Australia’s tech sector is noisy when it comes to criticising the country’s lacklustre venture capital sector.
One of the loudest to date has been Freelancer founder Matt Barrie who called Australia’s VC industry “stillborn”.
Trent Telford, founder of data security company Covata, which is about to run head first into a reverse takeover on the ASX with uranium exploration company Prime Minerals, has joined the ranks of tech bosses dismissing Australia’s VC market.
“I wouldn’t say it’s stillborn. I think stillborn means it started and now it’s dead,” he told Business Insider. “I don’t think that’s the case. I think that there are a lot of people wanting to invest in Australia in tech. I don’t think it’s a very sophisticated landscape in terms of the investment.”
“It’s an infant and it’s still learning to walk. It’s tripping over a lot.”
Part of the problem with Australia’s VC market is lack of experience. Comparing it to the US, Telford said the addition of experience, where VCs have built and sold their own tech companies, strengthens the sector.
He said of Australia: “There’s a lot of bankers running the cheque books but not a lot of people that have done it [run a tech company] sitting next to the bankers.
“If you sit in front of most of the VCs in Australia it’s like sitting in front of junior bankers who really don’t understand where the value is, where the risk is, how to execute and how to get offshore.”
Many of Australia’s tech companies looking to raise are trying to expand offshore markets.
“I don’t think there are a lot of investors here that know how to help them do that even though they claim to,” Telford said.
“There’s a lot of risk in that if you don’t know what you’re doing.”
But patching up Australia’ VCs is going to take time, Telford said.
“You need successful tech stories out of Australia, where there has been exits and learnings,” he said, adding entrepreneurs who have experience need to start sitting on the VC side.
Australia’s big tech successes, including Atlassian founders Mike Cannon-Brookes and Scott Farquhar, Freelancer’s Matt Barrie and Campaign Monitor’s Ben Richardson and David Greiner all in some way invest back into startups through various funds or directly into startups.
But all remain heavily involved in developing their own companies, which Telford says limits the amount of time and energy they can allocate to VC advisory.
He said until Australia’s VC industry has big tech successes committed to it and acting as advisers, it will continue tripping over.