Friday, December 14, 2007
BSIS 2007 XMAS Bash
Bronte - Bondi - Watsons Bay
Great Company, Good Food , Top Wine and all that jazz
Great Company, Good Food , Top Wine and all that jazz
Wednesday, December 12, 2007
Wednesday, November 21, 2007
Sunday, November 18, 2007
Kanwal Rekhi - the Sage of Silicon Valley
Kanwal Rekhi has been called 'the dominant investor & a sage of Silicon Valley' by Forbes magazine and is a renowned leader and veteran of the IT industry. In his phenomenal rags to riches life, Mr.Rekhi invented and built hi-tech products and solutions since the mid 80's, built & sold companies as a serial entrepreneur, actively investing as VC/Investor & advising many Corporations and Presidents.
He holds a Ph.D in Business & Engineering from Michigan Tech University, was the CTO and Director on the Board of Novell (since 1989), then founded, invested and advised several technology companies in the valley receiving numerous awards. A humble man, he continues to mentor entrepreneurs through TiE worldwide (www.tie.org).
Over the last 20 years in the Silicon Valley, he has built solid experiences and wisdom to share, on what works and what does not.
BSI and TIE hosted Kanwal at the Grace hotel on 12 November 2007 where he enthralled 100 + BSI and TIE Members with his thoughts of what is hot in the Valley.
Kanwal’s direct, forthright manner, opinions and advice provided us with the most up to date information and clarity on “what’s hot”, how to build & extend business beyond Australia and create super wealth!
Tuesday, November 06, 2007
Release of open social
Google Press Center, November 1, 2007:
Google, Inc. today announced the release of OpenSocial -- a set of common APIs for building social applications across the web -- for developers of social applications and for websites that want to add social features. OpenSocial will unleash more powerful and pervasive social capabilities for the web, empowering developers to build far-reaching applications that users can enjoy regardless of the websites, web applications, or social networks they use. The release of OpenSocial marks the first time that multiple social networks have been made accessible under a common API to make development and distribution easier and more efficient for developers.
(http://www.google.com/intl/en/press/pressrel/opensocial.html)
Google, Inc. today announced the release of OpenSocial -- a set of common APIs for building social applications across the web -- for developers of social applications and for websites that want to add social features. OpenSocial will unleash more powerful and pervasive social capabilities for the web, empowering developers to build far-reaching applications that users can enjoy regardless of the websites, web applications, or social networks they use. The release of OpenSocial marks the first time that multiple social networks have been made accessible under a common API to make development and distribution easier and more efficient for developers.
(http://www.google.com/intl/en/press/pressrel/opensocial.html)
Friday, October 12, 2007
SILICON Savvy
BRW’s Tony Blackie wrote an article on BSI’s and AlwaysOn event in Silicon Valley. Article in Emerging Companies on 11 October 2007
Excerpts of Article:-
“Companies with Innovative Technology need to pitch their ideas professionally at the source of most venture capital… the United States.”
Christine Tutone fom Aditlast said that the event has become one of the main events for aspiring and global entrepreneurs who want to showcase their inventions, products and services to an audience of more than a thousand technology , media and advertising chief executives, media buyers, venture capital and private equity investors, and the technology media.
Dean Mcevoy, founder of Booking Angel, which provides software to give instant confirmation of online bookings and reservations, said that the event was a vital part in the evolution of Booking Angel, and that all Web 2.0 companies should think Global from the start. Knowing how to get in touch with venture capital companies and investors is the key. He admits he tried to do this on his own a few years earlier… but found it difficult without the network that BSI was able to provide.
“If you have a good idea and can’t get traction in Australia, go to the USA and there is a good chance you will get support.” Says Mcevoy
Glynx Founder, Malcolm Allen, has developed a peer to peer social network site. He said tha as the product has global applications, it was important to access global corporate markets. The tour paid dividends in that he was able to present to several hundred Silicon Valley investors and business people at a lunch organised by BSI.
Allen said that if you think you have a world beating software idea then you have to go where the world-beating software ideas are – Silicon Valley.
The US trip was organised by Business Strategies International, an early stage capital raising, venture capital and business incubator company. BSI has set up shop in San Francisco to get Australian Innovation closer to a source of capital and opportunity. The aim is to get Australian Technologies in front of the right people.
Over the years, the Always on Events have had a star studded speaker list including Google Founders Sergey Brin and Larry Page, Skype founder Niklas Zennstrom Marc Benioff of Salesforce.com, Verisign’s Stratton Sclavos and Jonathan Schwartz of Sun Microsystems.
BSI is planning to take 10 later stage Innovative Companies to the ALwaysON Summit in the First Week of December. Companies Interested in attending should contact Ivan Kaye on ikaye@bsi.com.au or David Brown on dbrown@bsi.com.au
for more information go to http://www.bsi.com.au/exports/article.asp?id=145
Excerpts of Article:-
“Companies with Innovative Technology need to pitch their ideas professionally at the source of most venture capital… the United States.”
Christine Tutone fom Aditlast said that the event has become one of the main events for aspiring and global entrepreneurs who want to showcase their inventions, products and services to an audience of more than a thousand technology , media and advertising chief executives, media buyers, venture capital and private equity investors, and the technology media.
Dean Mcevoy, founder of Booking Angel, which provides software to give instant confirmation of online bookings and reservations, said that the event was a vital part in the evolution of Booking Angel, and that all Web 2.0 companies should think Global from the start. Knowing how to get in touch with venture capital companies and investors is the key. He admits he tried to do this on his own a few years earlier… but found it difficult without the network that BSI was able to provide.
“If you have a good idea and can’t get traction in Australia, go to the USA and there is a good chance you will get support.” Says Mcevoy
Glynx Founder, Malcolm Allen, has developed a peer to peer social network site. He said tha as the product has global applications, it was important to access global corporate markets. The tour paid dividends in that he was able to present to several hundred Silicon Valley investors and business people at a lunch organised by BSI.
Allen said that if you think you have a world beating software idea then you have to go where the world-beating software ideas are – Silicon Valley.
The US trip was organised by Business Strategies International, an early stage capital raising, venture capital and business incubator company. BSI has set up shop in San Francisco to get Australian Innovation closer to a source of capital and opportunity. The aim is to get Australian Technologies in front of the right people.
Over the years, the Always on Events have had a star studded speaker list including Google Founders Sergey Brin and Larry Page, Skype founder Niklas Zennstrom Marc Benioff of Salesforce.com, Verisign’s Stratton Sclavos and Jonathan Schwartz of Sun Microsystems.
