The bitcoin rollercoaster continues this week with Japan announcing plans to regulate transactions, two bitcoin exchanges hacked and one closed, and a chief executive found dead of suspected suicide in Singapore. This week, the Poloniex exchange and Flexcoin’s bitcoin bank were both hacked, with Canada-based Flexcoin announcing their closure shortly afterwards. “As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately,” a statement from the company said, which also confirmed the loss of 896 bitcoins, worth over $650,000. The sudden closure of key Tokyo-based exchange Mt Gox last week sent shockwaves through the community. The bitcoin price dropped from around $US800 to $US500 before holding steady. Australian bitcoin experts and entrepreneurs welcomed the news of Mt Gox’s demise. The Japanese government did not. The Nikkei stock exchange has reported the government intends to establish rules for the trading of bitcoin, including taxes on bitcoin transactions. But the bitcoin start-up ecosystem is weathering the storm. A hackathon is taking place in Texas and Blockchain.info has acquired the ZeroBlock bitcoin trading platform. US-based Bitcoin Foundation said in a statement last week that recent events were certainly not the end of bitcoin. "As our industry matures, we are seeing a second wave of capable, responsible entrepreneurs and investors who are building reliable services for this ecosystem,” read an emailed statement. Australian start-up leader Niki Scevak has significant skin in the bitcoin game, after leading an investment round for Melbourne-based bitcoin start-up CoinJar. Blackbird Ventures invested $500,000, their maximum possible amount, in the start-up in December. Scevak says while it was obviously going to be a bumpy road, they were not remotely concerned about the current issues. “I have not changed my view at all about the long term potential of bitcoin,” Scevak told StartupSmart. “The fundamental innovation of bitcoin is still strong. What’s amazing is bitcoin has never been broken on a protocol level. All the bad things have been human fallibility and the age old phenomena of people stealing or doing silly things.” He adds bitcoin remains one of his biggest investment interests and Blackbird is actively seeking to invest in more crypto-currency start-ups. In sad news that is yet to be directly linked to the turbulence in the bitcoin ecosystem, First Meta’s chief executive Autumn Radtke was found dead near her home in Singapore, where the exchange is based. Radtke, 28, had previously worked for Apple, and Richard Branson as a business and sales consultant. She co-founded Geodelic Systems in 2008. She had recently published an essay on the psychological price of entrepreneurship in the hardcopy edition of Inc. magazine. In a statement, First Meta’s board chairman Douglas Adams said the team was shocked and deeply saddened by the loss. “Our deepest condolences go out to her family, friends and loved ones. Autumn was an inspiration to all of us and she will be sorely missed.” Launched in 2009, First Meta has raised capital from Plug and Play, as well as Singapore's National Research Fund. If you’re feeling depressed you can call Lifeline 13 11 14, BeyondBlue 1300 224 636 or MensLine 1300 789 978.
CoinJar, a Melbourne-based bitcoin exchange and payment system, has raised $500,000 in seed funding from a range of individual investors and the Blackbird Ventures seed fund. Launched in February by Asher Tan and Ryan Zhou, CoinJar currently has over 10,000 active users in Australia. The company charges a low single-digit percentage fee for each transaction. Tan told StartupSmart the funds would go towards enabling their global expansion. They’ll be investing in new hires, including support and technical talent such as Ruby on Rails developers. “A lot of people talk about a bitcoin bubble, but the case is too strong to ignore,” Tan says, adding the investors were compelled by the story behind bitcoin and the use cases. “One of the unique draws of bitcoin is totally people-powered. As long as people remain interested, bitcoin won’t die out.” Tan says while they’d welcome regulation around bitcoin to further legitimise the currency, it was important law makers take the time to understand the scene and potential. He adds creating the right infrastructure and increasing the ease of cashing in and out of the digital currency will boost usage in the coming year. Tan says the investment is a breakthrough for them as it brings credibility to the nascent technology. “It’s not just about the money. We’re very new to this, so the investors are bringing