The presence of Australian banking titan Allan Moss at an Australian startup event yesterday is part of a much bigger story.
On Tuesday, some 25 startup founders were at the Start-Up Conference in Sydney to face some of the country’s biggest private equity investors. It was Shark Tank without the cameras and pantomime. Each startup got 15 minutes to pitch their company — a strict time limit which was enforced if they started rambling on.
Founders from a bunch of startups — including one that wants to disrupt the sunscreen market, another which wants to get rid of paper registrations and one which wants to make it easier to find adventure around the world — pitched to a group of around 90 potential investors.
Drawing on contacts he’s made over his 30 year career in investment banking, event host Randolf Clinton organised the event to introduce startups to new investment circles.
Former Macquarie Bank CEO Allan Moss was in the crowd, as were VCs from AirTree, the Telstra Venture investors and a member of Alibaba’s Alipay Australia team.
There were also a number of representatives from family offices, private equity funds and high net worth individuals. In short, it wasn’t the regular crowd you see at these startup pitching events. There were lots of suits, shiny shoes and leather binders.
“It is indicative that the non-traditional channels are starting to look at ‘early entry’ opportunities and back the right startups,” Clinton said.
This week Australia’s biggest bank, the Commonwealth Bank , launched its open-source mobile payment platform called Albert at its Innovation Lab in Sydney. It’s a space operated at arm’s length from the company and uses the startup model to act as an idea incubator and accelerate innovation.
Last year Westpac tipped up to $50 million into technology-focused venture capital fund Reinventure Group. One of the main reasons the bank’s new CEO Brian Hartzer got the job was because of the threat to banks’ business models through digital disruption.
“That is Brian’s home ground,” Westpac chairman Lindsay Maxsted said. “He understands the threat; he understands how the Westpac brand is perceived by customers and that there will be significantly different customer interactions as technology changes. He has a great opportunity to put his stamp on this issue.”
Telstra, Australia’s dominant telco, also has its Muru-D accellerator program and late last year NRMA launched Jumpstart, a startup program co-ordinated by the Slingshot accelerator and supported by Artesian Venture Partners and PwC.
They are just a couple of examples of big blue-chip businesses starting to actively work with startups as a way to stay abreast of innovation and technology developments.
At yesterday’s event venture capitalists, armed with legal pads and pens, fired questions at jittery founders both in front of the crowd and on the sidelines.
Clinton said nearly all the companies had a couple of people interested in receiving more information after they presented their pitch.
“I am confident in saying there will probably be 30+ follow up meetings as quite a few had up to five requests to meet again or invest,” Clinton said.
Setting up for the next round
But not all the startups were looking for cash. Many were looking to build connections with investors to stay ahead of their own capital raising curve.
Handcrafted, which has raised $250,000 to date, was one of those companies looking to build out its network to make future funding rounds easier.
Airtasker CEO Tim Fung said the company was looking to get in front of some high calibre investors that may not have seen the tech company before.
“We’re always touching base with potential investors and this was one of the biggest events with the people who are here,” he said adding he used to work “about 50 levels below” Alan Moss at Macquarie and was excited to spot him in the crowd.
“You want to stay ahead of your capital curve and a lot of the guys here are private equity, growth capital, so not traditional seed VC guys.
“As you build your business you want to be talking to the guys who will be interested in potentially partnering up in the future.”
Securing seed funding in Australia is becoming easier with the number of incubators, accelerators and corporate programs supporting startups increasing. But securing the bigger cheques for later rounds is still difficult.
“We don’t expect them to do it at the super high risk seed stage but when you’ve got a business model and you’re starting to scale it these guys could come to the party,” Fung said.
Speaking at the Start-Up Conference, Andrew Dowling, founder of Stitch, an online social network for over 50s which he says has “no scammers, no gold diggers – totally safe and secure”, said events like this were important for Australia’s startup community because it helped bridge the gap between angel or seed rounds and investment later in a company’s life cycle.
“The idea of anyone who’s trying to grow that pool of the investor community and the linkages between them and startups, I think, is great,” Dowling said.
“There are a lot of startup events but they tend to be populated by the same people and the same companies so expanding beyond the postcodes, as Randolf said, is I think good.
“Otherwise we’re reinforcing the paradigm that if you’re any good, go to the US.”
Dowling took Stitch over to the US for funding and managed to attract Silicon Valley-based Structure Capital which was an early investor in Uber, and Dave McClure’s 500 startups.
“Part of the reason is it’s easy to do so, but part of the reason is these investors are excellent [in the US] at helping you raise your follow up rounds as you grow,” he said.
“By getting investment from 500 Startups in the US, then some angel investors came onboard in Australia. It’s really weird tall-poppy dynamic where everyone was like ‘you’ve made it over there, now you must be real’,” he said, adding it’s also a trend he sees when presenting Startmate companies to investors – they want to see how startups go in the US first.
He said a number of people in the startup sector have talked about whether there should be an Australian discount to get investors moving early.
“There’s this lack of belief that this little Aussie company can make it but when you see the early signs that they are, then you want to pile on,” Dowling said.