BSI is planning to take 10 later stage Innovative Companies to the ALwaysON Summit in the First Week of December. Companies Interested in attending should contact Ivan Kaye on ikaye@bsi.com.au or David Brown on dbrown@bsi.com.au
for more information go to http://www.bsi.com.au/exports/article.asp?id=145
Wednesday, September 26, 2007
Saturday, September 08, 2007
Sunday, August 05, 2007
BFO's from ALWAYSON 07
BSI was proud to lead a delegation of 8 Innovative Companies to ALWAYSON 2007 forum.
For details of Australian Companies Presenting see BSI USA Investor Forum - Summer Summit Australian Collection
Some BFO's that I took away from the conference:-
The Internet is the greatest single innovation in human history!!
Planes, Trains and Automobiles - the extension of the feet
Weapons, Tools, Appliances - the extension of the hand
Cameras and Videos - the extention of the Eyes
Film and Video - the extension of the Imagination
and The Internet - The extention of the human Mind
ALWAYSON 100 Winners have a good chance of hitting that Home Run!
photobucket
Sold for 250m to fix interactive – 39million registered users $6 per user!!
Last.fm – 15m users – Acquired by CBS $280m $30 per user
Need to align emstream with them…
Feedburner - $100m sold to google – fits –
BLINKZ – IPOd shares inc 45% on listing –video search engine $355m
TELLME Networks - $833m to microsoft …integration of voice services to their productivity software..100m people will be able to do quickcall from their apps
Speech and voice recognition
Directory assistance calls. Platform handles ½ directory assisted calls
(Dominos to get a Pizza or American Airlines etc
GrandCentral Connunications – purchased by Google
1 # that rings all their phones
Helps expand googles business of “collaborative exchange between users”
POSTINI spamfilter to google - $625m (where are you ISHerriff?)
Our Australian Delegation presented at the ALWAYSON CEO Pitches, where 50 Companies have been chosen to Pitch to 900 Delegates and 1000's of Bloggers around the world. Two of our Companies have been chosen to be a TOP 100 Award Winner - Christine Tutone's ADITLAST (Melbourne) http://www.aditlast.com.au/ and Dean Mcevoy's BOOKING ANGEL (Sydney) http://www.bookingangel.com/ . . Lucielle Outhred's DIGISLIDE (miniture projector that will be OEM'd into moile phones, PDAs and Notebooks has caused a stir at the Conference, having previously one a number of awards over the past 12 months. http://www.digislide.com.au/ One of the Most Disruptive Technologies I have come across is Malcolm Allen's and Greg's FREEDOMTEL. http://www.glynx.com/index.php
Friday, July 20, 2007
WEB 2.0 and VC
I was part of a panel at the Churchill Club on 17th July
People on the Panel
Ben Barren - a blogger and futurist/satirist extraordinaire - this guy should be on the stage.... he writes and says what people would wish they had written and said!! Setting the stage - you have to read bens blog!!
Rob Antulov of 3eep web 2.0 start up entrepeneur - ex head of strategy at fairfax multimedia
Mike Cannon - Brookes Founder of Atlassian - young entrepeneur of the year - sharp mind - and selling his enterprise wikki solution to a gazillion countries!!
Campbell Sallabank - CEO of Linkme - web2.0 community for people in the work place, who post their resumes, that can be accessed by recruiting firms and headhunters.... a powerful model that can only succeed!! Sensis have backed them
and Me!!
Attached are my notes and thoughts on Web2.0 and VC
WEB 2.0 is Hot
Web 2.0 – the facilitation of user created content – network and collaboration softweare and the creation of commnities seems to be the next wave of innovations coming through the innovation system.
WEB 2.0 will be major competition for existing advertising/tv and way people spend there time and hours in the day.
People will pay for time saving and specialized information – even small amounts.
Micro-payments will be a key to the growth of WEB 2.0 Companies.
In 2006 VCs invested $844m into 167 web 2.0 deals – 2X 2005 – in fact deals have been doubling every year. (EY Dow Jones Report)
In June 2007 $635m has been funded in 31 Deals (www.venturecapitalupdate.com )
VCs are interested in WEB2.0…. the issue is that do Web 2.0 Companies need VCs?
WEB 2.0 companies are a lot different to WEB1.0 companies in that they have
• Low start up costs
• Little infrastructure (can be virtual)
• Speed to market can be done cheaply through effective viral marketing
The average precap valuation for an investment in a web 2.0 was 6.5m (last year 3.3m)
Technologies and Ideas are not the constraints to Succeed today…. The winners in my view will be the
• Brand Builders
• Effective teams and Managers who will be able to build communities, network and run effective businesses
Youtube, My Space and Facebook – there were 100s of similar Technologies and ideas…. it was the ability of the management team to build the brand and get the company to market –
If the companies get this right – I believe they will cash out for multiples!!
VCs who have the ability to assist companies with identifying the brand managers and providing the transitional managers to these WEB 2.0 companies , will be worth their weight in gold.
WEB2.0 Exit Strategies
Exit 1
There is an opportunity to build a low cost web 2.0 company with the exit strategy in mind to sell to the Search Engines and Whales such as Google, EBAy, MSN and YAHOO. They are constantly looking for communities and are actively looking to acquire WEB 2.0 Companies with strong communities.
This strategy does not need a whole lot of money, and would probably suit an Angel/Incubator or Small Fund.
Example – small company with $50k investment – built a web app technology, built a 100k community in 3 months and google bought it and the team for an undisclosed amount.
My view is that is where the majority of successful exits will occur for Australian Web 2.0 Companies in this way.
Exit 2
Those companies who will scale, whose objective is not to sell to the whales and become one, will need significant investment. This is where I believe the VC s will play.
Examples of some returns are
• My Space – Murdoch 500m – now many $b
• Bebo - Benchmark recently invested 15m
• Facebook – VC $40m – will get great returns
• Zillow – Real Estate
• Jobster -
• EBAY
• Skype
• Kazaa
• Joost
• 2nd Life
THE RISK
Is that VCs have huge $s that they need to put to work – will throw money at these companies that do not need the $s and WEB 2.0 will turn into BUBBLE 2.0.
Based on the low cap valuations ($6.5m) we seem to be a long way off bubble territory.
Providing an Entrepeneur with too much money spoils them. WEB 2.0 companies seem to have learned from the previous bubble…. Companies are tending to commercialise quickly and cheaply.
THE VC ISSUE
VCs with large $s to invest have a major issue
If they have $200m to invest… why bother investing 500k into a venture that will give you a 10 times return – it will only affect the portfolio by 2.5%.
Rather invest $50m in a company that can give you a 3 X return.
The question is – how many WEB 2.0 companies will be able to effectively use this quantum of funds effectively in the business?
What is the Ideal Size Fund for A Web 2.0 Fund – Will there be Specifically formed WEB 2.0 Funds?