legitimacy to our business. A lot of people ask us how do they know we’re not a scam, so having such well-known and respected investors means people will trust us more,” Tan says. CoinJar received their first funding of $20,000 earlier this year when they took part in Melbourne accelerator program AngelCube. Blackbird Ventures co-founder and serial entrepreneur Niki Scevak led the investment round. He told StartupSmart it was exciting to see Australian entrepreneurs taking on the emerging bitcoin industry. “I love the ambition of the team. Asher and Ryan are remarkable people who are creating something special. They’re committed to being the best in the world rather than just the best here, which is very cool,” Scevak says. He adds while bitcoin is very young and there are significant risks, the founders and the progress they’ve made since launching earlier this year convinced investors. “This is very, very early on in the life of bitcoin. The majority chances are that bitcoin start-up investments will amount to nothing. A lot of bitcoin companies that have achieved success have been hacked, so that’s a big risk because once you’re hacked you’re dead because the trust is eroded,” Scevak says. He adds the investors were excited by how effectively Tan and Zhou had iterated on their offerings, and especially about their development of an API strategy. This technology would speed the uptake of bitcoin. While Tan says he expects bitcoin will become mainstream, but is wary to gaze into a crystal ball and set a date as there are so many variables, with regulation being a predominant one. “I do welcome regulation, provided it’s informed regulation. Governments will need to ask some hard questions, but we’re all doing this for the first time so it’s important we don’t jump into regulation. We all need to develop considered, well thought out plans about something that could be beneficial to the whole world,” Tan says. Pioneering a new technology comes with many challenges, with CoinJar battling the Commonwealth Bank earlier this year after their personal accounts were shut down without warning.
Happy Global Entrepreneurship Week! Here’s the wrap of the stories we covered this week, so you can catch up on your reading over the weekend. Apple Inc has hit a roadblock in their bid to trademark “startup” in Australia, and Kogan got into a fight with Click Frenzy. We spoke to the local co-ordinator for Global Entrepreneurship Week about the 230+ local activities, new research revealed Australia is the third most entrepreneurial country in the world, and some of Australia’s leading entrepreneurs were celebrated at an awards night on Thursday. Meanwhile, Ireland is making a play to attract our best and brightest, announcing a start-up ambassador for Australia, a campaign director told us how to get more sales via Facebook, and Nina Hendy shared seven tips to make your business look bigger. Don’t give up The big theme of our stories this week is a perennial mantra for start-ups: don’t give up. Niki Scevak, serial entrepreneur, investor and advisor, shared why ideas don’t fail, teams that give up do. It was also a recurring theme in the Start-ups are Scary series we launched this week. We heard from the co-founders of 99designs, Canva, Thank You Water, Vinomofo and Seek about their toughest and most terrifying moments, and how they made it through. Investment and accelerator news We spoke to an investor and advisor who’s worked with some of the world’s leading start-ups about his top five tips for seeking investment, heard from a start-up that raised $2 million and got the inside scoop on what the plan is for the new Telstra-backed accelerator. The ANZ Innovyz Start program, one of Australia’s leading accelerators, announced they’ll be opening an intake in Sydney early next year. We spoke to managing director Dr Jana Matthews about why they chose Sydney, and how the program has evolved in the past few years. Entrepreneurs shared their plans Start-ups may be hard work, but they’re also rewarding and a lot of fun, especially according to this MBA student who’s chucked in her plans to get a corporate gig to work for a start-up instead. We heard the business plans, passion and growth strategy behind a nursery furniture company, a museum mapping tech company, a Melbourne beer company, and a start-up turning one-week-old this weekend. Also this week, find out how to boost your profits as we head into the traditionally quiet period of Christmas, why getting a handle on hyperbolic language will revolutionise how you do business, and how to find the perfect business partner.
