Sydney accelerator BlueChilli is partnering with one of Australia’s big four banks to encourage local entrepreneurs to develop new ideas and solutions for the agricultural sector. The Westpac Innovation Challenge will award $40,000 to the entrepreneur who develops the “most useful and innovative” digital solution for the bank’s agribusiness customers. The winner will also receive a six-month placement in Blue Chilli’s accelerator program, which will give them the potential for further investment opportunities. This is the second time the Westpac Innovation Challenge has run, with last year’s competition focusing on real estate. BlueChilli founder and chief executive Sebastien Eckersley-Maslin told StartupSmart the innovation challenge was a good opportunity for entrepreneurs to develop a new idea and tap into a large pool of customers. “When we work with our corporate partners we want to leverage their existing distribution channels and Westpac has strong ties to the agricultural sector,” he says. “We think this is an exciting area and digital can add a lot of value.” Eckersley-Maslin says corporates are increasingly looking to startups for innovative solutions and to get ahead of the competition. “It’s really exciting that we’re seeing the big end of town start to identify innovation that can happen the startup way,” he says. “We’re looking for ideas that are truly innovative and can use digital to enhance farmers lives and agribusiness – it can be anywhere in the supply chain. We also want people to think about how Westpac can give them an unfair advantage.” Westpac’s national agribusiness manager, Stephen Hannan, said in a statement he hoped the competition would uncover new ideas that would help farmers and the communities that support them. “Our customers have told me their biggest focus is ensuring the long-term sustainability of their businesses and the primary industries they work in,” he said. “We want to connect our agribusiness customers with new and innovative solutions that tackle some of their biggest concerns – new ways to improve productivity, lower costs, foster sustainable farming and manage market fluctuations.” The Westpac Innovation Challenge is open to Australian residents who have an existing early-stage startup or are developing a new concept. Applications open on 23 June and close on 2 August. Startups focusing on agricultural technology are tipped to be the solution for feeding the world’s fast growing population, with farmers expected to feed nine billion people by 2050 with even less land than they have now. Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
With the Apple Watch having now officially launched in Australia, developers and businesses releasing apps for the platform are describing a number of unique challenges posed by the device, including dealing with a smaller screen, unreliable Bluetooth links and new contexts for apps. The highly publicised launch of Apple’s wearable device will see the number of companies with smartwatch apps explode. The list of companies committing to apps on the platform includes Domain, REA, CBA, Fairfax, Qantas, Woolworths, OzLotteries, Westpac, St George and Zova. They join startups such as Rewardle and Freelancer which are already operating on smartwatches via Google’s Android Wear platform and, in some cases, created apps even before the Apple Watch was officially announced. Klyp mobile lead Tyson Bradford says many more businesses are taking a wait-and-see approach to the platform. “At the moment as a digital agency, we’re not seeing a lot of demand for apps, but there is a lot interest in the business community. A lot of businesses are watching the launch very closely,” Bradford says. Bradford says screen size is one of the major user interface issues developers need to consider when designing an app. “In general, smartwatch keyboards are unusable and on the Apple Watch it’s non-existent. That creates a number of UI challenges. So for example, for an app that relies on communicating between two people, instead of a keyboard, Apple allows you to use predetermined emoji, draw on the screen or call them by voice. That means the whole UI needs to be rethought,” he says. “The other issue is processing power and the necessity of being synced to the iPhone for many of the features. So, for example, the watch can’t access the internet directly, meaning you need to have your phone nearby – in a pocket, a bag or on a desk – when you want to call someone. “That means if you have a fitness app, there’s a good chance the user won’t have their phone in their pocket when they go running – and you won’t be able to get data onto the internet in real time. So you really need to consider the context as well as the UI.” Among the Australian startups preparing to launch an Apple Watch app is mobile ordering and payments platform AirService. Its chief executive and co-founder, Dominic Bressan says it’s important to be mindful of battery life, and that design elements work differently on a smaller screen. “It’s a new platform, a new experience, and you can’t just shrink an iPhone app down to a smaller screen. So you have to pick which elements you bring from the iPhone to the Watch,” Bressan says. “So notifications are something that naturally flows from the phone to the watch. I don’t see the full ordering experience translating to the watch, at least this stage. We will allow users to save a couple of favourite orders, but a full browse of venues with photos will remain on the iPhone. “It has been really tricky developing an app without a device to test on and needing to do everything in a simulator. You have to remember things like the Bluetooth Low Energy connection is prone to drop out on the real device, but always works flawlessly in the simulator. Likewise, Airtasker chief executive and co-founder Tim Fung says notifications are likely to be a key focus for the startups forthcoming Apple Watch app. “For us, the benefits of an Apple Watch app are proximity and immediacy. Most of our Apple Watch app features are worker-centric features. We’re looking at scheduling, alerts and notifications that will allow them to move quickly and respond to an alert,” Fung says. “When it comes to posting tasks, at this stage the interface just isn’t strong enough. That will change over time, thanks to the likes of Facebook and Twitter. Over the long term, we’re looking at things like using voice-to-text for tasks.” Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Stone and Chalk, a new fintech hub that promises to help accelerate the development of Australian fintech startups, was unveiled in Sydney on Tuesday. The independent not-for-profit will be located on level 26, 45 Clarence Street in the Sydney business district. It will include 1230 square metres of office space with the potential to grow to 3000 square metres. Stone and Chalk’s co-working space will open in May and can fit up to 150 entrepreneurs, as well as offering space for seminars, industry meetings and conferences. Corporates will also be able to rent space in order to collaborate with the startups working there. New South Wales Premier Mike Baird, who spoke at the hub’s launch yesterday, says it will encourage innovation and creativity in fintech. “Stone and Chalk will provide fintech startups with subsidised office space to collaborate, network and investigate venture capital opportunities,” he says. “The fast-growing fintech sector will further strengthen Sydney’s position as Australia’s business capital and a globally recognised and competitive finance sector.” Stone and Chalk chair Craig Dunn says the hub will become the heart of fintech in Australia and hopefully Asia. “Digital disruption is transforming the financial services industry and there is much to be gained through greater collaboration between stakeholders in the fintech ecosystem. We are focused on brining to life our vision for Sydney’s fintech hub to support startups compete, thrive and lead on a world stage.” Toby Heap, managing director of the AWI Ventures fintech accelerator program, says the new hub will provide a physical focus for the growing fintech ecosystem. “Our aim is to provide an ecosystem of advice and support that empowers the brightest up and coming financial services executives to leave their often comfortable nests and start a new generation of world leading financial services organisations.” The hub was made possible due to professional and financial contributions worth more than $2 million from Allens, Amazon, American Express, AMP, Capital Markets CRC, CIFR, FINSIA, Finzosft, HSBC, IAG, Intel, KPMG, Macquarie Group, Oracle, Suncorp Bank, Veda, Westpac and Woolworths. Co-founder and chief operating officer of Pocketbook, Bosco Tan, praised the commitment shown by the government and private organisations in coming to “collaborate and elevate innovation”. “Being surrounded and supported by the who’s who of the sector is a critical step to shortening the process of ideation and execution,” he says. Posse co-founder Rebekah Campbell says the there’s a huge opportunity for innovation in financial services. “The fintech hub is a great initiative to drive focus and collaboration in the sector. I’m sure we’ll see some giant disrupters emerge as a result in years to come,” she says. Fintech start-ups that would like to express interest in moving to Stone and Chalk, visit stoneandchalk.com.au for more information. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
The Financial System Inquiry has taken a “slow and steady” approach to financial crowdfunding, despite perceptions that Australia is lagging behind in this area. While acknowledging the wide range of global crowdfunding models, the report focuses on securities-based crowdfunding such as crowd-sourced equity funding (CSEF) or debt, and peer-to-peer lending (P2P), recommending: Graduate fundraising regulation to facilitate crowdfunding for both debt and equity and, over time, other forms of financing. The aim is to eventually have a holistic regulatory setting that can facilitate internet-based financing, including crowdfunding. For the moment, it will be an “adjust-as-you-go” approach with the regulations, but the focus will be on disclosure requirements of issuers and protection of retail investors. Since CSEF has far more regulatory requirements than P2P, the inquiry recommended a consultation on CSEF regulations, leading Treasury to immediately release a discussion paper on CSEF. The government’s measured approach is justified if we realise we are looking at the tip of a very huge iceberg. Crowdfunding is a whole new market with its own ecosystem. Just like we have emerging markets, frontier markets and so on, this financial crowdfunding market is expected to disrupt financial intermediation similar to what Amazon did to bricks-and-mortar bookshops. Tagging on keywords like collaborative finance, fintech, platforms, algorithms, networks, engagement, equity slices, social validation and momentum-investing, this market is projected to reach US$93 billion by 2025 and an astonishing US$300 billion once the developing countries release their crowd. With the new market comes new asset classes such as venture capital for retail investors. Take the case of Australian entrepreneurs Dan Joyce and Jared Mooring, now living in London, who pitched their venture My Mate Your Date (MMYD) on the UK equity crowdfunding platform Crowdcube with a target of reaching £130,000 representing 20% equity by 21 December 2014. The project was pitched on the platform around 29 October 2014 (according to its Facebook entry). By 9 December MMYD had raised £110,550 (representing 85% of funds) from 97 investors, with the largest investment being £20,000. The pitch’s links to MMYD’s Facebook and Twitter, the stream of messages, “likes”, and “shares” and “comments” matter as much as the financials and key data. The social validation of a venture can make a casual observer become a curious investor, and then a self-appointed brand ambassador, passionately following the firm as it grows and into a possible IPO. This is the power of a networked, engaged crowd. The returns in these ventures are clearly much more than financial which explains the rush by even banks and large companies to back these ventures. SocietyOne Australia is backed by Rupert Murdoch and James Packer as well as Westpac’s Reinventure Group. Financial crowdfunding is a brilliant solution for the small and medium-sized enterprises’ funding gap issue, as well as for the economy’s innovation and industry competitiveness agenda, while delivering along the way the gift of efficient risk-return transactions to the crowd. That’s a lot of wins and doesn’t justify the slow approach. But, here’s why one needs a steady approach too - new market, new risks. Recently, Aurora Labs, a Perth-based startup that launched on Kickstarter on 23 September 2014 cancelled the campaign on 9 October despite receiving $304,755 from 122 backers - three times its $100,000 target - due to the company’s concerns over protecting its intellectual property (IP). Aurora had failed to understand Kickstarter’s disclosure requirements: When a project involves manufacturing and distributing something complex, like a gadget, we require projects to show a prototype of what they’re making, and we prohibit photorealistic renderings. The funders want as much detail as possible, while the issuer wants to protect IP. Questions around what “showing a prototype” really means and the level of detail required in its disclosure, need to be addressed. Other risks such as cross-jurisdictional/cross-border complexities, securitisation of unsecured loans, and a lack of disclosures of “real” returns have been highlighted in recent reports from Infodev/World Bank and the International Organization of Securities Commission. We also need to understand the “real” business model of these Fintech companies. LendingClub debuted this week on the New York Stock Exchange under the ticker symbol LC with a highpoint value of US$5.7 billion, but rose to more than US$9 billion on the first day of trading. Is it a “fin” or a “tech”? It is being valued as a technology company. We are back to the question: “What’s this fintech’s business model”? Well, that explains the “understand before you regulate” perspective of the inquiry. After all, we don’t need a regulation that turns out to be a lemon. This article originally appeared at The Conversation.