Is it better to have a $20m – $40m fund to invest in WEB 2.0 companies which will enable these funds to invest relatively small amounts in WEB 2.0 opportuities with a view to exit to G,Y,MSN, EBAY?
Or Have a $200m fund with view to spend 50m – 100m in a company that will scale….
In Australia my view is that there should be a $40m fund taking advantage of this space.
WEB 2.0 will create a new kind of VC – with a focus on Brandbuilding and Recruiting effective managers for their portfolio companies. My view is that before long there will be funds specifically focused on acquiring WEB 2.0 companies
Having said this – the fundamentals of investing by a VC are still the same…
• Is the management team passionate and effective – can they fulfil their plans
• Whats the USP – how are they going to reach customers
• How is the company going to scale the business and make money
• Show me the model that can scale cheaply, be profitable and throw off lots of cash!
What does this mean for Australian Companies?
This technology and Internet has effectively eliminated the Australian Constraint of “the “Tyranny of Distance” – In fact , a USA company having a partner in another timezone can be seen as a Positive.
Australians are a tech savvy group of people, who are innovative , have amazing ideas and are inherent entrepeneurs – ready to give it a go!!
ADI and Information City are 2 Incubators who we are aligned with and are actively focusing on WEB 2.0 companies – they are in our space. We only invest small amounts, and are comfortable on getting returns on an investment basis verses a portfolio basis.
WEB 2.0 Fits the incubator/small fund model with a view to Exit 1.
In fact in 2 weeks time ALWAYS ON – is having their annual Silicon Valley Conference with 900 people… and there will be at least 10 Australian Companies – many in the WEB 2.0 space presenting – with 2 having been chosen for the Always On top 100 Innovations:-
ADITLAST And BOOKING ANGEL
Other Web 2.0 Australian Companies that come to mind include
• Swapace – swapping community
• Red Bubble - art community
• FunkySexyCool -
• Martian Logic – B2B recruitment Software
• Webit – Webinars and Eventmanagement Online
• Globaltainment - Online Nightclub with Avatars in China
• Oztion; Seek; Real estate.com; RSVP; iSHeriff; DVD Trivia; Bcode; Global IP Video; Emailcash
and I am sure there are hundreds of others
WEB 2.0 is HOT - Money is flowing into this space in a big way, and it seems that the money tree is starting to sprout!!
The reality is that there will be a few winners, some stayers and many companies that will either be acquired or fall by the wayside.
It is early days for WEB 2.0 and it usually takes at least 10 years to become an overnight success!!
People on the Panel
Ben Barren - a blogger and futurist/satirist extraordinaire - this guy should be on the stage.... he writes and says what people would wish they had written and said!! Setting the stage - you have to read bens blog!!
Rob Antulov of 3eep web 2.0 start up entrepeneur - ex head of strategy at fairfax multimedia
Mike Cannon - Brookes Founder of Atlassian - young entrepeneur of the year - sharp mind - and selling his enterprise wikki solution to a gazillion countries!!
Campbell Sallabank - CEO of Linkme - web2.0 community for people in the work place, who post their resumes, that can be accessed by recruiting firms and headhunters.... a powerful model that can only succeed!! Sensis have backed them
and Me!!
Attached are my notes and thoughts on Web2.0 and VC
WEB 2.0 is Hot
Web 2.0 – the facilitation of user created content – network and collaboration softweare and the creation of commnities seems to be the next wave of innovations coming through the innovation system.
WEB 2.0 will be major competition for existing advertising/tv and way people spend there time and hours in the day.
People will pay for time saving and specialized information – even small amounts.
Micro-payments will be a key to the growth of WEB 2.0 Companies.
In 2006 VCs invested $844m into 167 web 2.0 deals – 2X 2005 – in fact deals have been doubling every year. (EY Dow Jones Report)
In June 2007 $635m has been funded in 31 Deals (www.venturecapitalupdate.com )
VCs are interested in WEB2.0…. the issue is that do Web 2.0 Companies need VCs?
WEB 2.0 companies are a lot different to WEB1.0 companies in that they have
• Low start up costs
• Little infrastructure (can be virtual)
• Speed to market can be done cheaply through effective viral marketing
The average precap valuation for an investment in a web 2.0 was 6.5m (last year 3.3m)
Technologies and Ideas are not the constraints to Succeed today…. The winners in my view will be the
• Brand Builders
• Effective teams and Managers who will be able to build communities, network and run effective businesses
Youtube, My Space and Facebook – there were 100s of similar Technologies and ideas…. it was the ability of the management team to build the brand and get the company to market –
If the companies get this right – I believe they will cash out for multiples!!
VCs who have the ability to assist companies with identifying the brand managers and providing the transitional managers to these WEB 2.0 companies , will be worth their weight in gold.
WEB2.0 Exit Strategies
Exit 1
There is an opportunity to build a low cost web 2.0 company with the exit strategy in mind to sell to the Search Engines and Whales such as Google, EBAy, MSN and YAHOO. They are constantly looking for communities and are actively looking to acquire WEB 2.0 Companies with strong communities.
This strategy does not need a whole lot of money, and would probably suit an Angel/Incubator or Small Fund.
Example – small company with $50k investment – built a web app technology, built a 100k community in 3 months and google bought it and the team for an undisclosed amount.
My view is that is where the majority of successful exits will occur for Australian Web 2.0 Companies in this way.
Exit 2
Those companies who will scale, whose objective is not to sell to the whales and become one, will need significant investment. This is where I believe the VC s will play.
Examples of some returns are
• My Space – Murdoch 500m – now many $b
• Bebo - Benchmark recently invested 15m
• Facebook – VC $40m – will get great returns
• Zillow – Real Estate
• Jobster -
• EBAY
• Skype
• Kazaa
• Joost
• 2nd Life
THE RISK
Is that VCs have huge $s that they need to put to work – will throw money at these companies that do not need the $s and WEB 2.0 will turn into BUBBLE 2.0.
Based on the low cap valuations ($6.5m) we seem to be a long way off bubble territory.
Providing an Entrepeneur with too much money spoils them. WEB 2.0 companies seem to have learned from the previous bubble…. Companies are tending to commercialise quickly and cheaply.
THE VC ISSUE
VCs with large $s to invest have a major issue
If they have $200m to invest… why bother investing 500k into a venture that will give you a 10 times return – it will only affect the portfolio by 2.5%.
Rather invest $50m in a company that can give you a 3 X return.
The question is – how many WEB 2.0 companies will be able to effectively use this quantum of funds effectively in the business?
What is the Ideal Size Fund for A Web 2.0 Fund – Will there be Specifically formed WEB 2.0 Funds?
