Increasing participation in science, technology, engineering, mathematics (STEM) and computer science disciplines is critical to the success of Australia’s startup ecosystem, according to entrepreneur and investor Bill Bartee. He says if Australia doesn’t act quickly to lift participation rates in those disciplines, the nation will look back in 20 years’ time with regret. “I think one of the ways we can improve the startup and entrepreneur ecosystem in Australia is to create more entrepreneurs,’’ he says. “And if you look back over the statistics of who starts companies, most companies founders are STEM or computer science majors.” Bartee, a managing director of Blackbird Ventures and co-founding partner of Southern Cross Venture Partners, recently spoke at Sydney co-working space Fishburners where he gave his thoughts on the StartupAus Crossroads report, which was released earlier this year. He says the pool of people graduating with a background in those disciplines is small, particularly when taking into account international students, many of whom return to their home countries. “What it means is in 20 years if we don’t increase participation in these subjects we’re going to look back at it and we’re going to regret it,” he says. “A shortage is going to hurt us. My hope is we can really start to educate kids at a much earlier stage. “I think we need to get to the point where the primary schools wouldn’t think of taking math and English without taking computer science. “Not so they become rockstar programmers, but so they can think algorithmically and they can understand how things work, and how to write basic code.” Bartee says Australia is lagging behind the rest of the world in this regard. “If you look at Vietnam, Vietnam starts teaching computer science in grade five or six, and you’re finding that they’re becoming much, much more computer science literate,” he says. “If you look at the European Union for instance, their Entrepreneurship 2020 Action Plan, technology entry education is part of the program and begins in primary schools.” He says there’s no reason why Australia can’t excel in STEM fields and points to Australian mathematician Terence Tao who was recently announced as one of five winners of the Breakthrough Prize in Mathematics. He says entrepreneurship needs to become a cultural norm. “It has to be part of the social conversation, when we’re sitting with parents, watching kids play on the soccer field, you want the conversation to be ‘my son’s going to be a lawyer, doctor, lawyer or investment banker’ but also ‘my son or daughter is a maths wiz, she wants to be an entrepreneur’,’’ Bartee says. “It has to come to the point where being an entrepreneur, starting a startup is normal.” At @fishburners to hear more about the @startupAUS crossroads report from @peterbradd @wbartee #startups #Australia pic.twitter.com/Xw2dpfwtKs— Ash Pritchard (@AshfordP123) June 23, 2014
The National Commission of Audit report’s contention that government support of startups provides no real benefit to the community is flat-out wrong, according to a number of startup industry figures and two major reports into the industry. Rui Rodrigues, investment manager of Tank Stream Ventures, says the commission’s suggestion is ridiculous. “It’s a very short-sighted view and there isn’t any logic behind it,’’ he says. “They’re essentially saying that the thousands of jobs created through startups and technology have had no impact on the economy.” It’s an opinion echoed by Sydney Angels management committee member Richard Dale. “The verdict’s been in for quite a long time, a startup, as long as it’s a high growth potential venture and not a lifestyle business, is a net creator of jobs,’’ he says. Last month peak not-for-profit StartupAUS released its report Crossroads: An action plan to develop a vibrant tech startup ecosystem in Australia which highlighted that startups play a big role in job creation – three million new jobs are added to the US economy each year by new firms, while existing firms lose a total of a million jobs per year. The Crossroads report noted Harvard professor of economics Ricardo Hausmann’s observation that Australia has “an amazingly primitive export basket”, which he says will lead to Australia becoming one of the worst performers in the region in terms of GDP growth. StartupAUS board member Bill Bartee, who is also a co-founder and managing director of Blackbird Ventures and Southern Cross Venture Partners, believes the commission is taking the wrong position. “Well I don’t know where they’ve been or where they’re getting their data,’’ he says. “It’s pretty clear when you look across the OECD and the US that there’s been lots and lots of job growth from startup and tech companies that build real businesses. “The eBays of the world, all of these very, very large tech companies that drive the US economy in a lot of ways were once very small companies. “It’s not as if the government is assisting a dying industry.” artee says he’s a firm believer in the need to support tech startups by providing capital, both human and financial. Last year, The Startup Economy, a report commissioned by Google and carried out by PricewaterhouseCoopers, found high-growth tech companies have the potential to contribute 4% of the Australia’s GDP by 2033 while adding 540,000 new jobs. Currently, startups contribute just 0.2% to the nation’s GDP. The commission’s recommendation that the government abolish Commercialisation Australia and the Innovation Investment Fund would leave Australian startups in a weaker position, says Dale. “Do they benefit? The answer is yes, these programs are putting experience, talent and money into the startup ecosystem,’’ he says. “Are they perfect? No. Do they help? Yes. Does taking them away have an impact? Yes, absolutely. Are they the best way of reducing barriers startups and early stage ventures face? Probably not. “All programs, all solutions can be improved, but we have programs at the moment that are functioning, providing benefit – so don’t turn off the tap. “The two years it will take to design, approve and implement a new program, that’s two years of lost opportunity.’’ Startup Victoria CEO Lars Lindstrom added to the chorus of startup community voices speaking out against the Commission of Audit’s recommendation. “In our view CA (Commercialisation Australia) has been doing a good job and the IIF(Innovation Investment Fund) structure of government matching investment 1:1 mirrors successful initiatives elsewhere such as in Singapore,’’ he says. “I don’t agree that it’s as simple as saying ‘finance can be acquired from the private sector’, VCs have had poor returns and therefore funding is in short supply.” “It may be short-term cost-saving but in the long run it would be highly damaging to the Australian economy.’’
