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Venture Capital in Australia

Discussion in 'Business & Startup Funding' started by Simon Hampel, 30th Aug, 2016.

  1. Simon Hampel

    Simon Hampel Founder Staff Member

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    Is there much venture capital funding happening in Australia yet?

    The media doesn't seem to cover this as much as they do in the US?

    Maybe I'm just not reading the right sources? Is there someone who blogs or writes about venture capital in Australia?
     
  2. Rolf Latham

    Rolf Latham New Member

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    Australians are notoriously risk averse.

    if it aint bricks and mortar its tough.

    My USA mates are much more tolerant to losing a $.

    ta

    rolf'
     
  3. RPI

    RPI Well-Known Member

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    I have a listed Venture Capital company as a client so get to see some interesting stuff. They have really exited the early startup space in Australia though. The problem they had in Australia (as opposed to their operations in USA and Europe) was that the narrow nature of the startups. Very few developed concepts that worked beyond our shores and in the tech space they need universal appeal or if country specific need to be targeted at a much bigger population than ours.
     
  4. Simon Hampel

    Simon Hampel Founder Staff Member

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    Yeah, that kind of fits with the feedback I've been getting.

    I've already had a few coffee meetings with people who were interested in investing in PropertyChat (I'm not really looking for funding at this point, would prefer to retain control and try and self fund it - was more out of curiosity that I met with them). The key driver behind their interest was in taking the model international - I think that's what would be required for the kind of growth they are looking for.
     
  5. Shawn

    Shawn New Member

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    I don't think you need to take the model international for it to be successful.
    It can definitely be done locally, we have got a lot of property investors and I'd say less than 5% of them are even on this forum.
     
  6. Simon Hampel

    Simon Hampel Founder Staff Member

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    I agree - but it comes down to your definition of "success".

    Most venture capitalists aren't looking to build a million dollar business ... they are looking to build a billion dollar business. Not too many of those in Australia.
     
  7. Teetotal

    Teetotal Member

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    Not enough population in Australia to serve the definition of being successful.
     
  8. Shawn

    Shawn New Member

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    You've got to build a million dollar business before a billion dollar one right?
     
  9. Corey Batt

    Corey Batt New Member

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    VC total capitalisation is actually down in raw figures from '86 in Australia if I remember correctly - talk about a sad state of affairs.

    Australian's are very risk adverse and have access to high leverage, relatively low risk investments (property) which means the flow of capital will continue to move to that sector at the expense of business/VC.
     
  10. Simon Hampel

    Simon Hampel Founder Staff Member

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    I know some economists are very concerned about the amount of capital going into real estate vs business because real estate is seen as unproductive capital which just increases inflation, whereas business generates jobs and helps boost the overall economy.

    I'm not sure that lowering the company tax rates is the answer either - although it is certainly a simple and popular option.

    I think we could have some "special economic zones" where people locating their business activities in certain places (eg regional centres) should get tax incentives. I think this has worked well in some other countries.
     
  11. pinkboy

    pinkboy Member

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    Will that see someone like BHP or WOW setting up head office in a town with a population of 12?

    VC is in limited supply in Australia. The Federal and State governments acknowledge this, and do have tax incentives (dollar matching) for some R&D and some conceptualised innovation, and 100% CGT free for 'Angel Investors' - but that still doesn't even scratch the surface for what is needed in Australia,

    I guess Australians are just too conservative from the Ma n Pa, through to formed governments.

    pinkboy
     
  12. Simon Hampel

    Simon Hampel Founder Staff Member

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    I think it can be done sensibly with certain criteria limiting the obvious rorts - depends on what you're trying to achieve really.
     
  13. Player

    Player Member

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    Aside from the risk averse nature of most Australians, the focus on property as an asset class to build wealth is deeply ingrained on our population and culture historically.

    Not saying it doesn't work and, certainly I am,...................guilty as charged. I haven't been denied anything from property investing.

    So having people look at alternative asset classes even beyond traditional shares is challenging. Add to it the unlisted nature of VC, or private equity or the even more risky angel finance space and the investor pool shrinks drastically. The Government has created ESVCLP to encourage funds to flow in this VC direction with various tax incentives/concessions:

    Early stage venture capital incentives and concessions | Australian Taxation Office

    The lack of talent (not ideas or entrepreneurs) also plays a role in fast tracking the development of the various startup businesses that have validity. Despite the fantastic lifestyle on offer here people do not want to leave the US to relocate. Money is too good over there (even though life here is cheaper than San Francisco and Silicon Valley) and the culture over there is mature. It seems like a chicken or the egg analogy where we can't get the culture unless we have the people and they won't come unless the culture is already in situ.

    I read somewhere a few years back that the entire VC capital allocated by Australian investment firms to Australian startups here was circa 70 million dollars per annum. In the same article it was reported that the amount one person from the US invested in startups per annum was approximately 70 million...........but get this, it was in Australian start ups alone. So one person from the US alone invested just as much in Aussie start ups as the entire VC industry here did. This Aussie VC figure has probably grown from that point, however it is still a very immature space.

    I am increasingly looking at angel funding and private equity type investments to create a portfolio of startups and early stage commercialised businesses to diversify away from property and the traditional stock market approach.

    I only discovered this forum an hour ago, after being re-introduced to Invest Chat this morning. So many chats now @Simon Hampel . What's next in the forum family? Chit Chat? :D
     
    Last edited: 18th Sep, 2016
  14. Simon Hampel

    Simon Hampel Founder Staff Member

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    I think we'll need a meta-forum to discuss the forums ... ChatChat ?

    I have also been running ZooChat for over 12 years now - but that's more of a hobby type site rather than a serious business.

    While I do own some domains suitable for other forums, I don't have any current plans to use them - the Property/Invest/Business trio is what I've been working towards for quite a few years now and I think that covers the key areas I want to focus on.

    Now I just have to make them all work!
     
  15. Player

    Player Member

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