Is it better to have a $20m – $40m fund to invest in WEB 2.0 companies which will enable these funds to invest relatively small amounts in WEB 2.0 opportuities with a view to exit to G,Y,MSN, EBAY?
Or Have a $200m fund with view to spend 50m – 100m in a company that will scale….
In Australia my view is that there should be a $40m fund taking advantage of this space.
WEB 2.0 will create a new kind of VC – with a focus on Brandbuilding and Recruiting effective managers for their portfolio companies. My view is that before long there will be funds specifically focused on acquiring WEB 2.0 companies
Having said this – the fundamentals of investing by a VC are still the same…
• Is the management team passionate and effective – can they fulfil their plans
• Whats the USP – how are they going to reach customers
• How is the company going to scale the business and make money
• Show me the model that can scale cheaply, be profitable and throw off lots of cash!
What does this mean for Australian Companies?
This technology and Internet has effectively eliminated the Australian Constraint of “the “Tyranny of Distance” – In fact , a USA company having a partner in another timezone can be seen as a Positive.
Australians are a tech savvy group of people, who are innovative , have amazing ideas and are inherent entrepeneurs – ready to give it a go!!
ADI and Information City are 2 Incubators who we are aligned with and are actively focusing on WEB 2.0 companies – they are in our space. We only invest small amounts, and are comfortable on getting returns on an investment basis verses a portfolio basis.
WEB 2.0 Fits the incubator/small fund model with a view to Exit 1.
In fact in 2 weeks time ALWAYS ON – is having their annual Silicon Valley Conference with 900 people… and there will be at least 10 Australian Companies – many in the WEB 2.0 space presenting – with 2 having been chosen for the Always On top 100 Innovations:-
ADITLAST And BOOKING ANGEL
Other Web 2.0 Australian Companies that come to mind include
• Swapace – swapping community
• Red Bubble - art community
• FunkySexyCool -
• Martian Logic – B2B recruitment Software
• Webit – Webinars and Eventmanagement Online
• Globaltainment - Online Nightclub with Avatars in China
• Oztion; Seek; Real estate.com; RSVP; iSHeriff; DVD Trivia; Bcode; Global IP Video; Emailcash
and I am sure there are hundreds of others
WEB 2.0 is HOT - Money is flowing into this space in a big way, and it seems that the money tree is starting to sprout!!
The reality is that there will be a few winners, some stayers and many companies that will either be acquired or fall by the wayside.
It is early days for WEB 2.0 and it usually takes at least 10 years to become an overnight success!!
Fast 100 talk to Young Entrepeneurs about BSI's Journey
THE FIRST 10 YEARS
BSI Started when I left the accounting profession and said to myself that I would never fill another timesheet!
Everything that I did was based on some form of success fee based on a successful outcome for clients. Accessing Government grants was a major focus.
The grants that I focused on were was
• the EMDG – where for every $ spent on marketing and promoting your product overseas, the company gets 50c in the $ back up to $150k per annum.
• Import Credits in the Textile Industry – also export related
• R&D Tax Concessions and Grants – Incentives given to companies who innovate.
These companies had a huge need for business planning, capital, management advice and management accounting services.
2001 -
Enter an old school friend of mine, Alan Milwidsky, who was at the time a partner in a BIG 5 company, specializing in Growth Strategies – looking for a change…. I said Al… come spend a week in our business, have a look at our deal flow, join me in the business and you will make a lot more money and have a lot more fun… I was ½ right…. We have a lot more fun!!
We developed the BSI business plan – the Vision being “To Help Companies Grow” and “ To be a “one stop shop for the entrepreneur”
Providing Grants, Growth Strategies, International Gateways, Capital Raising.
We believed that in order for us to leverage our skill base, we would take equity stakes in Innovative Companies and back Motivated People, and over the years help there companies grow with the objective of getting a return on our investment.
We worked out the money that we needed to grow the business, identified a number of strategic investors and pitched our plan to them.
We were fortunate to raise the money that we were looking for from these parties, together with some of our own money.
With the money raised, we acquired
• A Bizcap team Specialising in Early Stage Capital Raising
• The leading R&D Tax Concession Firm, being run by an old friend of mine,
• a Recruitment Business (which acquired a few more recruiting businesses)
• a Training Business ((which acquired a few more training businesses).
• As well as making a number of Investments in Innovative Companies.
Our model was to set up different Companies with a common brand and Philosophy, whereby each Head would be a stakeholder, and a group policy of X referring Clients, people and knowledge with a common culture.
THE BSI INVESTOR FORUM
It was 2001, and the dot com crash happened…. And there was no environment for the SME innovator looking to raise between 200k and $2m….
Alan M developed the
“BSI Investor Forum” – where every 3 months we showcase 8 innovative companies to 200 HNI and Funds in Sydney, Melb and Brisbane.
Over the past 4 years…. We have had 15 forums, showcased 120 companies, of which +40m have been raised for more than 60 of them.
This year we have set up a USA office as part of our International Gateway Strategy, and are having our first forum in Silicon Valley at the end of July, where we will be showcasing 10 Innovative Australian Companies at “ALWAYS ON” – the key Silicon Valley Conference – where 900 people are expected.
Our Investment Fund
In 2003, an amazing opportunity presented itself…..
We had the opportunity to acquire a small BITS fund, sponsored by the Federal Government, from a group looking to get out of the early stage marketplace.
This Fund was a dream come true for us…. It gave us Capital to co-invest with our HNI and Funds, and we would not have to use our working capital to invest in these Innovative Companies.
We have subsequently merged with another fund, and together have made in excess of 30 Investments in what we believe that some will be successful world beating companies.
Since 2001 – we have grown from a turnover of 1m – 15m ….
Did I do this…. I have pretty much done nothing besides picking guys who are brighter than I am, passionate at what they do, with the right incentives to help them achieve their goals and objectives.
Where to from here?
We are currently working on a number of projects that will hopefully take us from $15m – 150m over the next 10 years.
Lessons Learned:-
• Have a Vision – “help companies grow” and “ be a one stop shop for the entrepreneur
• Be passionate – if you aint passionate get a job
• Get the brightest and best people, and make sure you look after them like gold. Your people are your assets
• Be able to sell and network
• Keep communication lines open – our biggest failures have been through an inability to communicate
• Cash Flow, Cash Flow, Cash Flow – hire people based on your actual needs , not your projected needs – be nimble and ensure you have adequate cash resources to achieve your objectives.
• Avoid FTI – take action – make a decision and implement it – even if it is the wrong decision – you can always change it
• Your Database is an valuable asset keep it updated, respect it and guard it. Use it for networking
• X referring clients throughout the service lines – providing a holistic service to clients has been important
• Build your Brand – this is where you will get leverage and credibility – update your website, provide links, use professional mweb marketers, create your blog, have events, seminars, attend seminars. Become “the college of knowledge” in your field of expertise. If people perceive you as a leader, performer and creator – then that is reality – PERCEPTION IS REALITY.
