{"id":33999,"date":"2023-10-20T14:32:26","date_gmt":"2023-10-20T14:32:26","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/are-australian-investors-overly-conservative-startupsmart\/"},"modified":"2023-10-20T14:32:26","modified_gmt":"2023-10-20T14:32:26","slug":"are-australian-investors-overly-conservative-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/are-australian-investors-overly-conservative-startupsmart\/","title":{"rendered":"Are Australian investors overly conservative? – StartupSmart"},"content":{"rendered":"
Getting venture capital for any start-up is hard work. Even in the US, the world\u2019s biggest venture capital market and the mecca for start-ups, only two out of every hundred get funded.<\/p>\n
<\/span> <\/p>\n \u00a0<\/p>\n It\u2019s even more difficult in Australia where there is a smaller market. Entrepreneurs say an even bigger problem is that the venture capital firms here are conservative.<\/p>\n \u00a0<\/p>\n Start-up specialist Fiona Boyd, founder of RushCrowds<\/a>, a social media site that sends people to music, arts and entertainment events, says Australian VCs are just timid.<\/p>\n \u00a0<\/p>\n \u201cThey\u2019re not actually hunting and looking for the deals,\u2019\u2019 Boyd says.<\/p>\n \u00a0<\/p>\n \u201cThey are very vanilla. They want it all beautifully wrapped up and presented.\u201d<\/p>\n \u00a0<\/p>\n \u201cBut you know what? It\u2019s venture capital, no one really knows the future and when people are playing with new technologies, the outcomes are mainly unknown, apart from the fact that you can create great technology, test it, put it into market and build up from there.\u201d<\/p>\n \u00a0<\/p>\n Valley of death<\/strong><\/p>\n \u00a0<\/p>\n Significantly, RushCrowds has not been able to get any interest from VCs here. But it plans to set up operations in San Francisco and has already had positive discussions with venture capital firms in Silicon Valley.<\/p>\n \u00a0<\/p>\n \u201cWhat happens here that might be different to Silicon Valley,\u201d she says.<\/p>\n \u00a0<\/p>\n \u201cHere, everyone is very focused around their rules and their process which is good to a degree and it may lead to some degree of self protection but I think they are missing the opportunity.\u201d<\/p>\n \u00a0<\/p>\n \u201cThere are a number of companies that are going straight to Silicon Valley unfunded because they know that\u2019s where the risk money is.\u201d<\/p>\n \u00a0<\/p>\n The problem, she says, is the \u201cvalley of death\u201d for start-ups that are looking for anything less than $5 million.<\/p>\n \u00a0<\/p>\n \u201cThey are simply not interested. The Australian VCs will probably be doing themselves out of good deals if they don\u2019t become more active at a lower range of one to five,\u2019\u2019 she says.<\/p>\n \u00a0<\/p>\n What makes it more difficult for start-ups now is that venture capital firms around the world are investing less.<\/p>\n \u00a0<\/p>\n Part of it is because of the global financial crisis, the other part is that investors are now more conservative and gun-shy.<\/p>\n \u00a0<\/p>\n Global dip<\/strong><\/p>\n \u00a0<\/p>\n Brigitte Smith, managing director of GBS Venture Partners<\/a>, puts it bluntly: \u201cIt\u2019s going down fairly precipitously and that\u2019s a global phenomenon.\u201d<\/p>\n \u00a0<\/p>\n \u201cThe volume of venture capital in the United States is probably at half to a third to the level that was being raised in 2007 so there has been an extreme contraction of the industry globally and we\u2019re seeing that also in Australia.\u201d<\/p>\n \u00a0<\/p>\n