500 attend tech events in Australia and New Zealand

The early stage technology industry in Australia and New Zealand looks strong judging from the more than 500 attendees at the ANZA/Southern Cross Venture Partners "Success in the US" tour of Australia and New Zealand in March.  See more details here.

I was in Australia at the same time for the Australasian Cleantech Forum, so I could not attend the ANZA event. Nonetheless, I can report that my two weeks in Australia confirmed the level of innovation and desire to take on global markets.

I hope to see plenty of Aussie and Kiwi entrepreneurs heading to Silicon Valley soon.

Do Angels support US market entry?

My particls feed picked up an article in iTnews entitled “Angels give wings to Australian start-ups” by Liz Tay.

Before Australian start-ups start flocking to Boulder Colorado to make their fortunes . . . I should provide a little perspective.

The article devotes considerable space to a program in Colorado called TechStars as an example of US angel investment activity. TechStars looks like a great program, organized by entrepreneurs and VC firms in Colorado, which provides up to $15,000 in cash, 3 months on-site mentoring, and an opportunity to pitch to local VC (all this in return for 5% of the company).

However, TechStars is by no means representative of the angel investor scene in the US. Rather it represents a relatively new approach which combines an incubator setting with a small amount of cash. Y Combinator is perhaps the best known example. They got started in 2005. Josh Catone lists nine similar "Seed Fund Incubators". They typically focus on web companies that require relatively little capital to get started.

Are they useful for overseas start-ups? First, bear in mind that these are designed for very early stage companies. Is this the right fit for your stage of development? To get an ideas you can read a post on the YC experience by Matt Maroon.

Practicalities: Do you have a US corporation? Are you authorized to work in US? Can you relocate and support yourself for many months after the program ends?

My second thought is: Why would anyone move from Australia to Boulder Colorado because they want to access Angel or VC tech investment? No offence to Boulder, they have a thriving community, but it would be like moving to Melbourne because you want to meet movie producers. If you want the "Hollywood" of tech investing then come to Silicon Valley.

Third and final thought: Will US Angels invest in overseas companies?  Strictly speaking, the chances are slim. The good news is that you can become a US company.  There are people and organizations here that can help you, regardless of your stage of development. There are even investors interested in helping you make the jump.

And of course, as Michelle Deaker notes in the original article, the government can help you with a little cash . . .

Bottom Line: I will put more information in a future post.

VC thoughts on investing globally

Article entitled VCs Discuss Merits, Challenges of Investing Globally by Jennifer Kho in greentechmedia has thoughts from Bill Green (VantagePoint), Michael Goguen (Sequoia Capital), Jennifer Fondstadt (DFJ) and Scott MacDonald (Emerald Technology Ventures).

Bottom Line: As they say on Wikipedia: "This article looks like a stub."  What was I thinking? Read the article and decide for yourself.

Don't just read blogs, come and visit . . .

I see quite a lot of business plans and presentations from "internet" companies from outside the US (from Europe, Australia, New Zealand and SE Asia in particular). In many of those pitches, these smart entrepreneurs spend of lot of time making the case for internet business models and Web 2.0 technologies in themselves, rather than presenting a promising end-market and differentiating themselves from other solutions.

When I ask them why, they tell me that potential customers and investors at "home" are not familiar with internet based business models, never mind Web 2.0. One company was pitching the establishment of a bricks and mortar business as the primary revenue generator around a fantastic UGC  play. Perhaps a good business model, but the ides would probably not even occur to Silicon Valley-based company (maybe also a good thing).

Their potential customers and investors "don't get it"? Well that applies to 99% of the world anyway; we just don't know if it is them or us. I was able to reassure them that in Silicon Valley they would not have to explain Web 2.0.

However, it also struck me that many of these companies were unaware of competitors and trends in the market that had an immediate bearing on their business. These are internet / SaaS / Web 2.0 companies, and information flows freely around the world in their chosen industries. So why were they missing stuff?

My theory: while we all "receive the news" on news sites, blogs, or RSS, we are often missing the "spirit" of the news, the vibe, or the cultural context unless we are somehow more physically connected. Therefore, we may not be doing such a good job at parsing the information, making sense and seeing the big picture.

Silicon Valley denizens it are often accused of living within a bubble (Silicon Valley) within a bubble (California) within a bubble (the USA). However, all countries, regions, towns, industries and verticals have their own parochial bubbles. We all risk missing vital information about "over there" unless we put our feet in the water.

Bottom Line: You can read about it in blogs and RSS feeds, even visit in Second Life. But there is no substitute for being on the ground, visiting, networking, talking and soaking it in. Your business plan will be the better for it. See you soon.

Thinking Big in the rest of the world

Other parts of the world often envy Israel for their ability to create technology companies and raise venture capital from both US VC and home-grown investors.

However, Daniel Cohen of Gemini Israel Funds asks why, in spite of "great brand recognition, a growing investor base, and high quality entrepreneurs" there are "no examples of great Israeli break out companies." (See VentureBeat).

His answer is applicable not just to Israel.  My experience is similar with companies from Australia, New Zealand, Germany, Singapore and other tech markets.

• Entrepreneurs want to retire with $3-$4m. Which he attributes to previous low lifestyle expectations in Israel. From Australia we often see the life-style entrepreneur who is not keen on cutting back on surfing (waves not the web).
• Impatience of investors (i.e. happy to sell and sell early rather than taking further risk).
• "Think small" mentality (self-constraining ambitions with small targets, small investments, and a tendency to optimize a small pie).
• The lack of $1 billion experience (i.e. team experience).

My view is that all four points are about "thinking big".

Mr. Cohen is optimistic that Israel will produce a Google or Nokia in 5-10 years.  Israeli investors and entrepreneur have certainly had the opportunity to learn and be exposed to thinking big.  Other regions may have some catching up to do.

Bottom Line:  Think big and long. Build a team of founders, employees, advisors and investors that also think big and know what it takes.