BSI Started when I left the accounting profession and said to myself that I would never fill another timesheet!
Everything that I did was based on some form of success fee based on a successful outcome for clients. Accessing Government grants was a major focus.
The grants that I focused on were was
• the EMDG – where for every $ spent on marketing and promoting your product overseas, the company gets 50c in the $ back up to $150k per annum.
• Import Credits in the Textile Industry – also export related
• R&D Tax Concessions and Grants – Incentives given to companies who innovate.
These companies had a huge need for business planning, capital, management advice and management accounting services.
2001 -
Enter an old school friend of mine, Alan Milwidsky, who was at the time a partner in a BIG 5 company, specializing in Growth Strategies – looking for a change…. I said Al… come spend a week in our business, have a look at our deal flow, join me in the business and you will make a lot more money and have a lot more fun… I was ½ right…. We have a lot more fun!!
We developed the BSI business plan – the Vision being “To Help Companies Grow” and “ To be a “one stop shop for the entrepreneur”
Providing Grants, Growth Strategies, International Gateways, Capital Raising.
We believed that in order for us to leverage our skill base, we would take equity stakes in Innovative Companies and back Motivated People, and over the years help there companies grow with the objective of getting a return on our investment.
We worked out the money that we needed to grow the business, identified a number of strategic investors and pitched our plan to them.
We were fortunate to raise the money that we were looking for from these parties, together with some of our own money.
With the money raised, we acquired
• A Bizcap team Specialising in Early Stage Capital Raising
• The leading R&D Tax Concession Firm, being run by an old friend of mine,
• a Recruitment Business (which acquired a few more recruiting businesses)
• a Training Business ((which acquired a few more training businesses).
• As well as making a number of Investments in Innovative Companies.
Our model was to set up different Companies with a common brand and Philosophy, whereby each Head would be a stakeholder, and a group policy of X referring Clients, people and knowledge with a common culture.
THE BSI INVESTOR FORUM
It was 2001, and the dot com crash happened…. And there was no environment for the SME innovator looking to raise between 200k and $2m….
Alan M developed the
“BSI Investor Forum” – where every 3 months we showcase 8 innovative companies to 200 HNI and Funds in Sydney, Melb and Brisbane.
Over the past 4 years…. We have had 15 forums, showcased 120 companies, of which +40m have been raised for more than 60 of them.
This year we have set up a USA office as part of our International Gateway Strategy, and are having our first forum in Silicon Valley at the end of July, where we will be showcasing 10 Innovative Australian Companies at “ALWAYS ON” – the key Silicon Valley Conference – where 900 people are expected.
Our Investment Fund
In 2003, an amazing opportunity presented itself…..
We had the opportunity to acquire a small BITS fund, sponsored by the Federal Government, from a group looking to get out of the early stage marketplace.
This Fund was a dream come true for us…. It gave us Capital to co-invest with our HNI and Funds, and we would not have to use our working capital to invest in these Innovative Companies.
We have subsequently merged with another fund, and together have made in excess of 30 Investments in what we believe that some will be successful world beating companies.
Since 2001 – we have grown from a turnover of 1m – 15m ….
Did I do this…. I have pretty much done nothing besides picking guys who are brighter than I am, passionate at what they do, with the right incentives to help them achieve their goals and objectives.
Where to from here?
We are currently working on a number of projects that will hopefully take us from $15m – 150m over the next 10 years.
Lessons Learned:-
• Have a Vision – “help companies grow” and “ be a one stop shop for the entrepreneur
• Be passionate – if you aint passionate get a job
• Get the brightest and best people, and make sure you look after them like gold. Your people are your assets
• Be able to sell and network
• Keep communication lines open – our biggest failures have been through an inability to communicate
• Cash Flow, Cash Flow, Cash Flow – hire people based on your actual needs , not your projected needs – be nimble and ensure you have adequate cash resources to achieve your objectives.
• Avoid FTI – take action – make a decision and implement it – even if it is the wrong decision – you can always change it
• Your Database is an valuable asset keep it updated, respect it and guard it. Use it for networking
• X referring clients throughout the service lines – providing a holistic service to clients has been important
• Build your Brand – this is where you will get leverage and credibility – update your website, provide links, use professional mweb marketers, create your blog, have events, seminars, attend seminars. Become “the college of knowledge” in your field of expertise. If people perceive you as a leader, performer and creator – then that is reality – PERCEPTION IS REALITY.
Saturday, June 30, 2007
Gems from Scott Berkun, Author of "The Myths of Innovation"
Extracts from Always on interview with Scott Berkun and Always On
http://alwayson.goingon.com/permalink/post/15309
Is there such a thing as a BFO?
An Epiphany, a BFO (blinding flash of the obvious), a hunch, an instinctive sense is generally the tip of an iceberg and comes from many years of accumulated knowledge stored in “the adaptive unconscious”
What prevents Innovators from Commercialising their Innovations?
Commercialising an Innovation generally has little to do with the skills of the Innovator/Entrepeneur . They have to spend more time persuading and convincing others for emotional, financial, or intellectual support, as they do inventing, and many don’t have the skills or emotional endurance for it. The skills for Commercialising are different to the skills of Innovation.
Where do Ideas Come From?
ideas are combinations of other ideas. People who earn the label “creative” are really just people who come up with more combinations of ideas, find interesting ones faster, and are willing to try them out
Is Innovation Structured?
Innovation does not generally follow a straight line. Innovators/Entrepeneurs generally work in chaos, uncertainty with a feeling the odds are against them (club terror!!).
Why do innovators face rejection and negativity?
People are threatened by Change, and it takes much convincing and copelling arguments to get people to change their behaviour.
As a Venture Capitalist/Investor – how do you invest in Innovation?
Invest in People more than ideas or business plans: A great entrepreneur who won’t give up and will keep growing and learning is gold. Very few entrepreneurs have had any real success the first few times out—3M, Ford, Flickr were all second or third efforts.
Adopt a portfolio approach, knowing most ventures fail. Invest based on a spectrum of risk (e.g. 1/3 very high risk, 1/3 high risk, 1/3 moderate risk). Sometimes seemingly small, low risk/reward innovations have big impacts and returns, where large investments fail miserably.
http://alwayson.goingon.com/permalink/post/15309
Is there such a thing as a BFO?
An Epiphany, a BFO (blinding flash of the obvious), a hunch, an instinctive sense is generally the tip of an iceberg and comes from many years of accumulated knowledge stored in “the adaptive unconscious”
What prevents Innovators from Commercialising their Innovations?