Designed to turn Australian technical founders into successful global entrepreneurs, one of Australia’s first start-up accelerators Startmate is now open for applications. The program will run next year from January to May. Companies will spend three months in Sydney and two in San Francisco. Startmate is seeking around eight companies, which will receive $50,000 in seed capital, in exchange for 7.5% equity. Startmate co-founder Niki Scevak told StartupSmart they’re seeking founders with big dreams and plans. “Beyond the very product centric technical team, we’re looking for people with large ambitions, the crazier the idea the better. We really want to work with teams who want to make a big difference in the world, so the scale of the ambition is what we’ll be selecting,” Scevak says. He says they’re committed to approaching each pitched idea with an open mind, adding that being the hundredth start-up to tackle an idea didn’t hurt Google, Facebook or Atlassian. “Anyone doing anything in an incredibly crowded area will be taken as seriously as brand new ideas. The ideas may sound incremental, but it really does matter why the founders have chosen to pursue this idea, and if they have a unique insight into it,” Scevak says. “It’s about why they care about their customers and if they have an authentic connection to the market. We look for what in their lives have driven them to this idea.” The program includes an impressive line-up of mentors including Atlassian co-founders Mike Cannon-Brookes and Scott Farquhar; Tjoos co-founder Bart Jellema; and Spreets co-founder Dean McEvoy, as well as several partners from Square Peg Capital and Blackbird Ventures. This will be the fourth intake for the program. Previous participants include BugCrowd and NinjaBlocks. Start-ups can apply via Angel List.
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.”
Storyberg co-founder Michael Dijkstra has revealed why the start-up surprisingly folded, shortly after being accepted into the 2013 Startmate program, but insists it’s “definitely not the end” of his start-up adventures. Storyberg, which helped app owners align product development with key metrics, was founded by Dijkstra and Kevin Nguyen, both of whom previously worked for Pollenizer. In addition to being selected as one of eight start-ups for the Startmate class of 2013, Storyberg was shortlisted for season two of the Optus Innov8 Seed Program. But less than three months into the Startmate program, Dijkstra confirmed in a blog post Storyberg is closing down. “In January 2013 [Nguyen and I] both went full-time. By that time, over 120 people had signed up, however, the data showed that we were the only ones to validate our features,” Dijkstra wrote. “People signed up but were only using our tool for task management, not hypothesis validation. “We decided that we did not want to build another project management tool that’s got a better design/UI so we pivoted to focus on the validation part of the lean start-up workflow. “We quickly relaunched our product as an analytics tool.” Storyberg’s pitch was: “Google Analytics tells you something happened, KISSmetrics tells you who did it, Storyberg tells you who did and why”. But the team quickly realised there was not enough value in the “why” on its own, without all of the additional information attached to the “who”, offered by services such as KISSmetrics. “We did not have the resources or desire to build all the baseline features of a product like KISSmetrics and then add our own unique value proposition on top,” Dijkstra said. “In the end, as a team, Kevin and I believed we had exhausted our possibilities with Storyberg and did not have anything else to firmly ‘pivot into’.” Dijkstra told StartupSmart the response from Startmate was “all very positive”, with co-founder Niki Scevak in full support of the team’s decision. Dijkstra is quick to point out Storyberg did not fold as a result of any disagreements between Nguyen and himself, saying he and Nguyen will potentially work together again in the future. But he is adamant nothing could be done to save Storyberg, insisting a second pivot was not possible. “The key to a real pivot is, they say, to plant one foot on the ground and then turn on it… There was nothing we could do to pivot into the space we had identified,” he says. “We weren’t ready to start from scratch again and do everything from day one because it’s a massive undertaking.” Dijkstra says if it hadn’t been for Startmate, it might have taken Storyberg a lot longer to make this realisation. “I think if we didn’t do Startmate we might have been in this situation six or 12 months later. [Startmate is] an accelerator and that’s what it does – it speeds everything up,” he says. “It was a great experience. The learning around the whole process of pitching, demo days, dealing with investors – you get a lot of support in that area, which is all new to us.” When asked about his involvement in the Australian start-up scene, Dijkstra says it’s “definitely not the end”. “Through Pollenizer and Startmate and everything, you become part of the start-up family in Australia,” he says. Startmate could not be reached for comment.
