A US venture capital investor is reluctant to invest in Australian startup founders because she’s concerned that they pay themselves too much.
Laurel Touby, who runs New York-based VC firm Supernode Ventures, says founders need to be prepared to suffer to succeed.
“I have discovered that they [Australian founders] pay themselves very high salaries compared to the US and other places,” Touby said, in a podcast interview with Lambros Photios, the CEO of software development firm Station Five. “They seem to be looking for income replacement and that is not in the interest of the investor.”
US VCs are “looking for a great company, a great founder, a great product, but also that you’re hungry, and hungry meaning, literally hungry,” according to Touby, who sold her company Mediabistro to Jupitermedia for $US23 million in 2007.
Prior to the sale, Touby was paying herself around $US80,000. “I was living in New York City, and I had employees making more than I was because I wanted them to work for me, and I couldn’t afford to pay myself after paying them,” she said. “So that’s the kind of sacrifice, and I didn’t make money until we sold, and I was really happy then.”
Touby added: “The investor wants to see hustle and aggression and drive and confidence and passion, but also, discomfort. I want to see you’re giving something up.”
Australia’s technology industry is growing but it still lags way behind the US, China, and countries in Europe such as the UK and France.
Enterprise software firm Atlassian is one of the country’s biggest success stories in recent years. Today, it’s worth around $US20 billion but the founders of Atlassian used their credit cards to fund their business in the early days, according to a profile in The New York Times.
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