Commercialising an Innovation generally has little to do with the skills of the Innovator/Entrepeneur . They have to spend more time persuading and convincing others for emotional, financial, or intellectual support, as they do inventing, and many don’t have the skills or emotional endurance for it. The skills for Commercialising are different to the skills of Innovation.
Where do Ideas Come From?
ideas are combinations of other ideas. People who earn the label “creative” are really just people who come up with more combinations of ideas, find interesting ones faster, and are willing to try them out
Is Innovation Structured?
Innovation does not generally follow a straight line. Innovators/Entrepeneurs generally work in chaos, uncertainty with a feeling the odds are against them (club terror!!).
Why do innovators face rejection and negativity?
People are threatened by Change, and it takes much convincing and copelling arguments to get people to change their behaviour.
As a Venture Capitalist/Investor – how do you invest in Innovation?
Invest in People more than ideas or business plans: A great entrepreneur who won’t give up and will keep growing and learning is gold. Very few entrepreneurs have had any real success the first few times out—3M, Ford, Flickr were all second or third efforts.
Adopt a portfolio approach, knowing most ventures fail. Invest based on a spectrum of risk (e.g. 1/3 very high risk, 1/3 high risk, 1/3 moderate risk). Sometimes seemingly small, low risk/reward innovations have big impacts and returns, where large investments fail miserably.
Sunday, June 10, 2007
Maximising Opportunities in the USA for Australian Exporters
Gems from the session from Angela Lowrey angela.lowrey@austrade.gov.au at the 2007 ECAL Conference at Twin Towns - Tweed Heads – Monday 4 June 2007
Summary by Ivan Kaye - Monday 4 June 2007
I was delighted to hear of Austrade’s activities in the USA, and BSI looks forward to working with Austrade to Leverage the Power of Australia to assist Clients Export Succesfully into the USA Marketplace!
Austrade open for business in the USA:-
Austrade has recognized the importance of the USA as a trading partner for Ozzie Companies, and have come to the party by appointing 20 Austrade Offices around the USA… split up into 8 Industry Groups.
They have been involved with
150 promotional trade events
20 Inward Buying Missions
500 Media Mentions
Various Marketing and Business Guides to assist exporters navigate the market.
Bring strategic Players/Buyers to Australia
8000 Australian Companies have been trading with the USA in some way over the past few years, and 54% of all EMDG claimants promote and sell their products into the USA Market place.
Alignment of the Stars for Aussie Exporters
There are a number of factors that have aligned to assist Australians enter the USA Marketplace:-
Americans love us
We talk the same language
Support of American Policy
Australian Wine has led the way – the Yellow Tail Story
We have an outback image – “the Crocodile Hunter”
The Wiggles
Actors and Actresses – Russell Crow and Nicole Kidman
News Limited – the success of Rupert Murdoch
A strong Expat Network – who call Australia Home
What this does is something invaluable – it opens the door so that you are able to do your 30 Second Elevator Pitch!
Although we speak the language – we have a different culture, and a successful exporter into the USA has to play by the USA rules….
We need to “brag” – why is our product so good that you need to be compelled to buy? Focus on the WIFM factor – don’t beat around the bush – tell the Customer what is in it for them! Tell them what the deal is - quickly.
USA is
Wealthy
Competitive
Consumer driven
Mass Market
Segment Driven
Market for anything
An example of the opportunity – Coles and Woolworths represent 70% of consumer market in Australia. There are 42000 supermarkets in USA.
A company with Gourmet Foods can deal with “Bristal Farms” who will possibly take all their supply.
Ensure that your packaging and pricing is done correctly – everything needs to be in lbs and ozs.
You need to be able to segment the market place… what is your Unique, Competitive Niche? Be able to articulate it!
How are you to be heard above the noise. At trade shows or events – position yourself so you can be heard. PR is key!
Before going to USA, do your market research – ensure that you have the ability to be a long term sustainable player in the marketplace.
There are many ways you can enter the market – is it with a Distributor, JV agreement, Agent, you own office. What have other companies done in your space… do your research.
Some are concerned that a successful businesses will sell the business/IP/Technology to a USA Company. This is not a bad thing. If successful, the entrepreneur will sell for ++ $s… this is great for the Australian Economy, as the successful Entrepreneur will understand the opportunity, and does it again, returning the wealth to Australia.
USA Sustainability Factors
Long term commitment
Relationship/network development
Success and reputation in Australian
Patience and perseverance
Entrepreneurial spirit
Unique Selling Proposition
Market Selection
Overseas Experience
Cultural Awareness
Sustainable Exporter Profile
Passionate about international business
Committed to new export markets and opportunities
Committed to exporting …despite short term setbacks
AUSTFA Opportunities
Government empowerment GSA’s
Enhanced access
Decreased tariffs
Increased Quotas
Ease of Market Restrictions
Opportunities include but not limited to:-
Agribusiness
Food – Gourmet, Wine and. Meat, Seafood, Dairy
Sell to Government – Security, Defence, US Gulf Coast redevelopment
Auto
ICT
Specialty Goods
Services
Things an Aussie Exporter needs to do to get traction in the USA Market
Tradeshows – and follow up on every contact
Buyer missions
PR
Market Research
Perseverence and Persistance
A thick Skin
Passion about your product
Ability to leverage on people who have done it before
BSI USA Gateway
Austrade
EMDG
DFAT
State Overseas Offices
Alliances
Relationships
Alex Daniel runs BSI USA Gateway office in Los Angeles. He will help you with your Journey into the USA Marketplace.
About BSI
BSI assists Companies access International Markets, Raise Capital and Maximise Government Grants.
For more Information about accessing the USA Marketplace, contact Alex Daniel on
adaniel@bsi.com.au or Ivan Kaye on ikaye@bsi.com.au
For more Information about Maximising your Export Market Development Grants (EMDG) contact Harvey Gartrell hgartrell@bsi.com.au , Andri Damoko adarmoko@bsi.com.au , James Roberts jroberts@bsi.com.au or Ben Milner bmilner@bsi.com.au .
Summary by Ivan Kaye - Monday 4 June 2007
I was delighted to hear of Austrade’s activities in the USA, and BSI looks forward to working with Austrade to Leverage the Power of Australia to assist Clients Export Succesfully into the USA Marketplace!
Austrade open for business in the USA:-
Austrade has recognized the importance of the USA as a trading partner for Ozzie Companies, and have come to the party by appointing 20 Austrade Offices around the USA… split up into 8 Industry Groups.
They have been involved with
150 promotional trade events
20 Inward Buying Missions
500 Media Mentions
Various Marketing and Business Guides to assist exporters navigate the market.