The Australian tech startup scene is ready to take off, but Australia might become globally irrelevant if our political leaders fail to grasp urgency of the opportunity and scale of required change, according to a report released today by peak not-for-profit group StartupAus. The 70-page Crossroads: An action plan to develop a vibrant tech startup ecosystem in Australia report details the present-day startup environment and puts forward 23 recommendations to put Australia on track to take part in the global startup boom. “We can’t put our head in the sand and ignore this domestic and global transformation. We either get ahead of it, or become irrelevant in the global context. As a nation we need to affect systemic change now. Entrepreneurialism is at the heart of this retooling,” entrepreneur Adrian Turner says in the report. You can read the full report here. According to the report, there are 1000 startups, 1500 founders, 15 incubators and accelerators, as well as seven student incubator programs. It also includes conservative estimates of the limited Australian investment landscape, with $79 million invested by VC funds in startups in 2013, six funds and $22 million in angel investment deals. StartupAus board member Peter Bradd told StartupSmart he believes all levels of government know they had to do more to support the startup ecosystem and are keen to, but lack a comprehensive road map showing what needs to be done. “This is why we’ve shown examples from other countries of how the kind of change we all want can be implemented. We’re not asking for invention and risk, we’re asking to catch up,” Bradd says. Labelling the government’s support of startups as “extremely modest”, the report also details the effective programs rolled out by the United States, the United Kingdom, New Zealand, Singapore, South Korea and the European Union. “We’re not doing much by global standards, so we’re not going to get the opportunities opening up for other countries if we don’t accelerate what we’re doing,” Bradd says. “We’re very far behind.” The report, which explicitly states replicating Silicon Valley is not a viable goal worth pursuing, outlines an ‘action plan’ Australia to strengthen its startup ecosystem. It outlines seven steps that could have an impact in one to two years, 13 that would have an impact in two to five years and three that would have an impact in five to 15 years. Short-term steps include changing the regulation around employee share programs, creating an entrepreneur visa and relaxing 457 visa restrictions for new businesses, as well as developing a “landing pad” or program for Australian startups heading to Silicon Valley. Medium-term steps include creating young entrepreneur scholarships, implementing a national learn-to-code promotion program, establishing a seed co-investment fund and creating loan schemes, as well as enabling a better legislative environment for crowdsourced equity. The long-term steps recommended include a national program of entrepreneurial education, a digital technologies curriculum and a national program to raise awareness about tech startups. StartupAus is a coalition of 50 tech startup community leaders. It is headed by a board that includes Bradd, Google Australia’s Alan Noble, Southern Cross Venture Partner’s Bill Bartee, RiverCity Labs Steve Baxter and ANZ Innovyz Start Accelerator’s Dr Jana Matthews.