Everybody wants to be startup. Recently, The Guardian claimed they were one, along with Westpac and a number of other large and well-established companies. And if they’re not claiming to be one, they certainly want to get in on the startup action, the latest being KPMG. The professional services firm has just announced a partnership with Artesian Venture Partners that will enable it to gather non-sensitive data, from up to 1000 startups over the next five years. The data will come from a number of funds which it operates including, the Slingshot Venture Fund and the BlueChilli Venture Fund, the funds behind the Newcastle-based Slingshot Accelerator Program and the Sydney-based BlueChilli incubator. In addition, it also operates the Sydney Angels Sidecar Fund. It provides investors with tax free exposure to all those funds through its Australian VC fund, for which it’s currently raising $100 million. Artesian Venture Capital COO Tim Heasley says the data will inject some much needed evidence into the Australian startup ecosystem. “The partnership allows us to accelerate the capital raising for the (Australian VC Fund) through KPMG’s corporation connections. Importantly, it gives us a means of capturing and ultimately processing data from the Australian startup ecosystem, data that has been missing or lacking up until now,” he says. “No one has a complete read on what’s happening, what verticals are being targeted? What are the technical of other backgrounds of founders? How many have had other successful startups? How many are women? Men? What age range? “Once we have that info we can start reporting it in a meaningful way, we’re going to end up with a rich data set, and we’re effectively professionalising the startup investment scene in Australia.” KPMG was one of three professional service firms that tendered to become Artesian’ s partner, with KPMG Australia head of innovation Martin Sheppard saying it’s an important milestone for the firm when it comes to doing business with startups. “Proactively engaging with Australia’s startup ecosystem is critical to our innovation strategy,” he says. “It will expose us and our clients to new growth opportunities; provide early insights into emerging and disruptive technologies, and help us and our clients stay ahead of the curve.” They’re not the only ones seeing the opportunity. Telstra, was one of the first starting its Muru-d accelerator program. But there are other signs too. Pollenizer, BlueChilli and 25fifteen are used to hearing startups pitching to them. Now they’re doing the pitching too. Competing to secure lucrative consultant-like roles with big incumbents in a whole host of industries, including banking, insurance, telecommunications, and logistics – shipping, warehousing, things of that nature. Services they provide range basic lean startup education courses, organising and running hackathons. BlueChilli chief growth hacker Alan Jones says corporates are aware of the competition that startups face. “Primarily what they’re aware of as a corporate is a lot of disruption in their industries is going to come from startups in the next five to 10 years,” he says. “They can see evidence of this already, particularly in banking and insurance, in travel and even in industries like automotive and airlines. We’re starting to see online native, early stage startups creating industries that have never existed before massively disrupting traditional industries. “So if there’s an opportunity to invest one million in a couple of years, in a startup that may eventually contribute 20% of your annual revenue, why wouldn’t you start exploring that?” Jones says the nature of accountability in big corporates leads to a risk averse culture and that, combined with large slow moving corporate bureaucracy, means innovation is a weakness not a strength. Realising this Woolworths recently made its own attempt to engage with startups when it launched its Wstart program. According to the program’s website it aims to foster Woolworth’s relationships with startups, bit at this stage is not doing much more than meeting with them. The first event is speed dating that gives successful applicants a chance to showcase their idea “and gain insights from the Woolworths team”. StartupSmart asked Woolworths to elaborate on its goals, they types of relationships it plans on fostering with startups, and whether it might lead to investment. “Wstart is a new program that aims to open up communication between Woolworths’ business and the startup community to drive innovation that will simplify the shopping experience for our customers and improve our business,” a spokesperson says. “We understand for a lot of startups there are few opportunities to engage with industry leaders and large organisations. Wstart is an opportunity for them to network and be mentored by senior Woolworths executives and collaborate with likeminded individuals.” No comment on whether or not it will lead to anything more meaningful, like investment or an ongoing relationship with the startups involved. Pollenizer partnerships manager Nicola Farrell says its great Woolworths is joining a growing trend of large enterprises realising that startups can help them experiment and learn faster. “We look forward to seeing a structured program in place which drives compelling outcomes for the startups involved,” she says. Follow StartupSmart on Facebook, Twitter, and LinkedIn.
Seven Group Holdings chairman Kerry Stokes is rumoured to have joined a consortium of high-profile business and media figures planning an investment in peer-to-peer lender SocietyOne. According to a report in The Australian Financial Review, the consortium is led by former Challenger chief executive Dominic Stevens, and includes both News Corp co-chairman Lachlan Murdoch as well as Crown chairman James Packer. The report also states the lender has attracted the attention of a rival consortium, which includes US private equity giant The Blackstone Group and New York-based investment bank Credit Suisse. The foreign rival bid is reportedly interested in expanding the company overseas. A spokesperson for SocietyOne told StartupSmart it is not in a position to comment on speculation. Popular overseas, the peer-to-peer (P2P) lending model works by allowing investors to lend a fraction of a loan directly to a borrower, without using a traditional bank or financial institution as an intermediary. In turn, companies such as SocietyOne provide a platform that links credit-worthy borrowers with investors. SocietyOne, which claims to be the only active lender of its type in Australia, cites a number of benefits of the P2P model. This includes lower fees and more flexibility for borrowers, along with a new class of asset for investors. Last month, the P2P lender dropped its personal loan rate for a prime borrower to 9.80% pa, 5% lower than the average rate from the major banks. It currently offers personal loans of between $5000 and $30,000. The consortium’s interest comes after Westpac’s Reinventure Group made a $5 million investment in SocietyOne during April. The investment was believed to be the first equity stake a bank has taken in P2P lender anywhere in the world. A further $3.5 million was poured into SocietyOne by Rocket Internet and several local investors at the same time as the Reinventure. StartupSmart attempted to reach a representative of Stokes through Seven West Media, but received no response prior to publication.