Bring strategic Players/Buyers to Australia
8000 Australian Companies have been trading with the USA in some way over the past few years, and 54% of all EMDG claimants promote and sell their products into the USA Market place.
Alignment of the Stars for Aussie Exporters
There are a number of factors that have aligned to assist Australians enter the USA Marketplace:-
Americans love us
We talk the same language
Support of American Policy
Australian Wine has led the way – the Yellow Tail Story
We have an outback image – “the Crocodile Hunter”
The Wiggles
Actors and Actresses – Russell Crow and Nicole Kidman
News Limited – the success of Rupert Murdoch
A strong Expat Network – who call Australia Home
What this does is something invaluable – it opens the door so that you are able to do your 30 Second Elevator Pitch!
Although we speak the language – we have a different culture, and a successful exporter into the USA has to play by the USA rules….
We need to “brag” – why is our product so good that you need to be compelled to buy? Focus on the WIFM factor – don’t beat around the bush – tell the Customer what is in it for them! Tell them what the deal is - quickly.
USA is
Wealthy
Competitive
Consumer driven
Mass Market
Segment Driven
Market for anything
An example of the opportunity – Coles and Woolworths represent 70% of consumer market in Australia. There are 42000 supermarkets in USA.
A company with Gourmet Foods can deal with “Bristal Farms” who will possibly take all their supply.
Ensure that your packaging and pricing is done correctly – everything needs to be in lbs and ozs.
You need to be able to segment the market place… what is your Unique, Competitive Niche? Be able to articulate it!
How are you to be heard above the noise. At trade shows or events – position yourself so you can be heard. PR is key!
Before going to USA, do your market research – ensure that you have the ability to be a long term sustainable player in the marketplace.
There are many ways you can enter the market – is it with a Distributor, JV agreement, Agent, you own office. What have other companies done in your space… do your research.
Some are concerned that a successful businesses will sell the business/IP/Technology to a USA Company. This is not a bad thing. If successful, the entrepreneur will sell for ++ $s… this is great for the Australian Economy, as the successful Entrepreneur will understand the opportunity, and does it again, returning the wealth to Australia.
USA Sustainability Factors
Long term commitment
Relationship/network development
Success and reputation in Australian
Patience and perseverance
Entrepreneurial spirit
Unique Selling Proposition
Market Selection
Overseas Experience
Cultural Awareness
Sustainable Exporter Profile
Passionate about international business
Committed to new export markets and opportunities
Committed to exporting …despite short term setbacks
AUSTFA Opportunities
Government empowerment GSA’s
Enhanced access
Decreased tariffs
Increased Quotas
Ease of Market Restrictions
Opportunities include but not limited to:-
Agribusiness
Food – Gourmet, Wine and. Meat, Seafood, Dairy
Sell to Government – Security, Defence, US Gulf Coast redevelopment
Auto
ICT
Specialty Goods
Services
Things an Aussie Exporter needs to do to get traction in the USA Market
Tradeshows – and follow up on every contact
Buyer missions
PR
Market Research
Perseverence and Persistance
A thick Skin
Passion about your product
Ability to leverage on people who have done it before
BSI USA Gateway
Austrade
EMDG
DFAT
State Overseas Offices
Alliances
Relationships
Alex Daniel runs BSI USA Gateway office in Los Angeles. He will help you with your Journey into the USA Marketplace.
About BSI
BSI assists Companies access International Markets, Raise Capital and Maximise Government Grants.
For more Information about accessing the USA Marketplace, contact Alex Daniel on
adaniel@bsi.com.au or Ivan Kaye on ikaye@bsi.com.au
For more Information about Maximising your Export Market Development Grants (EMDG) contact Harvey Gartrell hgartrell@bsi.com.au , Andri Damoko adarmoko@bsi.com.au , James Roberts jroberts@bsi.com.au or Ben Milner bmilner@bsi.com.au .
Thursday, May 17, 2007
BSI sponsors UCLA Andersen’s 22nd annual Entrepreneurship conference
ONE of Australia’s leading business advisory and consulting companies has set its sights on the United States, launching its international operation at the prestigious UCLA Anderson School of Management’s annual entrepreneurs conference.
Business Strategies International, which has helped hundreds of Australian exporters launch international campaigns, has spread its wings to Los Angeles.
BSI launched its USA Gateway program with its support of the UCLA Andersen’s 22nd annual Entrepreneurship conference that was held on 18 May 2007.
Keynote Speakers were Alan I. Rothenberg ,Founder of Major League Soccer and Founder & Chairman, 1st Century Bank and Jane D. Wurwand Founder, Dermalogica, Inc. and The International Dermal Institute.
The Conference included 16 Industry and topic specific panel discussions and workshops , a Networking lunch and cocktail reception
The UCLA Anderson School of Management is one of the top Business Schools in the world, supported by major corporations and industries in the USA.
It also has a landmark MBA program.
BSI is investigating tapping into the program as one of a range of initiatives for its clients.
BSI assists companies access a range of government grants to underpin their international ventures. Its focus will be on innovation.
The USA operation is run by Alexander Daniel, who has a focus on building sales forces for clients.
“We are looking to partner with companies, institutions or Individuals who are interested in assisting Innovative Australian Companies with commercialising their Innovations.” says Daniel.
“Australia is a great test market, but to get value, innovative companies need to have a presence in the USA. “
He pointed to BSI client IMCEDA – a compression software firm that had a turnover of $500,000 pa in Australia.
After establishing an office in the United States, they invested in a sales force and sold the business within 2 years for US $70 million.
“ Australia has great education, innovation , research and development, government support and great lifestyle - but has not got the population to enable ICT companies to get the scale that it needs,” Daniel said.
“As a result, companies need to be born global, and we need to be the bridge for taking these innovations to the USA.”
He said the Australian Government gives 50% of all marketing to assist Australian Companies access overseas markets through the Export Market Development Grant Scheme.
For more information contact
info@bsi.com.au
or
Alexander Daniel on adaniel@bsi.com.au
Business Strategies International, which has helped hundreds of Australian exporters launch international campaigns, has spread its wings to Los Angeles.
BSI launched its USA Gateway program with its support of the UCLA Andersen’s 22nd annual Entrepreneurship conference that was held on 18 May 2007.
Keynote Speakers were Alan I. Rothenberg ,Founder of Major League Soccer and Founder & Chairman, 1st Century Bank and Jane D. Wurwand Founder, Dermalogica, Inc. and The International Dermal Institute.
The Conference included 16 Industry and topic specific panel discussions and workshops , a Networking lunch and cocktail reception
The UCLA Anderson School of Management is one of the top Business Schools in the world, supported by major corporations and industries in the USA.
It also has a landmark MBA program.
