{"id":42376,"date":"2023-10-20T15:20:45","date_gmt":"2023-10-20T15:20:45","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/how-to-snare-a-us-investor-startupsmart\/"},"modified":"2023-10-20T15:20:45","modified_gmt":"2023-10-20T15:20:45","slug":"how-to-snare-a-us-investor-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/how-to-snare-a-us-investor-startupsmart\/","title":{"rendered":"How to snare a US investor – StartupSmart"},"content":{"rendered":"

The business world has been abuzz with talk of a second dotcom bubble, fuelled by the huge public debut<\/a> by LinkedIn last week.<\/p>\n

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Whether \u2018bubble 2.0\u2019 bursts as spectacularly as its predecessor in the early 2000s or not remains to be seen, but one encouraging sign is already evident \u2013 this time, Australian start-ups are part of the tech surge.<\/p>\n

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A flurry of recent deals demonstrates that US investors are keeping a closer eye on Aussie start-ups than, arguably, ever before. Whether it\u2019s Accel Partner\u2019s investments in Atlassian, OzForex and, most recently, 99Designs<\/a>, Yahoo!7\u2019s acquisition of Spreets<\/a> or Tiger Global Management\u2019s minority stake, revealed this week<\/a>, in Catch of the Day, the days of Australian start-ups being overlooked appear to be well over.<\/p>\n

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So how do American investors view emerging Aussie businesses and, crucially, how can start-ups boost their chances of following in 99Designs\u2019s and Atlassian\u2019s footsteps?<\/p>\n

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Scene setters<\/strong><\/p>\n

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Haig Kayserian, the Australian founder of web developer Kayweb, has offices in Sydney and New York. He splits his time between Australia and the US and recently launched a new angel fund that exchanges equity for technical skills<\/a>. <\/p>\n

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He says that the Australian start-up scene has finally \u201cwoken up\u201d and that US investors are taking notice.<\/p>\n

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\u201cThere have always been start-ups in Australia, but until recently they didn\u2019t embrace the term \u2018start-up\u2019, which is part of the vernacular here in New York,\u201d he says. \u201cThe scene has woken up \u2013 there are now a few local incubators and there is top-down investment.<\/p>\n

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\u201cMost US investors haven\u2019t been to Australia but they know the stereotypical questions to ask an Australian and the lack of a language barrier is a big advantage. There is a general synergy between the markets.\u201d<\/p>\n

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\u201cI\u2019ve noticed that investors here (in the US) believe Australia is a more progressively green place than the US. They feel that Australia is green, literally, and ahead when it comes to green technology. There\u2019s a definite opportunity for Australia to be a leader in a niche tech area such as this.\u201d<\/p>\n

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Going global<\/strong><\/p>\n

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Phil Morle, co-founder of tech seed fund Pollenizer, says that there is growing interest in Australian start-ups from across Europe and Asia, not just the US.<\/p>\n

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\u201cEveryone is very globally focused, I just think it\u2019s a general trend,\u201d he says. \u201cYou can just quickly do something, make something global and valuable.\u201d<\/p>\n

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\u201cAustralian companies and entrepreneurship has always been a very powerful force because it\u2019s always been so hard because of the appalling ecosystem to get a system off the ground.\u201d<\/p>\n

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\u201cIf you\u2019re an entrepreneur, your capacity to successfully do it in the US or southeast Asia is very strong, because there you have investment structures, better incentives on a tax basis and so on.\u201d<\/p>\n

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\u201cYou can now (as a large investor) invest smaller amounts across lots of different amount of opportunities, and a large percentage of those can catch fire.\u201d<\/p>\n

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Mark Harbottle, co-founder of 99Designs, says that the US venture capital market is streets ahead of its Australian counterpart \u2013 a fortunate scenario for a local start-up with global ambitions.<\/p>\n

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\u201cAustralian VCs aren\u2019t very active and I think the US guys see that as an opportunity,\u201d he says. \u201cWe didn\u2019t get a call from Australian VCs for three years, while we got calls every week from the US.\u201d<\/p>\n