Spreets founder Dean McEvoy has called for local angel investors to get better and faster at investing in start-ups at a recent angel investor education program. “We all need to learn a little bit more about angel investing,” McEvoy said. “It’s so important we build the education of the angel community here because we need to be better angel investors because if we don’t we’re going to miss out on all the good deals.” McEvoy shared he had pitched Spreets to some people in the room, but would have loved to speak to more of them because he would rather have given an 18 times return on their money to an Australian angel rather than some strangers in Europe he didn’t know that well. “It’s not Aussie versus US investors. It’s really about tech versus non-tech investors,” McEvoy said. “The Australian investors here who have technical experience act exactly the same way, if not better, than the US investors.” McEvoy explained local angel investors could brand themselves as smart, big or fast money. He added that as most angel investors don’t have the cash to be big money and many lack experience running a tech start-up and couldn’t be smart money, that left fast money. “You’re only option is to be fast money here in Australia, because if you can’t be the fast money you’ll miss out on the good deals which will find the smart or big money elsewhere,” McEvoy said, adding angel investors should try to make their decisions within two weeks. Serial angel investor and partner at Blackbird Ventures Bill Bartee said angel investors need to know what they’re getting themselves in for. “The idea is you can do angel investing for a whole range of reasons: to make money, to have fun, because it’s a passion or a hobby,” Bartee says. “You have to remember that even though angel investing is hard and fun, many die, some survive and a few thrive. You have to have that in mind when you do invest because that’s just the nature of the game.” He went on to outline the angel investment ecosystem in the US and Australia. “In the US it’s quite a big market,” Bartee said, citing statistics from the most recent Halo Report that revealed $US20 billion is invested in angel deals each year in the US. These funds went towards 60,000 companies, 80% of which were seed companies. Bartee described the average deal size as between $10,000 and $100,000. The Australian angel investment scene is still emerging. Bartee said they were 12 to 14 angel groups and incubators, including Innovation Bay, Pollenizer and Startmate, as well as several micro venture capital firms such as Tank Stream Ventures, Carnegie and Blackbird. McEvoy added the local community needed to be careful as it developed. “There is a bit of high-fiving when a great deal is done, but actually there are a few people who’ve been screwed over and we need to make sure we’re not going to axe our own angel community here,” he says. Angel investor community Innovation Bay and entrepreneurial community hub Pushstart coordinated the series. They’ve recently uploaded videos of the key presentations here.
Twenty-three start-ups will pitch to a panel of investors and start-up veterans for prizes ranging from meetings with mentors to tens of thousands of dollars at the upcoming Tech23 conference in October. The start-ups come from a range of sectors including robotics, app development and software-as-a-service. Marita Cheng, founder executive at robotic arm-maker 2Mar Robotics and chief told StartupSmart the competition was a great networking opportunity for her team. “It’s a great way to get the message out there about my company and to meet other entrepreneurs and some investors, as well as refine my pitch and have the chance to earn some prize money as well,” she says. 2Mar Robotics launched in April, and is currently refining the second iteration of its product and taking pre-orders. Cheng has been passionate about robotics since she was very young. “When I was growing up, my mum wanted me to do the chores but I would do it begrudgingly, and thought a robot would be better. And there were none, so I thought, why can’t I be the one who brings them into the world?” Cheng says. Nicholas Tong, co-founder and chief executive at fall detection and elderly support watch company Edisse told StartupSmart the conference was very well regarded and they’d been encouraged to apply by several mentors. “The competition will put us in contact with people we wouldn’t usually be able to reach,” Tong says, adding while they’ve been pitching since they launched the start-up eight months ago, they’ve recently been focusing on product development. “Pitches are iterative in themselves. We’ll get a whole bunch of questions after one pitch and re-factor that in. We’ll need to have another look at it, as we haven’t been pitching as much recently as we’ve been focusing on the second iteration of the product,” he says. Tong says his team is looking forward to pitching their idea, and getting people excited about the elderly, who he believes have been overlooked for decades. “Our team quickly knew we didn’t just want to build another social start-up or app. We wanted to create something that had real impact, and we realised falls was a major one. And if you look at the market, it seems like no one really cares and there’s been no innovation,” Tong says. The speaker line-up for the day will include Alan Noble from Google, Bill Bartee and Larry Marshall from Southern Cross Ventures, Melissa Widner from Seapoint Ventures, Paul Bassat from Square Peg Ventures, and Stuart Richardson from Adventure Capital. Tech23 is coordinated by Slattery IT. Slattery IT founder and chief executive Rachel Slattery told StartupSmart they were seeing a larger contingent of start-ups based outside of Sydney. “About half are from Sydney, but in the past it would always be a few more than half. About six are from Queensland, and that’s exciting as usually we’d be lucky to get one,” Slattery says. “We were looking for the most innovative companies that could demonstrate traction. Ultimately it’s an event, so we look at what’s going to be interesting and who is great talent.” While prizes haven’t been confirmed yet, Slattery says there are some “fairly hefty wads of cash floating around” and they were delighted to welcome AMP, PayPal and the REA group as prize sponsors. The start-ups taking part are: 121Cast, 2Mar Robotics, BuyReply, Edisse, Ennova, Food Orbit, Geepers, HSK Instruments, Instrument Works, Intersective, Kounta, Liquid State, My Myk, Nano-Nouvelle, ollo mobile, OneTouch, Open Learning Global, Roomz, SABRE Autonomous Solutions, See-Out, SimplyShow.Me, SkyTree, and Xped Corporation.
