Despite many corporates slowing down and packing up this week as we roll towards Christmas, the Australian start-up community has been powering along launching a car made entirely of Lego that runs on air and announcing new partnerships. The big one this week was Tiger Pistol, which is now one of two companies listed as Facebook’s preferred marketing partners. Co-founder and chief executive Steve Hibberd spoke to us about what this means for his company, and how they got in touch with Facebook after 18 months of perseverance. Investment announcements haven’t slowed yet, with an education app start-up announcing a Commercialisation Australia grant of $50,000 and an emergency response system start-up that planned to raise $500,000 but ended up raising $1.2 million after tweaking its pitching material. Also in investment news, an angel investor expert has warned the Australian angel networks to develop slowly, and the director of new ventures at NICTA, Andrew Stead, crunched the numbers of 71 investment deals made in 2012 and shared his findings about what Australian investors look for with us here. For every start-up that receives funding, there are plenty that don’t. This start-up decided to pursue their dream to go global with no extra capital, and all of their friends telling them it was a bad idea. They made it work after working through the overwhelming stress. The government announced it was abandoning two tax reforms that would have boosted the start-up scene, but it’s been a rougher week for workers at car maker Holden. The local start-up community in Adelaide has thrown open their doors to welcome any aspiring entrepreneurs among their number. Many local entrepreneurs are exploring ventures in the outsourcing and freelancing market, so the merger of international outsourcing giants Elance and oDesk is sure to change the playing field a bit. In other international news, an Australian start-up has returned from the 10X accelerator based in Ohio and another entrepreneur shared his insights after attending the Lean Startup conference in San Francisco. Closer to home, we shared tips to get the best work-life balance you can over the summer holidays, how much the average freelancer is charging, and three tips for creative entrepreneurs who can struggle to sell their work without selling their soul. Finally, we heard from a start-up tapping into the power of the crowd to compete with roadside assistance heavyweights, an award-winning education platform enabling anyone run an online course, and shared an infographic on how to master your fears as you move forwards as an entrepreneur.
After a year of significant growth in the ecosystem and local start-up investment improving, the Australian investment ecosystem is maturing to a point where it needs to start asking itself serious questions, says serial entrepreneur and investor Brian Dorricott. Dorricott, who’s worked as an investor and start-up consultant in the United Kingdom and Australia, told StartupSmart the emerging angel networks in Australia should avoid the temptation to rack up deal numbers and focus on thorough due diligence to ensure exits. “In the UK, and here too, all the angel networks measure their success in how many deals they’ve done,” Dorricott says. “One hundred-plus deals sounds great, but what matters to investors, and entrepreneurs too, is exits. So the real question is how many members of each gang have actually got their money back with more.” According to Dorricott, the focus on quantity of deals rather than the success of investments can encourage the wrong focus for angel networks. “If you’re looking to maximise the number of deals you’ve done, you’ll do smaller deals, and less due diligence. It’s risky for the whole ecosystem,” Dorricott says. He adds when angel networks look to grow their number of investors and deals, it can easily lead to inexperienced angels being inducted and investing before proper education or due diligence is carried out. “We do need more investors. But when you’re getting new people in and don’t invest the time in educating them, it causes a lot of damage. They put $100,000 in, and they damage two lots of people: the angel who probably won’t make the investment and also possibly the entrepreneur who got backed who may struggle with self-doubt and debt,” Dorricott says. In order to prevent Australian angel networks regularly doling out “double whammies to the ecosystem”, Dorricott says the ecosystem needs to take its time to grow and develop the networks. “If you’re looking at engaging with a fund, either as a founder or investor, you need to be looking for a long-term business prospect that’s okay with growing slowly. You want your fund to take the time to make really good deals, and get successful exits because then you get two people back – the original angel who did the deal and the entrepreneur they backed successfully.”
A new initiative called Crowd Valley says it wants to increase the level of democracy in the crowdfunding market, potentially offering a new path to funding for Australian start-ups.
Tech start-up networks Pollenizer and Innovation Bay have rolled out a new open-source platform that allows start-ups to pitch their concepts to a wide range of investors.
You have an awesome business model, have prepared your investment documentation and are all set to raise capital. Just one small hitch – where the hell do you find investors?