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What are US investors looking for?<\/strong><\/p>\n

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To get $35 million in funding, as 99Designs did, it obviously helps to have a concept of global appeal, as the crowdsourcing site does. But Harbottle says there are certain strategies that all start-ups looking for US investment can deploy to increase their chances.<\/p>\n

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\u201cIt\u2019s important to have a presence in the US,\u201d he explains. \u201cWe have a CEO in the US and without him it would\u2019ve been a lot harder to get the right investment. We, the shareholders, were one step removed from the negotiations, which helped too.\u201d<\/p>\n

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\u201cOne thing we did there was get a communal office space. We met a bunch of dotcom start-ups, which was realty helpful. They made introductions for us that we wouldn\u2019t have got if we rented an office in the middle of nowhere.\u201d<\/p>\n

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\u201cIt\u2019s important to remember, though, that the earlier you look to raise money in the US, or anywhere for that matter, the worse deal you\u2019ll get. You\u2019ll give away a large stake until you can prove you are profitable and fast-growing. If you can do the early stage with your own money, or get an angel investor on board, that is a good idea.\u201d<\/p>\n

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Face time<\/strong><\/p>\n

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Kayserian agrees that it\u2019s imperative to physically get in front of US investors in order to seal the deal.<\/p>\n

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\u201cIt\u2019s key to get in front of them as you can submit ideas, but they will only get you so far,\u201d he explains. \u201cUS investors like to see the person as much as they want to see the product or idea,\u201d<\/p>\n

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One good avenue to investors is pitching events or industry gatherings. Kayserian says that Silicon Valley VCs, such as RRE Ventures, regularly make trips to New York to seek out the best entrepreneurial talent at organised events.<\/p>\n

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Pitching events are public affairs in the US, with around 20 applicants accepted to take part. One VC firm head even has his diary online so that start-ups can book in time with him.<\/p>\n

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Sector-specific shindigs, such as this week\u2019s TechCrunch Disrupt, can also be fertile hunting grounds for Australian start-ups.<\/p>\n

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\u201cFor $2,000 you can get in, exhibit your business and mingle with the biggest VCs in the country,\u201d says Kayserian. \u201cFoursquare will be there, Google will be there \u2013 this is an audience you want to be in front of. They may hold a side party or event where you can talk further with a potential investor.\u201d<\/p>\n

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Investor hunting<\/strong><\/p>\n

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According to Keyserian, the months of May and June are a good time for Australian tech companies to visit the US and get in front of VCs.<\/p>\n

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\u201cThere\u2019s always a lot happening then \u2013 the pre-summer period is very busy,\u201d he says. \u201cA lot of VCs have events each quarter and a lot of them fall around now. It\u2019s a good idea to base yourself here as you\u2019ll achieve far more. You won\u2019t have to pack in meetings and can achieve traction.\u201d<\/p>\n

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\u201cRemember that VCs need ideas people as much as vice-versa. Come for two or three weeks around a big event, create contacts and leave time to set up meetings for afterwards.\u201d<\/p>\n

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So, once you\u2019re in front of a US investor, how do you impress him or her? Kayserian says that the rules are much the same as Australia, with some key differences.<\/p>\n

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\u201cAny start-up has to state what the problem is and how they solve it \u2013 that\u2019s a basic elevator pitch,\u201d he says. \u201cYou also need to show you understand the competitive landscape, mention how you will monetise your idea and whether you have an exit strategy.\u201d<\/p>\n

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\u201cYou need to show a skillset and passion. If the investor isn\u2019t impressed with the founder, he won\u2019t invest in the start-up.\u201d<\/p>\n

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\u201cComing from Australia, you need to have a vision broader than just Australia \u2013 you need a global outlook. VCs will want to know how you will get to a broad market rather than just start something in Australia and have it copied in the US \u2013 like Groupon but in reverse.\u201d<\/p>\n

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It\u2019s vital that you do your research before you approach a VC. Does he or she have a track record in your area? Are you sure that they haven\u2019t invested in your idea already?<\/p>\n","protected":false},"excerpt":{"rendered":"

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