According to SEEK co-founder and Square Peg chief executive Paul Bassat, payments are the “holy grail of innovation”. He made the comment at The Australian Financial Review and Macquarie Future Forum on Tuesday, where some of Australia’s leading entrepreneurs declared the industry ripe for disruption. Despite banks in Australia being protected by complicated regulations, entrepreneurs are placing the industry under increasing pressure. Adding to banking woes are the likes of Google, Amazon, Apple and Facebook eyeing entry to the payments market. Here are the top four Australian disruptive financial services startups to watch: 1. Society One Society One is Australia's leading peer-to-peer lending platform, with a $5 million investment from Westpac’s Reinventure Group, a $50 million fund set up to back early stage startups. It’s rumored to be on the investment radar of both James Packer and Lachlan Murdoch. Borrowers list loan requirements and investors decide which loans they choose, how much to invest in each loan, and the rate at which you want to earn their interest. Its personal loan rate for a prime borrower is 9.80% pa, 5% lower than the average rate from the major banks. 2. Tyro Payments Tyro provides credit, debit and EFTPOS card acquiring services and does not take money on deposit. It was founded in 2003 by ex-Cisco employees Peter Haig, Andrew Rothwell and Paul Wood as MoneySwitch Ltd. Eleven-year-old Tyro is in its second year of profitable business operations. Disrupting the Australian banking industry was never going to be easy, and it took the team over $30 million in capital and a founder break-up to get there. At launch it was the first new entrant into the eftpos space in 15 years. 3. Pin Payments Pin Payments is an Australian-based startup operating from Melbourne and Perth that offers onsite payments and a developer API without the need for a merchant account. It received a grant from Commercialisation Australia and partnered with some of the Australian banks to make its offering possible. Both overseas-based Braintree and Stripe operate in the same space, but Pin has a solid local focus. Getting access to a payment system has previously been a juggle for companies, especially early stage ones. Pin Payments is aimed at developers who can easily integrate its service through their API. 4. CoinJar CoinJar, a Melbourne-based bitcoin exchange and payment system, which 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 has over 10,000 active users in Australia. The company charges a low single-digit percentage fee for each transaction. CoinJar was the first company to get its Bitcoin app re-listed in the iPhone App Store, after Apple revised its app guidelines to include virtual currency apps that it previously excluded.
Opening a venture capital branch seems to be the new “thing” in the corporate world. While Telstra and Westpac are the new big national players, Google is clearly ahead of the curve, with two distinct venture capital firms: the newly launched Google Capital and the five-year-old Google Ventures. But why are so many companies, across a range of sectors, now running to open their own venture capital funds? And why does a company like Google, which has already delivered tremendous innovations in the past, now need to innovate “on the outside” with not one, but two, venture capital branches? How it works Venture capital has evolved as a tool to provide financing to firms in situations of extreme asymmetric information: young companies with no history, no assets and no track record, the proverbial “two kids in a garage”. In this situation bank debt is not viable because the bank has no way to control how the money is spent and no collateral to fall back on. Direct access to the stock market is also out of the question because investors would not be able to judge quality and risk of the project. The venture capitalist, on the other side, has industry specific know-how and can structure the financing in a way that allows them some control over the firm: in exchange for a capital injection the venture capitalist receives a portion of the equity and, usually, a seat on the board. Moreover, as a common practice, the investment is usually staggered into multiple tranches, with subsequent infusions conditional on the achievement of predetermined “milestones”, such as the completion of a prototype. Incentives for innovators While venture capital is a powerful tool, there is another way for companies like Google to innovate: internal development. If the “two kids in the garage” were to work as Google employees, the company would be able to allocate capital with the best possible knowledge of the project. So why use venture capital and not just develop internally? While this question hasn’t yet been directly addressed by academic research, pulling together different strands of literature can provide some useful insight. A first problem is the incentive structure for the “innovator”. Disruptive innovation is highly reliant on the talent and ideas of a small number of individuals. In a startup, innovators can reap the entire value of their idea when they sell their shares. For instance, the founders of WhatsApp, Brian Acton and Jan Koum, are now worth a combined US$9.8 billion after it was acquired by Facebook. When the innovation is promoted within a larger company the key actors will, at best, receive stock options with a value based on the performance of the entire company, only marginally reflecting the potential value of the innovation. Consider Paul Buchheit, the Google employee who developed the first Gmail prototype. While the details of his compensation are unknown, it is unlikely that it contained the full value of the world’s largest email service. Buchheit later left Google to join a startup incubator. This situation can get even more extreme: the CIA finances the development of strategic technologies via its own venture capital fund – In-Q-Tel. The entrepreneurs the fund financed would know that beyond the government getting the “first bite” of their products, they’d be able to benefit from the commercial applications. This would be impossible for public employees developing the same ideas in a basement at Langley. Taking a punt Another important factor: investing in disruptive innovation means accepting a high failure rate. While precise estimates are impossible, high levels of risk for venture capital investments have long been documented. Large public companies may be unwilling to accept this risk, not because of financial constraints, but because of pressure to maintain quarterly profitability. A recent survey has shown the majority of CFOs are willing to abandon valuable projects in order to meet quarterly profit expectations. Google was forced to close its in-house development playground Google Labs after it was criticised for a lack of focus. Other research has shown that firms whose financial statements are analysed by a large number of financial analysts tend to produce less innovation: they generate fewer patents and patents with lower impact. The authors of that study concluded that “analysts exert too much pressure on managers to meet short-term goals, impeding firms' investment in long-term innovative projects". Startups and venture capitalists do not suffer the same pressure: they are intrinsically less transparent and thus “protected” from the scrutiny of financial analysts and activist investors. They are free to experiment, free to take big risks, free to fail miserably, and eventually free to come up with an idea that will shake the market. Marco Navone is senior lecturer in the Finance Discipline Group of UTS Business School - University of Technology, Sydney and research fellow at CAREFIN, the Center for Applied Research in Finance at Bocconi University (Milan, Italy). This article was originally published at The Conversation. Read the original article
