Inside the complex funding environment
Access to funding has long been the missing link in the development of startups in Australia. The Australian startup industry has grown significantly over the past few years as capital has become more available. Alternative funding options, including crowdfunding, give startups more options than ever before. While this presents significant opportunities for startups, the complex funding environment can be difficult to navigate.
Key takeaways
Australia's startup ecosystem is making huge strides
Australia has a strong technology sector and quality universities but the challenge has been providing access to finance (in an appropriate manner) to startups.
There has been a huge increase in access to finance in recent years, particularly as superfunds increasingly focus their attention on startups and as international investors increasingly discover Australian companies.
The rise of crowd funding complements traditional funding options
There are a number of funding options for startups: corporate venture capital, venture capital funds, angel investors, and now, crowd funding.
Crowd funding also comes in many forms. OurCrowd takes an approach similar to venture capital and gets actively involved in the companies that it funds to guide them as they grow.
Crowd funding does not replace traditional funding options—it complements the suite of funding available to budding startups.
Exits are important, but investors and startups should look at exits in different ways
Investors need to think about exits all the time. It is important to get out at the right time and in the right way. Success as an investor often depends on a very few huge successes, so it is important not to get out as soon as the first good offer appears.
For startups, it is important to focus on building a business, not on simply building to an exit. While it is important to stay in contact with bankers, analysts and potential corporate players, this should not overshadow the importance of getting the fundamentals right.
Startups should be careful not to limit their options for an exit too early. For example: bringing corporate partners into a company with a right of first refusal at an early stage can limit the value of the startups later on. It is important to have reliable advisers at an early stage, to avoid making these kind of mistakes that look good in the short term.
Investing in startups is different to investing in public stocks
Investors should add value to the startups they invest in. This includes helping startups raise additional finance and getting involved in further investment rounds. Investors should also help startups develop their businesses by putting them in touch with potential partners, funders and hirers.
This makes startups different to traditional investments. Unlike established public companies, startups often need and expect assistance from their investors.
The future for major corporations depends on innovation
This means they are looking desperately for startups who are innovating in their area. Corporations are aggressively chasing innovation. There are great opportunities for startups that are able to meet this corporate demand.
OurCrowd is a leading equity crowdfunding platform that gives individual investors access to the startup sector. Rather than operating only as an investment platform, OurCrowd maintains a highly curated investment portfolio and actively works to develop the companies in which it invests. OurCrowd has over 25,000 accredited investors globally (including in Australia) and more than $1 billion under management.