Above: Chris Raethke, Damien Brzoska and Saxon Fletcher from Supportie (Image: Zach Kitschke). Startmate may have evolved from a trailblazer in the start-up accelerator scene to one of several incubators offering broadly similar things, but it is still regarded as the gold standard by many aspiring tech entrepreneurs. The Sydney-based program, now in its third year, hothouses web and mobile ventures by throwing an army of top-notch mentors and $50,000 at them, as well as providing them with a handy trip to Silicon Valley. The participants for the 2013 iteration of Startmate were picked back in December, with Niki Scevak, co-founder of the scheme, declaring “we have been looking for those unique ‘two shit’ teams – those which get shit done, and also give a shit about the customer and their problems”. So which of the class of 2013 are set for riches in Australia and beyond? We spoke to this year’s participants to get their insights and will be profiling them in two parts on StartupSmart: Supportie (formerly GetStall) What? Technical help for your small business. There are experts online waiting to help. · Founders? Chris Raethke, Damien Brzoska, Saxon Fletcher Website: http://www.supportie.com/ Why did you apply to Startmate? We remember seeing BugHerd being accepted into the first intake and saying, “Wow, that’s a really cool product. This Startmate thing sounds exciting.” Before applying we were running our own web company, building out MVPs for other people’s start-ups, and we really wanted to pursue an idea of our own. So late last year we had saved up some money and felt we had a good product (GetStall) to apply with. So we did. What was the application process like? As a tech team this was the hardest part for us. The application had a lot of tough questions around sales, marketing, finances, etc. Getting answers for these meant a lot of whiteboard sessions, reading and learning for us. It really helped us to grow as a team, and thankfully we have a really strong tech team so we were able to get through (even though our business skills were a bit light on). How are you finding the program so far? The program is great – there are a lot of really smart people here and some really interesting problems that people are solving. It is definitely an emotional roller-coaster, as any start-up could relate with. Some days are up, some days are down. The big thing we have learnt is that this doesn’t end mid-April when we go to the States. This is something which will continue on for at least the next four to five years. Why did you pivot? We were four weeks into pushing GetStall out to the masses and, while we were getting quite a few shops signing up, we weren’t getting many sales. We spent a few days going over what we had achieved and learnt so far, and the numbers didn’t show us anything which we could get too excited about so we chose to move onto something new. In hindsight, we put too much pressure on ourselves to be performing quickly. Things take time and unfortunately we learnt that the hard way. A day off, and a chance to breath and get some sleep, would have been a good idea. How do you make money? Like many marketplace-type businesses, the plan has always been to clip the ticket. We are actually only three weeks into this business, so the actual pricing will need to be refined once we have more data. What is your vision for Supportie? Supportie is still very much in the early stages and we are still doing a lot of discovery. We have been focusing on a small segment of the market at the moment, so we can’t say too much more just yet. How do you plan to achieve your vision? We’ve already spent two weeks assessing two markets within the Supportie space. The current plan is to spend a bit more time looking at possibilities in this space and then decide where we want to specifically focus. So the current plan is to learn more and then make a plan. Kinderloop What? A simple and secure way for child carers to communicate with parents. Founders? Dan Day and Daniel Walker Website: http://www.kinderloop.com/ What was the inspiration for Kinderloop? Dan Day: After having my two children in daycare for three years, I was frustrated by the lack of communication. Collecting them at the end of the day, it was impossible to find out what they learnt, ate or did. The carers were always so time-poor as well. Why is this needed? Kinderloop solves this problem by allowing carers to record events as they happen during the day. This saves them valuable time reporting, saves money in consumables and keeps them fully engaged with parents. What is your revenue model? Each carer pays a monthly fee and the parents pay for premium add-ons. Story continues on page 2. Please click below. Why apply for Startmate? We liked the idea of an accelerated program, the mentor list was attractive and it fitted nicely with where we were at in Kinderloop’s lifecycle. What was the application process like? We found it relatively straightforward. The one-minute video pitch was great practice and the demo interviews were fun – it really made us refine our spiel. How are you finding the program so far? We are enjoying it – you work as hard as you desire (which is hard, let me tell you!) It’s great sharing the highs and lows with the other teams, and there is so much learning each day. Are you hoping to raise additional funds for Kinderloop, either here or overseas? Yes we are. We will raise a round of $850k from both here and overseas to help build the team. Where do you see yourselves in a year from now? We aim to be the go-to communication tool for anyone who cares for