “The vast majority of start-ups do not succeed – they actually fail… [Only] 40% of entrepreneurs in the start-up space, when they fail, will start again.” The report highlights four key ways to unlock the potential of the Australian start-up sector: Attract more entrepreneurs with the right skills In the short term, Australia needs 2000 more tech entrepreneurs each year drawn from the existing workforce. In the long term, Australia’s education sector must produce more skilled tech entrepreneurs. Encourage more early stage funding Funding for the Australian tech start-up sector will need to increase. Australia invests approximately $US7.50 per capita in venture capital per annum, compared to the United States ($75) and Israel ($150). Open up local markets to tech start-ups Governments are major consumers, with spending totalling $41 billion in 2012. They can become more start-up-friendly with procurement reform. “Companies can [also] think more innovatively about how they use start-ups,” Thorpe says. Foster a stronger and open culture of entrepreneurship Australia has a considerably higher “fear of failure” rate than nations like the US and Canada, constraining the sector. The tech community is key to changing this by celebrating its own success and becoming more inclusive. According to Noble, this last point is a key takeaway. “This is a good thing – that the community realises the fate of the sector is actually in its own hands,” Noble says. “#startupAUS is a start-up itself. We’re still actually figuring out what the organisation’s structure will look like. It will be some form of not-for-profit. “We want to make sure it’s very much driven by the community itself. It won’t be like your traditional government body – it will be a much more community-led organisation. “A big part of its success will be ensuring we do provide ways for the community to collaborate… and, with any new venture, no one has a monopoly on ideas. “Hopefully the research released today will go some way to helping to inform the debate and get to where we need to go by 2033.”
British wartime Prime Minister Winston Churchill has topped a list of leaders most admired by chief executives, beating Steve Jobs and Mahatma Gandhi for the top spot, according to a survey of CEOs released last week. The finding comes out of accountancy PricewaterhouseCoopers’ 16th annual global CEO survey, which in January asked 1,400 CEOs from 60 countries what leaders they most admired. There were not many CEOs in the list of leaders that CEOs admire the most. Over half (60%) chose a politician or military leader. After that, the most popular categories were business leaders and historical leaders. Winston Churchill’s appeal was particularly wide. In France, he beat out home-grown president Charles de Gaulle for the top spot, and he also trumped Niccolo Machiavelli to come first in Italy. He managed a tie for second with Gandhi in Turkey, coming just behind wartime leader and national founding father Mustafa Kemal Ataturk. He was the most-admired leader in Latin America, Australia, the United States and Canada. 1. Stick to your convictions In the 1930s, as Hitler came to power in Germany, few sought a repeat of World War I. British politicians followed a policy of ‘appeasement’ instead. Churchill was one of the few to consistently warn about the danger of a rearmed Germany, and continued to do so even as it led to his being ostracised. Often portrayed in retrospect as a prophetic voice in the wilderness, Churchill was proved right by the German invasion of Poland in 1939. Churchill’s convictions came at great personal cost to him. In his 1948 book, The Gathering Storm, he reflected: “I felt a sensation of despair. To be so entirely… convinced and vindicated in a matter of life and death to one’s country, and not to be able to make Parliament and the nation heed the warning, or bow to the proof by taking action, was an experience most painful.” 2. Goad until it’s done Churchill is famous for his sheer belligerence in goading his countrymen to stand up to Germany, even as Britain was being bombed. “Churchill’s supreme talent,” one of his aides recalled, “was in goading people into giving up their cherished reasons for not doing anything at all.” For example, when informed of delays in shipbuilding in 1939, Churchill sent out a memorandum to one of his senior administrators: “It is no use the contractors saying it cannot be done. I have seen it done when full pressure is applied, and every resource and contrivance utilised.” 3. Maintain a positive attitude If anyone should be forgiven a moment of despair, it would be the British Prime Minister in the midst of the war with Hitler. In the early years of the war, it certainly looked like Germany would succeed. European countries were falling in rapid succession and Britain was being continually bombed, with many of its people forced to flee the cities. It wasn’t until Hitler besieged Russia that things began to go awry for him. Despite this, Churchill maintained a positive attitude with his subordinates. “It is a crime to despair,” he wrote after the signing of the Munich Agreement, which allowed Germany to occupy part of Czechoslovakia in 1938. “It is the hour, not for despair, but for courage and rebuilding; and that is the spirit which should rule us in this hour.” In 1955, in his last major speech as Prime Minister, Churchill again sounded a warning against hopelessness. “Never flinch, never weary, never despair,” he concluded. This was in keeping with the general structure he established in his earlier speeches. Churchill never ended without a call for optimism, often delivered in a bit of English poetry. Churchill wasn’t one to sugar-coat the truth. He always spoke of the dire threat to Britain should Hitler succeed. But this urgency was never intended to induce helplessness. “All will come right,” he frequently said. In the war’s darkest hours, he gave Britain courage. Perhaps that’s why he’s so universally admired by global CEOs today. This story first appeared on LeadingCompany.
Google has commissioned PricewaterhouseCoopers to gather data on Australian tech start-ups, and has already released preliminary findings, after partnering with five well-known Australian tech entrepreneurs including Matt Barrie.
Newly launched accelerator Slingshot plans to invest in around 100 start-ups over the next five years, investing as much as $100,000 in each start-up via a $10 million venture fund.
Quest Serviced Apartments has announced plans to build 10 new properties across NSW by 2014, after revealing it is on the hunt for new franchisees to drive the brand forward across Australia, New Zealand and Fiji.
Retailers are being encouraged to take note of a new PricewaterhouseCoopers report, which debunks myths of multichannel retailing, including the rise of social media, tablets and China.
Melbourne-based business OrdersInbox was built off an existing business, but is fast becoming a success in its own right, under the direction of Robert Reith and Douglas Reith.