{"id":44195,"date":"2023-10-20T15:34:06","date_gmt":"2023-10-20T15:34:06","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/deepen-the-pool-of-capital-or-see-startup-talent-ebb-away-says-avcal-ceo-yasser-el-ansary-startupsmart\/"},"modified":"2023-10-20T15:34:06","modified_gmt":"2023-10-20T15:34:06","slug":"deepen-the-pool-of-capital-or-see-startup-talent-ebb-away-says-avcal-ceo-yasser-el-ansary-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/deepen-the-pool-of-capital-or-see-startup-talent-ebb-away-says-avcal-ceo-yasser-el-ansary-startupsmart\/","title":{"rendered":"Deepen the pool of capital or see startup talent ebb away, says AVCAL CEO Yasser El-Ansary – StartupSmart"},"content":{"rendered":"
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The gap between seed and later-stage funding needs to be \u201curgently\u201d addressed or Australia will continue to lose its best entrepreneurs and startups overseas, AVCAL CEO Yasser El-Ansary.<\/p>\n

 <\/p>\n

According the recently released 2015 AVCAL Yearbook<\/i> there has been a \u201csignificant increase\u201d in funds available for early tech companies, but Australia is \u201clagging\u201d behind in terms of later-stage offerings.<\/p>\n

 <\/p>\n

The report shows that only 23%, or $85 million, of total VC funds are dedicated to these bigger startups.<\/p>\n

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This inevitably contributes greatly to the much publicised \u2018brain drain\u2019 of entrepreneurs leaving for places like Silicon Valley, El-Ansary tells StartupSmart.<\/i><\/p>\n


<\/i><\/p>\n

<\/i><\/p>\n

\u201cThese numbers confirm what we\u2019ve been saying for a long time: it\u2019s exceptionally hard for entrepreneurs to attract capital at a later stage,\u201d El-Ansary says.<\/p>\n

 <\/p>\n

\u201cThe depth of capital just isn\u2019t there.\u201d<\/p>\n

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The funding gap<\/b><\/p>\n

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It\u2019s the funds for large Series A or later rounds that Australia really lacks, he says.<\/p>\n

 <\/p>\n

\u201cRedressing the imbalance in that part of the market will help stem the tide of the best entrepreneurs packing their bags and relocating overseas,\u201d El-Ansary says.<\/p>\n

 <\/p>\n

\u201cIt creates a lot of pressure on our innovation potential in Australia in realising our full potential if we don\u2019t do something to help deepen the pool of capital.<\/p>\n

 <\/p>\n

\u201cWe will continue to lose our best talent offshore, and we run the risk of seeing too many of our best entrepreneurs funded by offshore venture funds, where over time they have an interest in migrating these businesses to their own base.\u201d<\/p>\n

 <\/p>\n

The Yearbook<\/i> shows that overseas investors overtook domestic investors in terms of overall funds, but this isn\u2019t a problem as long as the market remains competitive, El-Ansary says.<\/p>\n

 <\/p>\n

\u201cIt\u2019s important that we have a balance in the market and we need to have offshore venture coming to Australia, but at the moment there\u2019s almost no competition for those offshore managers,\u201d he says.<\/p>\n

 <\/p>\n

\u201cThey know we have great talent, great entrepreneurs and great business ideas but we don\u2019t have a deep enough pool of capital to back them. It\u2019s a great recipe for those funds to be able to come and effectively have their pick of the bunch without having any pressure on them to compete.\u201d<\/p>\n

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The government\u2019s role<\/b><\/p>\n

 <\/p>\n

Much of the answer for closing this funding gaps lies in the government\u2019s upcoming innovation statement, El-Ansary says, which is expected to be announced next month.<\/p>\n

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He says there are two main areas where the government can have a positive impact and it is \u201cimperative\u201d that it does so.<\/p>\n

 <\/p>\n

\u201cThey need to reinstate an improved co-investment fund for later stage equity capital investments \u2013 that should form the core of the entire agenda,\u201d El-Ansary says.<\/p>\n

 <\/p>\n

\u201cThey should also go to the bookshelf, pick up the 2011 report prepared by the board of taxation into venture capital, and implement all ten of the recommendations made.<\/p>\n

 <\/p>\n

\u201cThey were comprehensive, they were complete, and they were supported wholly by both sides of politics at the time, but nothing\u2019s been done about it.\u201d<\/p>\n

 <\/p>\n

\u201cThese two parts together need to form an integral component of the government\u2019s innovation strategy, and that\u2019s the message we\u2019ve been giving.\u201d<\/p>\n

 <\/p>\n

Positive signs for early stage investments<\/b><\/p>\n


<\/b><\/p>\n

<\/b><\/p>\n

Private equity and venture capital funds reached the second highest level in the last eight years for the 2015 financial year, and almost tripled the figures in 2014 to reach $3.1 billion.<\/p>\n

 <\/p>\n

The number of companies invested in increased by 5% while the funds contributed rose by 32% year-on-year.<\/p>\n

 <\/p>\n

Total venture capital investments are down on last year following CampaignMonitor\u2019s huge round, but up on 2013 and 2012.<\/p>\n

 <\/p>\n

The report showsmore positive stats in terms of early-stage funding of startups. It finds that Australia is \u201cfinally approaching the levels of fundraising and investment activity seen before the GFC\u201d and that confidence in early-stage activity is at the highest levels in a \u201clong time\u201d.<\/p>\n

 <\/p>\n

\u201cIt\u2019s now easier than it ever has been before to tap into high net-worth individuals who can invest that sort of money into a high growth potential startup,\u201d El-Ansary says.<\/p>\n

 <\/p>\n

But he says that also serves to widen the gap from later-stage funding.<\/p>\n

 <\/p>\n

\u201cThat\u2019s all the more reason why we need to ensure the pool of capital is there in the later stage to maintain a degree of balance in the market,\u201d El-Ansary says.<\/p>\n

 <\/p>\n

\u201cIt\u2019s so we get both sides of the equation right.\u201d<\/p>\n

 <\/p>\n

The focus in the innovation debate needs to shift to include this issue as well as encouraging entrepreneurs to start a business, he says.<\/p>\n

 <\/p>\n

\u201cAt the moment focused on encouraging more entrepreneurs to set up businesses and developing their ideas through to commercialised product,\u201d El-Ansary says.<\/p>\n

 <\/p>\n

\u201cBut we also need to have the same focus on expanding the pipeline of capital available at a later stage so we can fund those businesses when they are knocking on the door.<\/p>\n

 <\/p>\n

\u201cThis is when they\u2019re looking for the opportunity to scale up, employ people, lease out premises and start making a significant contribution to the nation. This is the critical point at which we\u2019re falling short of the mark at the moment.<\/p>\n

 <\/p>\n

\u201cWe\u2019re well short and need to do a lot better.\u201d <\/b><\/p>\n

 <\/p>\n

Do you know more on this story or have a tip of your own? Raising capital or launching a startup? Let us know. Follow StartupSmart on<\/i> Facebook<\/i>,<\/i> Twitter<\/i>, and<\/i> LinkedIn<\/i>.<\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

The gap between seed and later-stage funding needs to be \u201curgently\u201d addressed or Australia will continue to lose its best<\/p>\n","protected":false},"author":1,"featured_media":59372,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/44195"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=44195"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/44195\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/59372"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=44195"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=44195"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=44195"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}