All startups begin as ideas and, sadly, the vast majority stay that way. This award celebrates those who have started to turn their idea into something. With over 400 applications for this round, judges were seeking innovative and promising ideas. The winner will be announced at the StartupSmart awards night. You can follow the awards night with the hashtag #susawards. JobAdvisor JobAdvisor is a marketplace seeking to stop companies from being deluged with applications after posting a job ad and aspiring employees from lurking about the recruitment boards of their dream company. Employers still pay, but rather than listing jobs, they create a profile about what it’s like to work with them, including anonymous employee reviews. Clients include Telstra and Westpac. Founded by Justin Babet, they’ve recently raised funds and grown the team to five people. They launched version three of their product two months ago. StartupSmart covered JobAdvisor when it first launched here. Musio This platform connecting amateur musicians to professional reviewers burst onto the startup scene late last year after winning Startup Weekend Adelaide. With more music being produced than ever before, accessing expert mentoring or even one-off feedback is challenging. Promos and demos are usually sent via email with attachments and download links or CD mailers, all of which become unwieldy to manage. Musio co-founders Mal Chia and Oli Young describe the platform as a hybrid of LinkedIn and Gmail applied to the music industry. Chia shared his plans for the app with StartupSmart the day after they won Startup Weekend. CareMonkey CareMonkey is a software for schools, clubs and businesses that enables these groups to access parent-controlled emergency and medical forms. From permission slips to serious medical information, the app is designed to ensure carers have access to the information they need to make the right decision for children. The app was part of a Startup Leadership Program and has rolled out into 21 schools in 2013. Launched by Troy Westley and Martin Howell, they’ve been building their sales team and are looking to expand into the UK and US later this year. Epark While this idea is still only that, it’s a promising one to solve the constant clutter of cars trying to get out of car parks. Epark will be a software, possibly deployed as a mobile app, that scans sensors as vehicles enter and exit car parks to calculate the right fee. The amount is then deducted from the credit card or pre-paid account linked to the scanned vehicle. Alphatise This online marketplace aims to help sellers assess actual market demand for their product through a series of wish lists with a twist. For each item listed, the buyer also indicates how much they would be willing to pay. Sellers on Alphatise can then use the data shared and offer deals to pre-qualified buyers, or target new buyers with push advertising. The app also allows time-based deals, geo-targeting and competitor targeting. Co-founded by Paul Pearson and Richard Frey, the team has now grown to four including chief technical officer Linus Yong and chief operations officer Kent Hume. They recently raised $1.5 million and spoke to StartupSmart about their plans.
PushstartAU founder John Haining was at Australia’s first Bitcoin Barcamp held in Sydney over the weekend. Here’s what he thought. "Bitcoin is not money under Australian tax law," said tax lawyer Matthew Cridland of DLA Piper. A crowd of 130 developers, entrepreneurs, financial tech innovators and information security experts bristled at Cridland’s words at the recent Bitcoin Barcamp at the ATP Innovations* National Innovation Centre in Sydney. Cridland was a presenter at the first Australian ‘unconference’ on the cryptocurrency that addressed topics from bitcoin 101, how to keep your bitcoin safe (with concerns about exchanges like MtGox as well as operating system and USB security dominating the discussion), through to the future of digital currencies and the bitcoin improvement proposal, as well as what regulatory and consumer changes would be needed for broad adoption of digital cryptocurrencies. There was optimism about bitcoins as a future for exchange evident throughout the discussions. Attendees pointed out the failings of traditional currency, the limited guarantees for Australian bank deposits, and expressed surprise at how the uninitiated reacted to the novelty of cryptocurrencies. Advantages such as near real-time transactions, the security of the bitchain and the intellectual elegance of the approach were listed as success factors. Hanging in the Bitcoin Lounge In the Bitcoin Lounge, attendees were able to get more hands on. The lounge played host to leading Australian innovators and startups who are helping to make bitcoin a reality. The lounge featured over five bitcoin-based businesses. Coinjar, a Blackbird Ventures-backed digital wallet and exchange startup from Melbourne with over 20,000 users, let attendees create a new wallet with $20. (I received 0.0272 bitcoins from CoinJar, which have gone down in value at the time of writing!) Attendees also had the chance to wave goodbye to Australian currency and buy bitcoins in as little as 15 seconds using one of the first Lamassu bitcoin converters in Australia. BitPOS, which allows vendors to easily accept bitcoins, provided payment services for the day, including the end-of-day networking session, Bitcoin Beers. For those wanting to speculate in bitcoins, both CoinArch and BitTrade Australia were on hand to explain their approach to the opportunity. Where were the banks? With all of the financial innovation in the space, there was limited participation from existing financial players. Only a handful of attendees came from Australian banks, with one Macquarie Bank employee admitting to being there in a personal capacity, and not knowing if Macquarie Bank was doing anything in relation to cryptocurrencies. The day culminated in a pitchfest from the various startup companies, assessed by finance tech experts Opher Yom-Tov (formerly of Westpac) and Kim Heras, general partner in fund 25Fifteen. That more than 100 people turned out on a sunny Sydney Saturday to talk and learn about a niche topic is probably the most remarkable outcome of the day. Other innovations, such as education technology, wearables, and the internet of things also have strong interest, but nowhere near this level of committed participation. As the day drew to a close, the words of the tax lawyer hung over the room. Bitcoin may not yet be legal tender in Australian – at best they are a tradable bundle of rights** – but if the enthusiastic entrepreneurs at the Bitcoin Barcamp have their way, that day may not be too far away. Disclosures: * I am a director of ATP Innovations. ** Australian tax law is a funny thing: You (or your business) may be liable to GST, income tax or capital gains tax on bitcoin transactions. They may not be money, but they may cost you money. Get professional advice! John Haining is a co-founder of PushStart, a startup community company, a director of ATP Innovations, Australia's leading business incubator.
Westpac has launched Reinventure, a $50 million fund seeking early stage technology start-ups to back. The fund is seeking 12 companies to invest in over the coming years. While the mandate is broad and focused on disruptive technologies, Westpac are particularly seeking data aggregation and payment system start-ups. A spokesperson for Westpac told StartupSmart the fund would operate as a distinct entity from the bank. “We’ve helped set it up but from a day to day basis (fund founders) Simon and Danny are the ones who are driving it,” the spokesperson says. “Our motivation is we want to be closer to the forefront of technological advances as the world is moving pretty fast. We want to explore new growth areas and local entrepreneurs.” The fund’s founders are entrepreneur and in-house venture capital lead at APN News & Media Danny Gilligan, and Simon Cant, principal at innovation consultants Cant Associates.