children, from preschool to sports clubs, worldwide. Bugcrowd What? Crowdsourced security testing. We run managed bug bounty programs for business. Founders? Casey Ellis and Sergei Belokamen Website: http://bugcrowd.com/ What was the inspiration for Bugcrowd? Ellis: Bugcrowd was the result of a series of conversations with customers of my previous business, a security testing consultancy, where the bug bounties run by Google, Mozilla, Facebook and others kept coming up in conversation. I started asking the question, if you think these are such are good idea, why aren’t you running one? Off the back of that, I had the idea to create a business that handles those objections and runs bug bounties as a fully outsourced service. You’ve described yourself as “Kaggle for security vulnerabilities”. How so? One of the mentors at Startmate called us that. We are similar to Kaggle or 99designs in that we crowdsourced, meaning our customers pay for the results they want, not the effort that went into the results. The way Bugcrowd works: The client sets a reward pool, a duration for the bounty, and tells us what they’d like the crowd to test. The crowd is notified and starts testing. The first person to find each security flaw wins a reward, and there are higher rewards for the most creative or severe flaws. At the end we take the findings and validate them, then produce a developer-friendly report of things to fix. We then manage the payouts to the crowd. What’s your revenue model? We take a percentage of the reward pool offered in each bounty. We also have premium paid features, such as our Crowdcontrol system (which controls testing traffic) and private bounties (where only the top-ranked researchers are invited). Why apply for Startmate? Bugcrowd is a great idea but, despite our experience in running businesses, we knew we’d need help taking it from being a great idea to being a great business. The Startmate mentor network is built for this purpose. What was the application process like? Hectic! I left applying a little bit late (like the day before) so I had a lot to do to get something sensible submitted in time. How are you finding the program so far? Excellent. The focus it brings is fantastic. The mentor network is invaluable and the money we got from them is letting us work full-time on making Bugcrowd awesome. Niki (the founder of Startmate) is a very focused guy who knows what it takes, and you can tell that he’s gone to great lengths to impart his experience into the program. You’ll be heading to San Francisco a bit later. What are you hoping to achieve there? The main purpose of the trip will be to pitch for seed capital to take the business to its next stage. Apart from that, I'll be doing a bunch of business development and meeting up with a bunch of industry friends who I’ve only known through Twitter for years, which I am really looking forward to. What’s your overall goal? Our overall goal is to connect the global white-hat security research community with companies of all shapes and sizes through the Bugcrowd platform. Our aim is to become synonymous with the concept of crowdsourcing your security testing. Another goal is to continue and expand our charity bounty program, where we do bounties for charities for free, and make that the first port of call for charities wishing to have their security tested.
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.
Blackbird Ventures is determined to offer Australian start-ups much-needed Series A funding rounds, after announcing the formation and first close of its $30 million venture capital fund.
Mentor-driven seed fund Startmate is seeking “exceptional” developers and designers for its newly launched Trump Cards program, which offers insight into life as a start-up.
It’s fair to say 2012 was a mammoth year, not only for the various incubators and co-working spaces, but for the Australian start-up scene in general.
Niche dating website 7pm anywhere is among the eight start-ups accepted into the 2013 Startmate program, which will include two demo days and a two-month stint in Silicon Valley.
It appears that the ‘lean’ spirit of modern entrepreneurship has finally inspired the Australian venture capital industry to invest in early stage start-ups – a trend is set to increase due to the accelerator boom.
US incubator Y Combinator has reduced its investment amount from $150,000 to $80,000, underlining the plummeting cost of starting a business, especially in the tech sector.
Incubator program Startmate will return with a vengeance in 2013, doubling its investment to $50,000 per start-up and extending the program to five months, two of which will be spent in Silicon Valley.
A new venture capital fund is aiming to take the Australian start-up scene by storm, founded by a self-described “dream team” including Atlassian founders Mike Cannon-Brookes and Scott Farquhar.
For Australian start-ups dreaming of making it big in the US, the transition time from launching to jumping on a pan-Pacific flight seems to be getting quicker and quicker.
Australian travel start-up Flightfox has been accepted into US-based incubator Y Combinator and raised $800,000 in capital, just months after joining Startmate, the Sydney accelerator.
Australian seed fund Startmate has denied that it is contributing to a brain drain of local start-up talent, after advising its latest batch of start-ups to become incorporated in the United States.
Cofounder Speed Date has teamed up with AngelCube to bring the co-founder matchmaking event to Melbourne, but insists participants don’t need to have a start-up idea to attend.