Michelle HammondFollow on twitter www.startupsmart.com.au
Uncovering the Canberra start-up scene
Start-up survival rate: 71.7% (2007 to 2009).
If Australian entrepreneurs are asked to think about the best start-up hubs in the country, it’s safe to say Canberra doesn’t immediately spring to mind.
Canberra – population 358,000 – is often perceived as little more than a political epicentre. For start-ups, Canberra’s charms can appear limited, compared to the buzz of being part of the vibrant innovators’ ecosystems found in other capital cities.
But for those who do decide to start a business in Canberra, there is a surprisingly high level of funding support.
In 2008, the ACT Government introduced InnovationConnect (Icon), which provides grants of up to $50,000 to help Canberra-based businesses develop their products and services.
Just two weeks ago, five start-ups received $170,000 from Icon.
For up-and-coming entrepreneurs, there’s InnovationACT, a business plan competition for university students, run by the Australian National University and the University of Canberra.
Michael Cardew-Hall is the chief executive of ANU Connect Ventures, a pre-seed venture capital fund associated with the ANU.
In addition to InnovationACT, ANU Connect Ventures manages the $3 million Discovery Translation Fund (DTF) in conjunction with the ACT Government.
Grants from the DTF typically range from $25,000 to $100,000.
“It focuses on proof of concept – it’s meant to be complementary to Commercialisation Australia. It’s very focused,” Cardew-Hall says.
ANU Connect Ventures also manages a $27 million seed investment fund as part of the ANU-MTAA Super Venture Capital Partnership.
With regard to the DTF, Cardew-Hall estimates around 31% of the investments are made in biotech or healthcare, 15% in manufacturing and transport, 44% in ICT and 8% in engineering.
“A lot of the activity is in the ICT sector – the general scope seems to be in the ICT industry,” he says.
“Historically, the focus of many start-ups would have been with governments – either public service or defence. There are a lot of neat defence start-ups around here.”
“Now, most are looking for opportunities that will go global. The government is not seen as the panacea of the marketplace. The projects I’m seeing are not focused on government.”
“The general trend is to try and build companies that are global.”
Catherine Prosser, who founded Canberra-based start-up StageBitz, recently returned from the United States, where she spent time drumming up business.
According to Prosser, there are pros and cons of starting a business in Canberra.
“When you’re up in Sydney, it’s very much [about] getting all the tech start-ups together,” she says.
“Whether you’re a tech start-up or you’re setting up a new retail shop or a new professional consulting business, it’s all regarded as the same kind of thing [in Canberra].”
“I think that’s probably where we could improve – more targeted support to specialist areas of start-ups.”
Having said that, Prosser says the Discovery Translation Fund is particularly impressive.
“That’s the kind of thing that lots of people kill for outside of Canberra, so to have that kind of opportunity available is excellent,” she says.
“As far as accessing Federal Government programs, there’s something about being able to pop into the office that does make a difference.”
“As much as people malign Canberra as a public service city at times, it’s certainly been an advantage for me on that front.”
David Elliot, managing director of Canberra-based software development specialist Agile Digital, agrees Canberra has a “double-edged sword”, albeit for slightly different reasons.
“Canberra is an expensive place to live. Being a government town, it raises inflation in the economy. There’s nearly full employment and a lot of good-paying jobs,” Elliot says.
“There are two great universities, which pump out a lot of talent and good ideas, but when you do a start-up, you’re [potentially sacrificing] a very comfortable, high paid job.”
“Entrepreneurs wrestle against the non-start-up lifestyle, which is very comfortable.”
The Wedz system
Agile Digital recently worked with Wedz, another Canberra-based start-up that’s aiming to change the way brides plan their weddings.
The Wedz system produces a detailed plan and budget by asking each bride questions about the size, style and location of her dream wedding.
Wedz used Agile Digital to develop its product software including iPhone and iPad apps, and the central system logic and database. The start-up has also received support through Icon.
Matthew Power, co-founder of Wedz, won’t hear a bad word about Canberra, describing it as “the best place in the world to live”.
“It has every major city benefit but it has 350,000 people… Canberra has a tight-knit business community, so it’s easy to get to the right people. There’s no pretentiousness.”
“I can get to the top man or top woman in each business… It means you start at the right spot. If you start at the top, the whole system flows better.”
While Power has ambitious plans for Wedz, he has no intention to relocate.
“We’re going to go nationwide and worldwide with this thing [but] Canberra is where I live… We don’t need to relocate because it’s internet-based,” he says.
“If I can operate a business that doesn’t need to be in a major city, why would I be there?”
Nick McNaughton, chairman of not-for-profit organisation Capital Angels, believes mobile technology is a major growth area in Canberra, in addition to crowdsourcing.
Capital Angels provides a forum for high net worth individuals to support entrepreneurs in the ACT. While McNaughton speaks confidently of Canberra-based companies, he also sees a gap.
“The most obvious challenge is the lack of a co-location space for entrepreneurs to gather and work,” he says.
“We used to have an incubator called Epicorp. It was quite successful… but that had its funding pulled in 2007.”
“We’d like to see an ACT Government-funded co-location facility or incubator. There are people actively lobbying to bring that back to fruition.”
“One [model] I prefer is whereby we have the government potentially providing space and covering the rent of that space, and allowing the entrepreneurs there to work and develop their ideas without weekly outgoings in terms of rent.”
Rather than sit around and wait for this to happen, several entrepreneurs are taking matters into their own hands.
Last year, Matthew Ryan, Adrian McGarva and Lachlan Blackhall founded Covate, an incubator and accelerator based in Canberra, which invests in early stage companies.
Meanwhile, former Pollenizer employee Rory Ford, along with a handful of associates, is in the process of setting up a new co-working space.
Ford has teamed up with Fishburners co-founder Peter Davison, entrepreneur Asanka Warusevitane and StartupSmart Future Maker Dejan Andrevski.
“ANU has an unused demountable building located on the edge of ANU and the city that looks a promising co-working location,” Ford says.
“There is space for maybe 30-40 co-workers plus an event space, kitchen and some quiet rooms. The building needs work done such as carpet, painting, another toilet or two and high-speed internet.”
“The building is likely to be relocated, maybe within 12 months, and given the costs to fix this up, it would be expected that rent would be much, much lower then current commercial rates in the city.”
“This initial co-working facility will be put together on a shoestring and require a community effort both from the grassroots, and from some of the organisations supporting innovation and entrepreneurship in the ACT and surrounding region.”