<\/p>\n
Mick Liubinskas, co-founder of incubator Pollenizer agrees large businesses are starting to get serious about investing in early-stage ventures.<\/p>\n
<\/p>\n
\u201cBut they are taking their time to get their heads around the start-up space. It\u2019s difficult for them to take a risk and disrupt their own market, but they know that if they don\u2019t someone else will,\u201d he says.<\/p>\n
<\/p>\n
Patrick Llewellyn, CEO of 99designs, believes part of the reluctance by corporates to wade into the start-up market is the fact that many were burned making poor investments in digital ventures during the early days of Web 1.0 that did not deliver any real sustained success.<\/p>\n
<\/p>\n
\u201cIn the past, NAB, Telstra and all the major media players operated quasi funds or capital allocations to invest in start-ups or early stage business opportunities that met with varied levels of success,\u201d he says.<\/p>\n
<\/p>\n
\u201cThere were some well executed classified plays like seek.com, carsales.com.au and realestate.com.au, and Atlassian is leading the charge for self-funded success stories of the last 10 years.\u201d<\/p>\n
<\/p>\n
\u201cBut across the board we haven\u2019t seen enough winners from Web 1.0 to really encourage corporates to continue investing.\u201d<\/p>\n
<\/p>\n
\u201cIt\u2019s the same reason why there isn\u2019t a vibrant venture capital market in Australia.\u201d<\/p>\n
<\/p>\n
\u201cInvestors tended to pull their heads in post the first internet investment bubble and went back to investing in property and things they know and understand.<\/p>\n
<\/p>\n
\u201cBut over the last two years we are starting to see an improvement in the Australian funding landscape.\u201d<\/p>\n
<\/p>\n
\u201cWe\u2019re also starting to see new styles of angel networks and incubators and accelerators coming in to support early stage businesses develop.\u201d<\/p>\n
<\/p>\n
The flipside, according to Llewellyn, is reluctance among start-ups to accept funding from corporates.<\/p>\n
<\/p>\n
\u201cIt\u2019s often not attractive to take money from corporates at the early stage of a start-up\u2019s development as it can make the entrepreneur feel like they are locked in to a certain path,\u201d he says.<\/p>\n
<\/p>\n
\u201cGetting money from a corporate often comes with strings attached and it can limit the flexibility you have.\u201d<\/p>\n
<\/p>\n
\u201cFor instance, you might not be able to sell to one of their competitors and it could limit your ultimate liquidity options.\u201d<\/p>\n
<\/p>\n
Nevertheless, Dale McCarthy thinks most large corporates will establish separate businesses for investing in pre-profit companies over the next few years.<\/p>\n
<\/p>\n
\u201cLarge corporates are faced with a structural challenge,\u201d she explains. \u201cThey need to invest in early stage businesses to fund their future growth.\u201d<\/p>\n
<\/p>\n
\u201cTheir investment criteria will be around leveraging existing assets through early stage businesses. Large financial institutions will also set up more speculative venture funds.\u201d<\/p>\n
<\/p>\n
\u201cOver the next few years, it\u2019s very likely that we\u2019ll see retail, financial services and media businesses making more speculative investments through fund structures.\u201d<\/p>\n
<\/p>\n
Top five tips for getting on the radar of big business:<\/b><\/p>\n
<\/p>\n
1. Do your homework and understand what category of business individual corporates are interested in investing in. There\u2019s no point in approaching, say, Nine as a biotech start-up when history shows they are hot for digital, web-based businesses.<\/p>\n
2. Get the right team in place. Corporates are more likely to invest in businesses that have people on the team who have been involved in successful businesses previously.<\/p>\n
3. Don\u2019t take no for an answer. If a corporate knocks you back once, don\u2019t be shy about knocking on their door down the track with another venture.<\/p>\n
4. Get your pitch right. Make sure you can clearly and quickly articulate what your business does, how it will change the market and the problem the business solves.<\/p>\n
5. Show fiscal responsibility. Have a clear plan for how you will use any funding you receive.<\/p>\n","protected":false},"excerpt":{"rendered":"
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