The results from the latest Startup Muster survey indicate Australia still needs work when it comes to diversity in tech, as well the ambition of founders, according to a number of investors. BlueChilli chief growth hacker Alan Jones says it’s “maddening” to see 27% of startup founders estimating their market size is less than $10 million. The figure is so startling that it makes Jones wonder whether or not respondents understood the question and thought they were estimating the current valuation of their startup. “Because if you aim to steal 5% of a $10 million market, even if your net margin is huge, that’s never going to be worth the risk of doing a startup – you’d be better off opening a café or a plumbing business,” Jones says. “Startups should be shooting for the Moon, but it sounds like we’re still guilty of shooting for Moonee Ponds.” That number also had Colin Kinner, the author of the Crossroads report and director of Spike Innovation, wondering whether the survey had picked up a lot of non-startups that are lifestyle businesses. Startup Muster organiser Murray Hurps says in addition to the validation steps, he manually reviewed the companies to ensure they were leveraging technology to create something scalable, the correct definition of a startup, and there didn’t seem to be any misunderstanding of the term. It’s a concerning figure, given startup academic Steve Blank’s advice that startups are either born global or die local and certainly could be a factor contributing to another survey finding – 18% of startups had tried and failed to raise capital. As Jones points out, few investors are going to take on investments with such limited upside. Blackbird Ventures managing director and founder of the Startmate accelerator program Niki Scevak agrees a lack of ambition was the most striking of the survey’s findings. “What sadly stands out is the lack of ambitious founders creating global startups and chasing huge markets,” Scevak says of the survey results. “We created Blackbird and Startmate to provide capital and a network of likeminded founders to help those who dare to make a big impact but there is a long journey ahead. It’s easier in my opinion to build a large ambitious company than a small unambitious one. “It’s harder to get great employees, investors and partners when you are doing something uninspiring. So hopefully in five years’ time the numbers will be flipped. Come on Australia!” AirTree Ventures partner Craig Blair says the figure leads him to believe that this survey is a sample of early stage startups. “The opportunity for the Australian startup ecosystem is to convert these into Series A funded business. This will require addressable markets of more than $10 million, product market fit achieved and distribution starting to work,” he says. Blair was surprised that just 6% of startup founders were under 25, and encouraged that the number of female founders had increased from 16% in 2011 to 19% in 2013. Jones was frustrated at the slow pace of progress. “It’s frustrating to see we’ve made so little progress in changing the gender balance in the Australian startup industry but that might be because we need more girls studying STEM and entrepreneurialism to create more female startup founders, which would mean we won’t see the fruits of those efforts for another 5-10 years,” Jones says. “I’d like to see if the percentage of women in senior exec roles in Australian startups has changed in the near term, and the proportion of women holding equity or options in Australian startups.” 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.
Three Australian startups from the Sydney-based seed funding program Startmate stood out at 500 Startups’ demo day for its ninth batch. Venturebeat selected over-50s online dating service Stitch, photo organiser and enhancer Lumific, and crowdsourced sport predictions service SportHold as three of the five startups that caught the publication’s eye at the demo day. Stitch was co-founded by Andrew Dowling, who is one of the Startmate program mentors, while both SportHold and Lumific were both took part in Startmate’s 2014 program. The mentor-driven program offers $50,000 in investment in exchange for a 7.5% stake and access to countless networks and mentors. Startmate co-founder Niki Scevak was not surprised they were making an impression. “This is all fantastic evidence that Australia is producing great tech founders,” he says. Scevak played down Startmate’s influence, crediting the Australian startup ecosystem more broadly, saying Australia and its startups continue to punch above its weight. "5 startups that caught our eye from 500 Startups' Batch 9" - 3/5 are Aussie & from @startmate. Truly great program. http://t.co/wGqabRmruR — Mike Cannon-Brookes (@mcannonbrookes) July 30, 2014 In addition to highlighting three Australian startups, Venturebeat went even further, suggesting in a separate article that Dropbox should look at acquiring Lumific. “I sure hope file-sharing company Dropbox sent someone down to 500 Startups’ demo day today because they should really talk to a nifty little startup called Lumific,” the article says. “…Lumific would actually make for a perfect addition to the way Dropbox’s users interact with the photos they store in their Dropbox accounts, which the company has been increasingly refining, “And Dropbox should really buy it.” Scevak chuckles at the suggestion, noting it’s not Startmate’s preferred outcome. “It probably does make sense but we don’t want them to sell,” he says. “The core value of Startmate is to try and create something really big and durable that will last a really long period of time. “Sure some exit early in their lives, and people fail lots of the time, but the passion we have at Startmate is for playing the long game.” Applications are now open for Startmate’s 2015 intake.
