15 Oct 2014
There was serious money in the room looking for a home - heads of managed funds, VCs, heads of investment networks and angel investors looking for opportunities. Although there were fewer investors than last year, the mood was as buoyant, according to Tech 23 organiser Rachel Slattery.
"When you have everything money can buy and life is short, why would you invest in a business run by a pain in the neck?"
“Don’t put barriers in the way of customer acquisition.”
“Is it a local play, a global play or a hybrid? All are interesting.”
“If you believe in your product why not sell it for more?”
“Love the focus on making more profit instead of just reducing costs.”
“How can you shorten the sales cycle?”
“How many customers are there in your market? Not enough.”
“Yes, your customers will find it valuable – so valuable in fact they will soon be doing it themselves if they are not already.”
“Your customers are happy – how do you get them to change to your product?”
And the most asked question: “What is the go to market strategy?”
On the hunt to take the pulse of the scene and maybe snare a great investment were Seek founder Paul Basset, a major shareholder in SquarePeg Capital; the boys from Bill Bartee’s Blackbird Ventures; IT entrepreneur turned investor Michelle Deaker; Starfish Ventures; John Dysonand former Microsoft exec and investor Daniel Petre.
Slattery said while there was a Sydney focus to Tech 23, there were also investors from Melbourne and Western Australia present. “One even flew in from Asia, so that’s a good sign,” she said.
Industry leaders from ANZ, Commonwealth, ABC, REA and Telstraattended, wearing both investor and customer hats.
Slattery said about a third of the 23 start-ups that presented would access funding within the next year, mainly from the group of investors present at Tech 23. Half already had taken in some external funding and were looking for the next round.
While you could hear plenty of eager conversations taking place in the breaks, the conversations may continue for months and it was rare for a deal to be done on the day, Slattery said.
Over breakfast the incoming head of CSIRO, Larry Marshall kicked off proceedings by reminding everyone just how far the start-up scene in Australia had come. He left Australia decades ago and co-founded six start-ups in the laser/optical semiconductor and medical sectors, all of which created exits for investors.
When he left, Marshall mused, entrepreneurs were portrayed as crooks. He said that while Australian beaches are great, and there is huge potential, the biggest challenge is still to develop the start-up eco system.
Marshall also reminded everyone nibbling on their pastries of the huge challenge he faces at the CSIRO, comparing Australia’s national science agency to a start-up.
The CSIRO is currently reeling from the massive shock delivered by the huge withdrawal of government funding. But shocks can act as wake up calls and Marshall thinks he couldn’t have hoped to have changed the culture without it.
“We have to take CSIRO from an inventive culture to an innovative culture,” he said.
Slattery then got the pitches started, reminding us that the process of whittling down 140 entries to 23 and then putting them in buckets is always a great indication of what’s hot in the tech start-up sector.
This year enterprise software was hot, with four start-ups pitching their wares in the category called ‘Solutions for Business’. RedEye is a way for engineers to store and access their drawings in the cloud and Intelligent Fleet Logistics is a clever vehicle routing and scheduling products based on maximising profits not just reducing costs.
A session on harnessing data included a focus on analysing and presenting data (data visualisation). The consumer and ecommerce session threw up a hardware app that can transform your phone into a motion based musical instrument.
The Internet of Things produced student Allen Liao and his new company Tzukuri, which is focused on beautiful wearable technology at an affordable price. His first product, fashionable, unlosable sunglasses, got a lot of interest.
So how did the start-ups go? Here are my highlights, lowlights and observations of Tech 23.
The presentations were excellent
In the last few years, giant inroads have been made in teaching start-up entrepreneurs how to pitch.
Somehow, entrepreneurs have understood that part of the deal for the investor is they want to go into business with people they like, roll up their sleeves and contribute and even better, have some fun.
After all, when you have everything money can buy and life is short, why would you invest in a business run by a pain in the neck?
Likewise, no one wants to follow up a conversation with a self-conscious geek who makes you sign a non-disclosure agreement before they divulge their idea.
The presentations were very open and entertaining and for the most part the entrepreneurs came across as likeable, eager for assistance and possibly easy to work with.