The first ever annual Startup Spring Festival, a celebration and awareness raising festival about the Australian tech start-up scene, now includes over 100 events. The festival will include hackathons and start-up weekends, “walkabout” tours of incubators and co-working spaces, as well as a wide range of educational opportunities and travelling events. Launched in late August, the festival is coordinated by StartupAus, a not-for-profit collective of tech entrepreneurs including Google Australia director of engineering Alan Noble; Freelancer founder Matt Barrie; Shoes of Prey founder Michael Fox, Bill Bartee from Southern Cross Ventures; and Peter Bradd, chief executive of Sydney co-working tech hub Fishburners. The festival aims to showcase the tech start-up scene across the country, in major cities such as Sydney and Melbourne, but also in rising tech start-up cities Brisbane and Adelaide. There will also be events in Perth, Tasmania and Canberra. In August, Bradd told StartupSmart the event was designed to get the good news and momentum building in the tech start-up scene out beyond to a wider audience. “Strategically, we need to show there is momentum to get buy-in from other stakeholders. Government, big corporates and some universities don’t quite understand or believe in entrepreneurs, so awareness is quite important for making change,” Bradd said.
A new interactive report by Deloitte Private identifies lack of corporate and government support, access to capital and a culture afraid of risk as factors holding Australian innovation back. Deloitte partner Josh Tanchel, who coordinated the report called Startups: Playing it Safe is the Biggest Risk, told StartupSmart the panellists who took part in the report unanimously agreed about the potential and presence of innovation in Australia, but said Australia needed to get better at commercialisation. “All of the panellists saw greater opportunity for Australian innovation to move forwards and to change the ways we do things. They weren’t saying there was a lack of innovation in Australia, but that we needed to be better at commercialising that innovation,” Tanchel says. The panel was made up of five leaders in Australia’s start-up community: BlueChilli founder Sebastien Eckersley-Maslin; Southern Cross Venture Partners founder Bill Bartee ; Kelly Bayer Rosmarin, executive general manager at the Commonwealth Bank; Lisa Messenger, publisher of renegade COLLECTIVE; and Pete Cooper, founder of SydStart, Australia’s largest tech start-up event. Tanchel said Australia’s attitude to risk and failure was a major issue. He says the attitude in the United States is that failure is part of the entrepreneurial journey, and Australia needs to catch up with this approach. “Here in Australia, we have this culture where once you fail, there really is a black mark on you,” he says. “It’s holding entrepreneurs back here, as they’re less inclined to go for bolder global ideas. Instead they’ll go for smaller niche markets or verticals to test it, because they don’t want to fail and get blacklisted.” He adds this issue goes the whole way up the business ecosystem from start-ups to global companies headquartered here. “As an Australian culture, we haven’t really embraced failure, risk and therefore innovation,” he says. “But the time for playing it safe has passed. If you’re doing that, you’re going to get disrupted and lose your market share.” As the issue affects the entire Australian business landscape and the economy, Tanchel says corporates and governments need to step up to the issue as well. “The government could do more to mitigate risk, by supporting investment and structured, de-risking programs like incubators,” he says. “But the most important is they need to finally fix this ESOP (employee share scheme) problem. It’s the real currency for the ecosystem and it needs to be fixed once and for all.” Tanchel adds it’s becoming increasingly important for Australia to work out how to increase the number of women founders. “We need to work out a way to get more women into the sector, as that’s another huge opportunity for this country to grow.”
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.
Start-ups looking to make their mark with location-based technology are being urged to submit their pitch for the GeoNext Startup Showcase, with prizes including a two-hour strategy session on capital raising.
Technology showcase Tech23 has announced the 23 start-ups that will take part in this year’s event, including Ninja Blocks and Native Tongue, with $100,000 in cash prizes up for grabs.
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.
There has been a lot of press lately discussing the state of tech entrepreneurship in Australia and where it's headed.
Google is rolling out a new series of networking and tutorial events aimed at growing Australia’s start-up scene and fostering the “enormous talent” of local entrepreneurs.