Christmas can be a tough time for consumers when it comes to cash flow, but it can be equally difficult for businesses. As company’s shut down for the holiday period, invoices can get left unpaid, leaving companies chasing debt in the new year. As reported recently in SmartCompany, some businesses are taking nearly two months to pay their debts, putting SMEs into a troublesome cycle. Bibby Financial managing director Australia and New Zealand Mark Cleaver said with so many business people going on holidays, it is important to put systems in place to protect cash flow over Christmas and New Year. Here are his nine expert tips to get through this period with money still in the bank. 1. Get in line early at the fish market As you complete work, you’re entitled to charge clients, so invoice clients when work is done rather than wait until the end of the month to send invoice: Time is money, so act now and get paid sooner. You should also make your payment terms clear. Payment terms are usually set at 30 days; however, it’s perfectly legitimate to set your own terms at 14 days. You’ve done the work or delivered the goods, so you are entitled to payment. 2. Don’t wait until after Christmas to stuff your stocking Deal with late payers as soon as you become aware that an invoice is overdue. Any accounts receivables system should be structured so that late payers are identified as soon as possible. Remember, a sale isn’t a sale until the cash is in your bank account. So if there is a problem, pick up the phone and demand payment. An invoice is money due to you, not a donation. 3. Make sure your Christmas lights are working Investing in software can help you streamline your invoicing and receivables management as well as protect your cash flows. There are several excellent solutions available on the market that can automate the invoicing and receivables management functions, so investigate your options. Automation means you can redirect your staff to other functions within your business, such as sales or operations, helping to make you more profitable. 4. Christmas is a time of giving Over the holiday period, you might consider rewarding early or consistent payers with a small discount on their bill if it won’t harm your business. This is a great way to say thanks and show your appreciation to your loyal customers – and it might well bring in cash sooner than you expect. 5. Don’t hold on to old baubles If you’re hoarding stock that isn’t likely to sell over Christmas or the New Year and it’s got a use-by date, consider selling it at a discounted price to get it out. The November Westpac-Melbourne Institute Consumer Sentiment reveals consumers are planning to restrain their Christmas spending this year, with 35% of Australians recently saying they intend to spend less than last year, while 51% are planning to spend the same. This is sobering data so the time might be right for a sale. 6. Close up shop and head to the beach There’s no point keeping your business open and incurring costs if you aren’t busy over the Christmas period. Either maintaining a skeleton staff or shutting down over the holiday period can save running costs, as well as keep staff annual leave entitlements in check. 7. Cash in your invoices this Christmas Debtor finance can help companies alleviate difficulties with cash flow by quickly converting unpaid invoices into cash. Typically, a debtor finance company advances you up to 85% of what you're owed from customers within 24 hours of request. The remaining 15% balance, less a small fee, is paid to you when your customers pay their invoices. This allows SMEs to leverage one of the biggest assets on their balance sheet, accounts receivables, to create immediate cash flows and avoid the Christmas squeeze. 8. Get social this season Consider the Christmas period as an opportunity to review your business and marketing strategy. Consider dabbling in social media next year to increase engagement with your target audiences or listen to the conversations they are having about your business or sector on Twitter, Facebook or LinkedIn. Bibby’s recent Barometer, conducted in July, found that 75% of small businesses are using social media tools in their business operations. 9. Have a game of Christmas cricket Running a business can lead you through countless hurdles and challenges. Ensure you and your staff schedule in time to relax, have fun and partake in the festivities. Why not enjoy a friendly game of backyard cricket. This story first appeared on SmartCompany.
Westpac has announced plans to topple NAB as Australia’s biggest lender to business by 2017, as competition between banks over the SME sector heats up. The bank has already increased the number of business lenders and appointed Julie Rynski as its first senior executive to manage the sector. “We believe we can significantly expand our share of the market after investing in our business banking arm,” Westpac’s head of business banking, Jason Yetton, told Fairfax. “It's a big market, growth is improving, and I think we've got a good capability in this segment.” China records strong export growth in November China’s General Administration of Customs has released figures showing a 12.7% year-on-year increase in exports during November, beating analysts’ forecasts. Total exports for the month increased to $US202.2 billion, while imports were up 5.3% year-on-year to $US168.4 billion. China’s overall trade surplus was up to $US33.8 billion, up from $US31.1 billion in October and significantly above the median forecast of $21.7 billion tipped by economists. Labor calls for partial renationalisation of Qantas Shadow treasurer Chris Bowen has called on the government to consider all options to help Qantas, including a partial renationalisation, after ratings agency Standard & Poor’s downgraded its credit rating to junk status. “A small stake would send the signal to debt markets around the world and to finances that this was a body with which the government had a keen interest. That is one of the options on the table that we'd look at constructively,” Bowen says. However, his call has been dismissed by Prime Minister Tony Abbott, who says the government’s job is to create an environment in which the airline can operate profitably. “Businesses have to operate profitably and in the end they have to operate profitably because of their own decisions and from their own resources,” Abbott says. Overnight The Dow Jones Industrial Average is down to 5186.0. The Aussie dollar is up to US91.36 cents.
