This success, in turn, is being fuelled by a fast-growth, low-cost, minimal barrier environment for start-ups, particularly in the tech space.<\/p>\n
\u00a0<\/p>\n
\u201cThis model is changing the start-up environment in Australia and globally,\u201d says Heras. \u201cBefore the question was \u2018How do I get money to build my technology and systems?\u2019 Now it is, \u2018I have all these platforms already \u2013 how can I tailor them to create a business?\u2019\u201d<\/p>\n
\u00a0<\/p>\n
\u201cBusinesses now have all the tools. It\u2019s their job as entrepreneurs to create something and find a market for it.\u201d<\/p>\n
\u00a0<\/p>\n
So where does that leave Australian VCs? Heras suspects that they will treat the start-ups emerging from initiatives such as Startmate and PushStart as \u201cdeal flow\u201d, proving the next stage of capital, maybe via \u201csuper\u201d angel funds. But the equation isn\u2019t as simple as it once was.<\/p>\n
\u00a0<\/p>\n
\u201cVCs in Australia can\u2019t remain where they are \u2013 there\u2019s no room for them in the web and mobile space because there is no need for them,\u201d Heras says. \u201cI think they\u2019ll focus on clean tech, biotech and even hardware.\u201d<\/p>\n
\u00a0<\/p>\n
\u201cI know some VCs at Starfish and Southern Cross \u2018get it\u2019, but many come in way too late. I talk to start-ups who say they don\u2019t need the money then, which is the conundrum that VCs face.\u201d<\/p>\n
\u00a0<\/p>\n
\u201cWhen they eventually come knocking, start-ups are already profitable. Atlassian is a perfect example \u2013 it was able to go to the US to get a huge round. It didn\u2019t need to raise funds locally.\u201d<\/p>\n
\u00a0<\/p>\n
With Accel, and others, increasingly eyeing up opportunities in Australia, it would be easy to think that local VCs are under the pump, forced to focus on other areas or act as affiliates for the major US players.<\/p>\n
\u00a0<\/p>\n
However, John Dyson, investment principal at Starfish, one of the largest VC firms in Australia, rejects the notion that there is scant investor focus on start-ups.<\/p>\n
\u00a0<\/p>\n
Dyson says that around half of Starfish\u2019s portfolio has turnover of under $2 million, citing investments in up-and-coming companies such as Nitro PDF Software, Mimetica and iCiX, which has just expanded to California.<\/p>\n
\u00a0<\/p>\n
\u201cWe feel we keep in touch with early-stake start-ups pretty well and we\u2019ve made a bunch of investments that have been super successful,\u201d he says.<\/p>\n
\u00a0<\/p>\n
\u201cLike any industry, there are different types of VC, so it\u2019s hard to generalise. But I don\u2019t think you can be a conservative VC. You have to be optimistic and take a calculated risk sometimes.\u201d<\/p>\n
\u00a0<\/p>\n
Dyson says that Starfish is currently seeking a \u201chandful\u201d of start-ups to soak up the remains of a $185 million funding round that kicked off at the end of 2007. He insists that local VCs still have a vital role to play for emerging entrepreneurial talent.<\/p>\n
\u00a0<\/p>\n
\u201cFor Australia to produce a pipeline of great companies, they need capital at all stages, through to IPO,\u201d he says.<\/p>\n
\u00a0<\/p>\n
\u201cWe are seeing an aggregation of angel investors and more capital for early-stage companies, which is a positive development. I see that as complementary to what we do. We manage around $400 million and we want to see that going into better-managed companies.<\/p>\n
\u00a0<\/p>\n
\u201cThere\u2019s got to be a combination. Companies can raise an initial $500,000 and then come to use 12 months down the track for a $3-4 million cheque. We certainly aren\u2019t moving away from that space \u2013 of our four last investments, two were with very early-stage companies.\u201d<\/p>\n
\u00a0<\/p>\n
The idea that you can launch your company on $10,000 and be sipping a latte with Mark Zuckerberg in Palo Alto within a year without significant outlay is a misnomer, according to Dyson.<\/p>\n
\u00a0<\/p>\n
\u201cIt takes a lot longer, and far more capital, than people think,\u201d he says. \u201cIf you need to go to the US, we can help you do that.\u201d<\/p>\n
\u00a0<\/p>\n
Whatever the role of local VCs, it\u2019s clear that the push to create the \u2018Australian YCombinator\u2019 isn\u2019t set to slow down any time soon.<\/p>\n
\u00a0<\/p>\n
\u201cThe US accelerators will be tier one, but there will be heaps more in Australia,\u201d says Heras. \u201cWith various niche plays in universities, I think there\u2019s room for 10 accelerators to take place throughout the year. There\u2019s real momentum in the sector at the moment.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
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