Five Aussie businesses take us behind the scenes during the early set-up phase of their tech companies.
- Introduction
- SecureWrap
- Webit
- Cleartext
- QMSoftware
- SpamMatters
Smartyhost managing director Anoosh Manzoori says the current climate is alot better than it was in the late 1990s. Although there is less money around, he says the technology sector can now draw upon various business and revenue models that are known to work. "It's gone back to the basic business principles."
There is little doubt that funding is crucial for people trying to create a business. Several of the executives we interviewed spoke highly of the AusIndustry commercialising emerging technologies (COMET) grant (AusIndustry provides a variety of grants and venture capital to around 10,000 businesses every year).
The COMET grant helped Sydney company SpamMatters, which started in 2003 offering antispam litigation support server and client software, get off its feet in its very early stages. CEO David Jones says his company is now applying for a Commercial Ready grant (the successor to R&D Start and certain other programs).
But Jones says that while the Commercial Ready is suitable for his company now, it is a bit more challenging to set up than the COMET grant, which is designed for early-stage companies. "It's not something you can do in 40 man hours . . . we spent up to 300 man hours on the application," he says.
Jones' comments highlights one of the biggest hurdles start ups face when gaining funding -- the efforts required to secure funding can often be greater than the return. QMSoftware's Malone agrees that government funding can be too complicated to obtain. He says that and when your focus is on writing software you don't always have the capacity to deal with the application process for funding that sits before you -- which means you need a specialist to do it. But a professional advisor can take too big a cut of the grant, he says.
With so many funding options on the platter, simply researching the various funding programs can be a distraction from getting a product out the door.
"It's a bit of a minefield," Banes says, adding that for startups, paying a consultant AU$20,000 to AU$30,000 can be out of the question. Instead, he would like to see a Centrelink-style approach: a one-stop shop for startups that could direct entrepreneurs to the most appropriate public and private bodies for their situation, whether that involves grants, incubators, or advice -- this could be most beneficial when tied into the assistance offered by grants such as the COMET one, which helps with the initial legal and financial work.
Banes also speaks highly of events such as the VC Connect ones organised by Slattery IT which bring together fund managers, venture capitalists, and startups and Malone points any new startups to their government bodies for events and help. The New South Wales government, for example, organises events such as the Australian Technology Showcase. These offer great opportunities for networking -- a great avenue for startups to find partnership leads. QMSoftware has benefited greatly from its partnership with Intersystems, for example. "It is the best partner in software you will come across," according to Malone.
Other sources of assistance include small business advisory centres. Webit CEO Felix La Spina says these offer much more help than the likes of banks beyond the credit card or real estate mortgage. He says while banks may offer a few good angles for business, startups must be cautious, because they will expect a bigger slice of the company for the cash they put in.
There are a "minefield" of options out there for startups in need of assistance, and obtaining funding is just one, albeit difficult, part. Following are five key startup examples from local companies that had the guts to start, and the success required to keep going.
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