Debtor finance, also known as invoice finance, gives growing businesses access to finance that would otherwise be trapped in receivables and incoming payments. Wayne Smith, general manager at Scottish Pacific Debtor Finance, told StartupSmart debtor finance could be a cashflow lifesaver for start-ups and small businesses. “It can help grow the business through enhancing cashflow to fund staff, stock or capital expenditure. It helps provide peace of mind to business owners and is a standalone facility that can sit alongside other business borrowings, such as term loans and leasing,” Smith says. He shared his top tips for managing debtor financing as a small business below: Do your research first Think about the sector you operate in and the situation your business is in. Debtor finance is a great option for businesses that sell to other businesses on standard trade credit terms. Most providers have specialist business development managers who are more than happy to field queries from businesses interested in accessing debtor finance. Pick up the phone and talk to a couple of them, to get a feel for their approach. You can also research via the internet or talk to your broker. If your broker is not familiar with the concept, he or she may know a specialist or be able to access one via their aggregator. Pick the right provider There are a number of providers, ranging from the majors in NAB and Westpac through to small regional independents. The larger specialist providers tend to have the widest range of options, enabling them to tailor a solution to a business’s specific circumstances. Deal with a provider who will be upfront from the very beginning and explain all the costs and fees involved. It's important to choose someone you feel comfortable with as a partner helping your business grow. Work out which debtor financing provider model will works best for you Some clients allow the debtor finance provider to fully manage accounts receivables, which lets them focus on the business and not spend time chasing debts. Others prefer to handle invoices direct with clients, and the provider works in the background without your clients even knowing you have a debtor finance facility. Work out which of these two options best suit your business. Making the call as to which option will best suit your business often comes down to the resources you have at your disposal and how you want to spend your time. For established, profitable businesses with experienced staff in the accounting function a confidential facility may be the most appropriate. Conversely, in a small business, with limited resources, the extra support of a professional collections service operating in tandem with the funding might be the most attractive option. Use the relief of accessing a cash infusion to review your operations Once your facility is in place, look at how you pay your own suppliers – with a stronger cashflow in place, can you pay your own suppliers early and qualify for their discount period? From the debtor financier’s perspective, the quality and management of the receivables ledger is paramount as it represents their security, so make sure you make yourself attractive to a funder. A good start is to make sure your invoices contain all the required statutory information and relevant references to purchase orders. Ensure you keep robust "proof of delivery of goods or services" records. This is essential in the event of any dispute.
Consumer confidence in November is up by 1.9%, according to the latest Westpac-Melbourne Institute consumer confidence index, which is now 23% higher than in October last year. The index stands at 110 points, with a result over 100 indicating a growing number of optimistic consumers. Economists attribute the result to rising house prices, which consumers expect to continue over the short term. “But when we ask them about their finances over the next 12 months we see a fall of about 8% and that may be implying that people don't expect these rises in house prices to be sustained for over the medium term,” Westpac chief economist Bill Evans says. Murray Goulburn trumps Warrnambool bid rivals with $505 million bid Agricultural co-operative Murray Goulburn has increased its offer in the bidding war over Warrnambool Cheese and Butter, with its latest bid valuing the company at $505 million. The $9-per-share offer trumps the $8 per share offer from Canadian food giant Saputo and Bega Cheese’s cash-and-shares offer, which are worth around $7.56 per share at current market prices. “If it proves to be the knock-out blow, may it be. That's not the objective. The objective is that we are doing something in the interests of our shareholders and the Warrnambool shareholders, and particularly supplier farmers,” Murray Goulburn managing director Gary Helou says. New digital media player launches with super fund backing The former editor of The Age, Bruce Guthrie, has launched a new online news site called The New Daily, with backing from superannuation funds Australian Super, Cbus and Industry Super Holdings. “I think first and foremost, it's a true digital-only product. It hasn't been a newspaper in the past that was dragged kicking and screaming into the digital age. It wasn't a TV station. We've created this from the ground up to be digital and only digital,” Guthrie says. “But significantly, and I think it is becoming even more significant, it's free and it always will be free.” Overnight The Dow Jones Industrial Average is up 0.17% to 15777.31. The Aussie dollar is up to US93.30 cents.
Harvey Norman has posted a 1.2% increase in sales at its Australian stores during the September quarter, with chairman Gerry Harvey saying an expected post-election boom in sales failed to materialise. “I don't think the result is good. Sales are up… but they're marginally up," Harvey says. "We haven't got the kick from the election that we expected. There's been a little bit of a pick-up, it's only small.” Westpac profit up 14% to $6.8 billion Westpac has announced a full-year profit of $6.8 billion for the year to September, up 14% year-on-year. The strong result places it ahead of the $5.5 billion reported by the NAB and the $6.3 billion reported by ANZ, but behind the $7.7 billion reported by the Commonwealth Bank. “We will continue to remain disciplined, due to global uncertainties and structural change in the Australian economy,” chief executive Gail Kelly says. “However, I'm encouraged by signs of improving confidence, which we expect to lead to increased lending activity, in particular in New South Wales.” Reserve Bank expected to hold rates on hold The Reserve Bank is expected to keep rates on hold when it meets later today, with all 31 economists surveyed by Bloomberg expecting no change. The cash rate is currently at a historic low of 2.5%. Overnight The Dow Jones Industrial Average is up 0.05% to 15623.39. The Aussie dollar is up to US95.17 cents.
Westpac has appointed its first general manager of small business. The inaugural holder of the role, Julie Rynski, told SmartCompany this morning that while Westpac already has the nation’s largest number of small business bankers in Australia, it’s keen to play a larger role. “The recent election saw such a mandate around small business, and we agree it’s the heartbeat of Australia,” she says. “We’re keen to be a part of that. And as the first bank, and the largest SME bank in Australia, there’s synergy in us focusing on this.” Westpac says 640,000 small businesses use it for their banking, an increase of 70,000 since 2008. Since August 2011, Westpac’s release added, Roy Morgan Research has given it the satisfaction levels of the big four banks among its business customers. But the bank is looking to significantly ramp up its engagement with the sector, Rynski says. She has most recently worked as Westpac’s general manager of regional commercial and agribusiness, where she dealt mostly with small businesses in regional Australia. She also has experience in the sector from her previous role as national manager of commercial and property. She says small businesses need simple, flexible solutions from their bank. “Small businesses are time poor, and they need to be able to do stuff on their terms,” she says. “We have some fabulous digital solutions, and we’ve rolled out 18 24/7 branches around the country. “For businesses that can’t get to a branch, we’re rolling out our business hubs, which will allow SMEs to call or teleconference into a meeting with a banker.” Rynski says her focus is on working closely with the Council of Small Business of Australia, as well as Small Business Minister Bruce Billson, in reducing red tape for SMEs. “There’s so much red tape and bureaucracy. We will focus on making things as simple as we can,” she says. “Westpac has a large small business banking community, and we’re looking to grow that significantly.” This story first appeared on SmartCompany.