The few awkward geeks who presented made a joke of it and assured the audience they were very aware of their failings.
One thing: what is it with those awful power points presentations? While there was some great video, the power points presentations overall were drab and boring.
Missing in action
One striking omission from most of the presentations was the lack of discussion about money. When an industry leader did raise the topic while quizzing the start-up, it was often done with an air of apology, as if it was rude to ask.
If it were up to me, I would make every company talk about revenue and capital raised so far. Why should we talk money? Well, if a company has been around for 10 years and they only have $50,000 revenue and they have already raised say $500,000, it may be a good indication they have missed the boat.
Likewise, if a company is two years old, the entrepreneur has boot strapped the business, revenue is at $10 million with contracts in the bank, that's a big green flag.
Yet both companies without talking figures could sound compellingly good.
Every time one of the start-ups showed an org chart and spoke passionately about the experience of their teams, I got tremendously excited.
The entrepreneurs understood that no matter how good the idea, a large part of the equation were the people who were going to execute. After all, we all have a few great ideas in the shower every morning.
So it was great to see the entrepreneurs thinking in great depth about the skill set and experience of their management teams they were assembling. One start up, the bar tab app Clipp, had even been smart enough to bring in an experienced chief executive, Todd Forest.
Better still, some of the start-ups had boards with some well-known names to help them access capital, people, networks, ideas and confidence.
Of course, now equity share plans are viable again and start up entrepreneurs can offer the likes of Daniel Petre a small amount of equity to sit on their board in lieu of cash, we should expect them all to have boards at next year's Tech 23.
I loved this too: there was no outlandish claims which you often hear from aspiring start-ups along the lines of “My business is the next Google” and “I have no competitors”. Yeah, right.
Instead there was a very honest assessment from many of the start-ups about who the competitors are. In fact one chap was so honest about how much competition his company faced, I felt sorry for him.
Fortunately he planned to sell the business to a competitor as soon as possible and as such knew the competitor landscape in great depth.
Social media lagging
While there was lots of talk about sales channels and sales teams, few of the start-ups understood how to take advantage of the enormous growth in social media and how that is transforming the sales and marketing functions – in some cases merging them.
In fact there was a lack of awareness generally about how social media is transforming the business landscape.
This was a missed opportunity for several reasons: first there is an opportunity to reach new customers at a fraction of the price and second as business starts to come to terms with the way social media is changing the way their customers research, engage and buy, it will create demand and new customers.
For example, Peepable is a video search platform for discovering specific clips within video.
Customers were assumed to be the traditional publishers. But as corporates become brand publishers and distribute content through social media, might some variation of this be good for them? And wouldn’t that widen the potential pool of customers especially as corporates these days have more money than media publishers?
Female panel nails ‘compelling need’
There are usually only a few female entrepreneurs pitching at these Dragon’s Den-like events. But this year, not only were a third of the people attending female, but there was an entire panel of female entrepreneurs. That’s a first, Slattery said.
But of even greater interest was they not only had strong business value propositions but could clearly state the clear compelling need.
The difference? A great business proposition means you have a great idea and it makes sense that customers should be interested in the product or service. Compelling need? It is clear that a large customer base needs to buy your product and will be a lot better off with it.
Investor Laura McKenzie, who runs the female-focused angel investor network Scale Investors noted that while many of the start-ups had a great value proposition and some could demonstrate compelling need, the female panel nailed it with their problem, solution approach.
For example, Clevertar noted the huge problem, shared by many of the investors in the audience (judging from the nodding) of looking after aging parents.
Clevertar has created a an avatar called Anna, an intelligent, talking character who acts as a virtual assistant for older people from telling someone to take their medicine to helping coordinate their care with a multitude of care givers.
Another start-up, Sounds Scouts, has created a game with global application, to detect hearing loss in school aged children.
Some of the start-up entrepreneurs rushed off after their panel, back to their business. “Hang around,” I wanted to yell at their retreating backs. This is far more meaningful work than anything you are doing back at the office.
Besides, the industry leaders are the smartest people in the business. Their questions or observations were hugely revealing.
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
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