Accelerator and incubator programs are increasingly popular in Australia, with the promise of expert help and guidance during the difficult early stage development and fundraising process. But what kind of impact do they have on start-up founders, and would they work for everyone? Today we launch the first story in a four-part series exploring the impact of one of Australia’s first accelerator programs, Startmate. Now open for applications for their fourth intake, StartupSmart spoke to one company from each intake to gauge the impact Startmate had on their entrepreneurial journey. When Alan Downie first started working on his start-up, online bug-tracking software BugHerd, with co-founder Mateja Milosavljevic, the idea of entering an accelerator program had never occurred to him. “It was 2011 then, so still early days in the Australian start-up community. I hadn’t got my head into the fact we were doing a start-up, I just thought it was a business. But my co-founder was into the community,” Downie says. Both from technical backgrounds, Downie and Milosavljevic had recently launched a software testing app but it hadn’t fared as well as they hoped. “We realised we were good at building stuff, but we were probably missing something. We hoped that Startmate could fill that,” Downie says. “Matt and I are both developers and product guys, so we had that covered. It was about the business knowledge, and how once you’ve got an idea or product, how do you get it to market and grow it into a real business?” Melbourne-based, they both moved to Sydney for the three-month program. Downie says his concerns before the program were moving his young family, rather than being rattled by mentors or having to give up too much equity. “A lot of people worry about equity and being asked to give away too much by accelerator programs, but at that stage there wasn’t much company to give away and we had no idea if we even had a valid idea, so there wasn’t much to lose,” he says. With not much to lose and a steep learning curve ahead of them, Downie says it was probably helpful he wasn’t particularly aware of the start-up community before he began the program. “I didn’t know exactly who the mentors were; which in hindsight was probably a good thing because they’re pretty impressive,” he says, adding he struggled as an introvert from a corporate background to get used to the collaborative environment at first. Downie says any start-up signing up for Startmate needs to be aware it’s not for the faint-hearted. “We had one mentor come in, sit down and say ‘this is stupid and you shouldn’t do it’,” he says. “There are two ways to go after that kind of advice. You can go believe them and give up. Or use it to harden your resolve, and it did for us. Some people can’t handle that, but that’s what you really need if you want to build something big.” The other big discovery of the program for Downie and Milosavljevic was realising they were targeting the wrong market, a strategic decision that Downie says would have crippled their start-up had they not switched focus. Originally pitched at start-ups, the co-founders realised they probably wouldn’t pay for their own product, and that pitching to people who by definition have little or no funds probably wasn’t the best idea. “During one of the mentoring sessions, we realised that start-ups wouldn’t pay for it, because we wouldn’t and we knew its value backwards. It was a wake-up call,” Downie says. The team has since pivoted to focus on digital agencies and enterprise clients. They began raising a seed round of $250,000 during the January to March program, and closed the round shortly after the program. The transition from developer to accelerator participant to fully-fledged start-up founders was tough, especially graduating from a closely supported program. “Personally it’s been very difficult. You’re a developer one day, and then the next you’re actually a CEO, which means you need to be the lawyer, the accountant and the HR person all at once,” Downie says. “You toughen up and get used to it, and the Startmate guys are always contactable, but leaving the program can be a bit of a shock.” Since then, the team has gone on to be part of leading American accelerator 500 Startups, and raised a second round of $550,000 in January 2012 from this program and Australian venture capital fund Starfish Ventures. “As an unfunded, untested company, Startmate was harder. 500 Startups was a bigger cohort with some great guys, but in Startmate we learned a lot faster than we ever thought we could. The pressure was much more intense,” Downie says. With thousands of users, six full-time staff and plans to hire a few more in the coming weeks, the BugHerd team are preparing for growth. Downie says the ongoing mentoring provided by investors and Startmate mentors has enabled them to make two decisions, both of which doubled their sales. The first was scrapping the free trial offer and charging users from day one after their free trial. Downie says this led to increased engagement with the product. “We’re very analytical in our approach, probably thanks to Startmate’s AB testing focus, and we did a lot of testing of that first. We tested not showing the free plan option to 50% of the audience. By positioning it as a product that needed to be paid for, they were twice as likely to try it out, use it and buy it,” he says. This, coupled with the realisation browser extensions were far more likely to be used than packages that had to be downloaded and installed, has seen the Bugherd customer base skyrocket. They’re planning a Series A funding round next year.
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.
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.
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.
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.
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.
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.
Sitting half-way around the world it's easy to think of Silicon Valley as a magical kingdom of start-ups, but the reality is much more mundane.
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.
Mentor-driven seed fund Startmate has unveiled the participants of its 2012 program, investing in eight tech start-ups that it says are aiming to be “the best in the world.”
In the past year, mentor-driven incubators have spread like wildfire across the lush Australian start-up landscape. But there are questions over whether this seemingly welcome surge in start-up help is just a flash in the pan for both entrepreneurs and investors.
Australian tech start-up Grabble has been acquired by US retail giant Walmart for an undisclosed sum, in a deal that will see Grabble’s technology and talent become part of Walmart Labs.
In July last year I almost had a revolt on my hands. I had just told my staff that we were going to launch a sister publication to SmartCompany on September 1.
Serial entrepreneur Andrew Birt is looking for Melbourne-based start-ups to become the first group of participants for his latest venture AngelCube, an early stage incubator for web-based businesses.
A few years ago, the funding scenario for an innovative start-up was simple. Get a bank loan to get yourself started before turning to a grateful Australian-based VC who will help propel your business into the big time, in return for a juicy equity cut, of course.
Tech start-ups have been offered the chance to pitch for investment through the three-month MEGA program, which kicks off in April.