The Reserve Bank cut the official cash rate by 25 basis points to a record low of 2.5% yesterday, with Westpac cutting its advertised variable rate by 28 basis points to 5.98% in a bid to grab marketshare. The rate cut was also passed on in full by the National Australia Bank, Commonwealth Bank and the Bank of Queensland, while ANZ will announce whether it’s cutting rates on Friday. "The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values, and further effects can be expected over time," Reserve Bank governor Glenn Stevens says. IBM joins NBN debate IBM Australia managing director Andrew Stevens has waded into the debate over the national broadband network, praising both parties while favouring the ALP’s fibre-to-the-premises proposal. "Both parties have come a long way (to develop policy) to deliver high-speed broadband. There's no doubt that the era of smart will be defined by this utility called high-speed broadband, so we just have to get there as fast as we can,” Stevens says. “I just find there is a leader and a laggard and, in this particular case, the Coalition is the laggard. Forty per cent of people by 2025 are going to be partially or fully working from home. And $40 billion is not that much money; it's less than the value of parks and gardens in Australia.” Department of Justice files lawsuits against Bank of America The US Department of Justice has filed two civil lawsuits against the Bank of America, alleging $US850 million in fraud on investors of residential mortgage-backed securities at the beginning of the Global Financial Crisis. However, Bank of America is denying any wrongdoing in its marketing of the loan pools, which date to January 2008. "These were prime mortgages sold to sophisticated investors who had ample access to the underlying data, and we will demonstrate that,” Bank of America says in a statement. "The loans in this pool performed better than loans with similar characteristics originated and securitised at the same time by other financial institutions. We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result." Overnight The Dow Jones Industrial Average is down to 15518.74. The Aussie dollar is down to US 89.83 cents.
Consumers are increasingly relying on micro-transactions to make purchases instead of inputting their credit card details every time, which makes a new product from Visa all the more powerful, one expert says. Eventually, says Telsyte senior research manager Sam Yip, the risk of online transactions erodes to a point where consumers are happy to have their financial details tied to accounts – like in Apple’s iTunes ecosystem. Which is exactly how Visa’s new product, V.me, works. The service, announced yesterday and planned for an Australian launch later this year, allows users to input a username and password instead of requiring credit card numbers for purchases. Several banks are on board, including NAB, Westpac, ANZ, ING, Suncorp, Citigroup and several credit unions, along with retailers such as JB Hi-Fi and Cotton On. In a statement, Visa country manager Vipin Kalra said the V.me service “streamlines the process” of purchasing, and allows anyone to shop from any device. The service allows users to store existing Visa and other payment cards, store multiple shipping addresses and set transaction alerts, along with other customisable features. The banks are certainly happy – ANZ general manager of cards and payments Marj Demmer said in a statement the Visa service “aligns with our digital focus”. Yip says this is no surprise. These types of accounts allow for microtransactions, which end up being more profitable for merchants. “If you look at the popular app stores, like Google or iTunes, people who have already embedded their credit card details into those online stores tend to buy more on impulse. “These microtransactions are becoming much more profitable, they were more bite-size products a few years ago and are moving into big purchases over time. “Being able to embed your details and have them be accessible is certainly the way to go.” The popularity of such accounts is a good example of how the internet is making traditional requirements redundant. The phone number is quickly becoming a useless string of digits for younger users who rely more on instant messages – the same is happening with credit card details if these types of services take off. As Yip points out, the risk is quickly disappearing. Over time, this could mean all online transactions are run through this type of account-based system. “The risk is gone,” he says. “The controls are a lot better and these companies are handling fraudulent transactions a lot faster than even five years ago. “A solution like this to minimise the path to purchase and maximise ease of use is certainly one new way to grow.” This story first appeared on SmartCompany.
The Australian dollar could drop below the psychologically significant barrier of US90 cents as early as this week, according to several leading economists, with some tipping the currency could fall as low as US83 cents by the end of the calendar year and US75 cents by the middle of next year. “Economic news out of the US is certainly good but significant fiscal problems are still yet to emerge there, which will be a drag on growth. The Australian dollar is doing the RBA's work for it, and if the currency keeps falling the RBA may well not cut rates further,” HSBC chief economist Paul Bloxham said. However, not all analysts share the view, with Deutsche Bank foreign exchange strategist John Horner suggesting the Australian dollar might have fallen by too much already. “We're not bearish about China, and think markets have overdone the response to a batch of bad news in recent weeks. Even if the Federal Reserve does begin to unwind its bond-buying program it has said interest rates will remain low for a very long time, and the Bank of Japan, of course, will continue to pour liquidity in the market,” Horner said. The Bendigo is bullish about margin loans The Bendigo and Adelaide Bank and Westpac-owned BT Financial have revealed they are bullish about the $12.5 billion margin lending sector, which lends money to managed funds and share investors. For Bendigo Bank, the bullishness comes despite their margin loan book shrinking by over 20% to $2 billion during calendar year 2012. “[We] may well have seen the bottom of the market for the margin lending sector. It is early days yet, it does seem that the time is right to invest further in the margin lending business to ensure we are not latecomers to the opportunity,” Bendigo Bank chief executive Mike Hirst said. “We've seen material improvement in overall activity, including significant appetite for fixed-rate margin loans. However, it's too early to make the call whether we are witnessing a permanent return to higher levels of confidence,” a BT spokesperson said. Packer likens Barangaroo casino to sporting rights deal Crown executive chairman James Packer has likened the company’s proposed $1.5 billion casino-hotel development at Barangaroo Point to winning a television sporting rights deal. “This is like a media company buying sporting rights where you are happy to end up in a break-even position for the halo effect it has over the rest of the network," Packer told The Australian. "We modelled and bid Crown Sydney to approximately a 9% IRR (internal rate of return), which is basically a break-even position.” Overnight The Dow Jones Industrial Average is up 0.59% to 15224.69. The Aussie dollar is up to US91.4 cents.