Diary of an Australian Entrepreneur Raising Capital

February 17, 2010

Steve Sherlock, founder of Oodles.com, one of Australia’s leading online car rental aggregators, has been blogging a multi-part series at Australian Anthill on his quest to raise a multimillion dollar Series A funding round. He rules out nothing, seeking funding in the US, Europe and taking advantage of Australia’s grant system. In fact, this week’s installment focuses on the process of applying for a Commercialisation Australia (CA) grant.

We’re just picking up on the ninth installment of Sherlock’s experience, but the previous posts are all available. Click here to read “Diary of an Entrepreneur Raising Capital” and to get up to speed with Sherlock’s other eight experiences in raising capital to date.

Six Things You Should Know Before Meeting with a US Venture Capitalist

February 7, 2010

It’s great to see 2010 Australian entrepreneur of the year, Khimji Vaghjiani, CEO of Solar-Gem getting some press in Australian Anthill. We worked closely with Solar-Gem and the other state finalists in this year’s G’Day USA Innovation Shoot Out in Silicon Valley. Part of our coaching was to prepare CEOs of these companies on what to expect when they started meeting with American VCs and other investors, who approached them after the Shoot Out. Khimji reveals to Anthill some of our advice in “Six Things You Should Know Before Meeting with a US Venture Capitalist“:

  1. Drive-bys don’t work. In order to raise capital in the US, you have to establish yourself there. VCs like to be close to their investments, and they more often invest in companies that own the IP they are investing in. US VCs often take a board position and expect that board to have the final say on company matters … not take direction from a ‘parent’ company in Australia.
  2. Think global, think BIG. Projecting $10M revenue in Australia is considered a reasonable success metric, but this number will not interest a US VC. In the US, $100M revenue projections are common and 10x returns on investment are expected.
  3. Know your competition. Spend time familiarising yourself with your competition in the US market. If a VC names a competitor that you have not heard of, close your laptop and leave — the meeting is over.
  4. Team. Option 1: You have the best team, proven track-records, no question that your team is the right team to execute the plan. Option 2: You have team gaps, you know it and one of your criteria for selecting your investor will be that you believe they can help you build the team.
  5. Focus, focus, focus. Since Australia is such a small market, a company has to sell broadly across many market sectors in order to be considered successful. In the US, however, this could become a company’s downfall. Large, complex markets (like the US) need focus. Your VC wants to see a laser-sharp market entry strategy that will take the company to the next level (profitability or next investment round) as quickly as possible. Be prepared to give the ‘blue sky’ opportunities, but don’t make this part of your pitch.
  6. Learn from every meeting. There are hundreds of quality VCs in Silicon Valley alone. Every meeting will provide you with invaluable advice and ideas that you can incorporate into your pitch and plan for the next meeting. Ask for feedback, and you’ll be able to improve your pitch with every meeting.

Solar-Gem, a company from New South Wales, has an interesting story. They’re an Australian company seeking US funding to develop business opportunities in India, Africa and the Middle East. (Read more)

Ten Reminders for Australian Entrepreneurs Looking at the US Market

October 22, 2009

by Viki Forrest, CEO ANZA Technology Network

Just read Philip Rogers’ highly informative piece in Australian Anthill about Aussie companies thinking about doing business in the US market.

A couple of quick takeaways apply:

  1. The US remains the largest developed market in the world and a big influence on other global markets. It remains important for any company with global ambitions.
  2. Innovative new models and technology have dramatically changed the cost of entering and developing the US market, you can now do some of the early market development work from Australia
  3. That’s right — you no longer need to hire a US-based sales manager to get your business off the ground.
  4. But — don’t make the mistake that your products or services are fully developed since they were successful in the home market. Changes will always be required to meet US customer needs.
  5. Go back to startup mode — entering the US needs to be seen as comparable to a startup, meaning that founders need to be closely involved. Hiring rainmakers and expecting them to succeed on their own is unlikely to be successful.
  6. Most value added resellers (VARs) or other distributors are good at selling mature products in mature categories. They are not very motivated by, or successful at, marketing innovative products and services that require the ability to create or disrupt markets.
  7. That’s why you’ll need to adopt some new strategies and techniques. The good news is inbound marketing strategies in particular are extremely affordable. Search engine optimization, web-based content (webinars, white papers, etc.) and social media strategies let you start building your brand well before anyone gets on a plane. Content that demonstrates expertise and innovative thinking is the new currency. Inbound marketing will attract early adopters and innovators who are looking for new ideas.
  8. As well, outbound marketing strategies like strategic targeting of prospects based on a defined ideal customer profile is another way to accelerate reach and growth. Outsourced demand generation or inside sales services mean that Australian companies can get access to the same US-based resources used by top US firms without taking on employees.
  9. Where I may disagree with this otherwise excellent advice is on the short visits to the US to make an in-person impact. Great idea during the first 6-12 months of your market entry strategy as you work through the top 8 points above, but after that, to quote Markus Weichselbaum, CEO of TheBroth, a successful ANZA Fast Track company, “You have to be here.”
  10. And, as always, the focus needs to be on your customers. Find your customers, make them happy and the rest will follow.

Now that I’ve paraphrased Philip’s piece to fall in line with what we talk about all the time at ANZA TechNet, please give his piece the full read it deserves. Click here.

Tips for Australian Companies on Raising Private Capital in Australia

June 19, 2009

At a recent ANZA-sponsored seminar here in Silicon Valley, we heard Tristen Langley, of Southern Cross Venture Partners tell a group of visiting Aussie start-ups to go back to Australia and “raise $400,000” and then return to the US ready to do business.

If you’re an Aussie start-up wondering how to raise private capital at home before going global, we’ve come across an Australian Anthill story by Reuben Buchanan, “6 Tips for Raising Private Capital in Australia”. All of these tips will put you in good stead for raising more money later on in the US. (Read more)

Time to Forget about Australia’s Tall Poppy Syndrome

April 15, 2009

Thought I’d post a link to my colleague Mick Liubinskas’ excellent piece in this week’s Anthill Online.  It’s called “Me, ‘Tall Poppy’? Thanks!” and it’s about — you guessed it — the dearth of Australian entrepreneurs based on that cultural mainstay of ours “the Tall Poppy Syndrome”. Why we like to cut down those who stand tall in their success — an Australianism so pervasive it has stopped an untold number of people with good ideas from even trying, lest they fail and get a big “I-told-you-so” from their mates. It’s bred a degree of risk-averseness in Australia, that fortunately, rapdily melts when Australian entrepreneurs immerse themselves in Silicon Valley where short poppies don’t last long.

Have a read of Mick’s opinion on the subject here, then join the Tall Poppy Pact, a group of Aussies determined to stand tall and help their friends and colleagues do the same.

Australian Anthill Launches “Letter from China” Blog

February 11, 2009

Australian Anthill — the magazine and website dedicated specifically to innovation and entrepreneurship — has launched a revised website this week with lots of new features. One in particular that is a must-read for all entrepreneurs is the blog “Letter from China” by Aussie ex-pat entrepreneur Andrew Collins.

Collins runs a business based in China, and he will be regularly blogging about the challenges faced by Westerners in this very different and very lucrative — 1.4 billion consumers — marketplace. It’s a marketplace all entrepreneurs should understand as it continues to mature and play a major role in the global scheme of things.

Read the inaugural entry here.

“Silicon Valley is a Graveyard”

December 18, 2008

I’ve just read early-stage Australian entrepreneur Kevin Garber’s story about his visit to Silicon Valley in Australian Anthill.

For a quick trip to Silicon Valley, this is an insightful observation. For those of us who live it day to day and have done so for years, we see it as simply reflecting the reality of a high risk, high reward culture that Silicon Valley is.  A place where 1 in 10, if you’re lucky, get funded, and “great ideas” without a market will quickly die.

The bottom line is – you’ve got to be here, you’ve got to try those great ideas, yes, every single one of them, because it’s only when you take the risk that you’ll ever reap the reward.