BSI is investigating tapping into the program as one of a range of initiatives for its clients.
BSI assists companies access a range of government grants to underpin their international ventures. Its focus will be on innovation.
The USA operation is run by Alexander Daniel, who has a focus on building sales forces for clients.
“We are looking to partner with companies, institutions or Individuals who are interested in assisting Innovative Australian Companies with commercialising their Innovations.” says Daniel.
“Australia is a great test market, but to get value, innovative companies need to have a presence in the USA. “
He pointed to BSI client IMCEDA – a compression software firm that had a turnover of $500,000 pa in Australia.
After establishing an office in the United States, they invested in a sales force and sold the business within 2 years for US $70 million.
“ Australia has great education, innovation , research and development, government support and great lifestyle - but has not got the population to enable ICT companies to get the scale that it needs,” Daniel said.
“As a result, companies need to be born global, and we need to be the bridge for taking these innovations to the USA.”
He said the Australian Government gives 50% of all marketing to assist Australian Companies access overseas markets through the Export Market Development Grant Scheme.
For more information contact
info@bsi.com.au
or
Alexander Daniel on adaniel@bsi.com.au
QUOTE OF THE MONTH -- "THE WORLD IS NOT FLAT."
"Global innovation does not occur in one place anymore. It occurs through networks. Thomas Friedman said that "the world is flat". The world is not flat, it's a waffle. It's a bunch of peaks of excellence at different places that need to be connected through networks for innovation to grow." -- Dr. Bill Miller, Silicon Valley legend, as told to Australian Anthill, May 2007. Read more at http://www.australiananthill.com/main.php?page=ed_hard_way21
Sunday, May 06, 2007
BSI Hosts David Gold
Ivan Kaye, David Gold and Lisa Donath
On Tuesday, 20 March 07 David Gold the Founder of dstore explained what it takes to do business in the world of Technology today.
He said a major mistake was to have a large number of investors on the board making decisions based on vested interests.... Much time was spent on accomodating investors vs running the business.
David's skill in raising capital from investors is exceptional, starting from his success in his involvement in Looksmart, where he was involved with Business Development.
An interesting anecdote was when he was trying to get the rights of this amazing software in the USA... he set up a meeting with the CEO, and found the business run by this school kid running his business from the kitchen, with his mother ensuring that he was not being taken advantage of!
David has recently exited from Azure Wireless, creating great returns for himself and his Investors.
"In Melbourne's Chapel Street, wireless hot spots are being established it seems within sight of every coffee machine around. It's got a kind of Sex in the City groove about it, and David Gold, former dot.com wunderkind, is hoping its appeal will grow beyond the froth of the cappuccino and into more extensive hot zones.
DAVID GOLD, AZURE WIRELESS: I think we're going to see increasingly, more and more applications. Things like watching TV wirelessly. Things like, you know, movies - downloading movies in real time.
Gaming - there's a whole range of things that we just don't envisage necessarily today that people will be using wireless broadband networks for tomorrow.
GEOFF HUTCHISON: Give me a sort of cafe-scenario five years down the track. What will it look like and what will people be able to do there?
DAVID GOLD: I think it will become a commodity, just like anything else. You know, where can you get your water and you know, like public places and you can get electricity etc, etc. And wireless Internet will just be something that's standard in most places.
Start-up champion
Article in Smart Company
Tuesday, 20 February 2007 By Amanda Gome
Ivan Kaye is a rare breed in Australia. The former accountant runs advisory company BSI and two venture capital firms, ADI and Information City. He chooses to invest small amounts of money in high-risk start-ups in hot new industries, a space ignored by most venture capitalists in Australia.
He tells SmartCompany how … and why he invests in emerging technologies.
“I am into innovation. All the fun is investing in early-stage companies because after that it becomes different – full of managers, accountants and lawyers. I am also an entrepreneur. And you can’t invest in start-ups with five people unless you are an entrepreneur and have run a start-up with five people.
“At present we invest between $50,000 and $300,000 in a start-up. We specialise in web 2.0, wireless, software, ASPs, new media and mobile applications. Very few people invest in Australia at such an early stage so many people come to me and ask for money.
“Often they’ll say, ‘I have this great technology and I need $3 million’. But they don’t need $3 million. They need relationships, grants, programs to help them commercialise and get to the next step like COMET (the Federal Government’s Commercialising Emerging Technologies program) and Export Market Development Grants. We get the companies ready for a fee (usually between $1000 and $100,000.)
“If the guy is right and the chemistry is right, we invest. Initially it might be $50,000 but if the company needs more – like $700,000 – we will get co-investors. Of the $3 million we have invested since we started in 2000, we have raised $35 million in co-investment.
“Often entrepreneurs just need ideas. I just had a great session with Rex Hunt. He asked me, ‘How do I take my brand worldwide? Why not go fishing with a star like John Travolta and get him to tell you his life story and put that on primetime TV?’
“My biggest tip to entrepreneurs? Avoid indecision. If you can’t make a decision you are in limbo. So it’s better to make a decision even if it’s the wrong one. At least you learn by that.
Don’t sack the entrepreneur
When the business is so small, it will not survive without the entrepreneur. Once the business starts making decent sales, of $5–7 million, that’s when you start to think about replacing the entrepreneur with a management team because the business needs new skills at that stage.
“If we invest in 15 companies, we’ll get seven to the stage of needing $1–3 million and then four of those to the stage of needing $3–6 million. When they need $12 million we’ve made our money.
“Our biggest success was investing in digital company Quickcut, which was worth about $750,000 10 years ago and recently sold for $50 million.
Is it a world-first innovation?
“When someone comes to see us with technology they often claim it is a world-first. What do I know? I am an accountant. But I know all the experts. If it’s wireless, I ring Walter and I say what do you think? There is always something similar being developed somewhere so being first to market isn’t everything. It’s usually innovations that are second or third to market that make all the money.
“So many venture capitalists take the attitude in Australia that they love the technology but to take the company forward, they want to sack the entrepreneur. But if the entrepreneur is committed to making it work, mostly it will work. And I have rarely seen a business work where they have sacked the entrepreneur.
“The biggest danger is the entrepreneur saying, ‘I am off to do something else’. The big question is: will the entrepreneur stick around until the business is sold? But there is no way to be certain about this before you invest; it is just one of the risks you take.
Best time to invest
“At present we have a $7 million fund and we are raising money for a $40 million fund.
I feel this is our time. We started after the dotcom crash and have done the hard yards.
"This is also the time to invest in Australian companies. You can get in at very low prices and if you take them to the US, you get 20 times the return. We are approaching another bubble and people should come along for the ride!
“There is lots of money available and it is so much easier to get three or four rounds of funding than it used to be so you don’t need to take companies to IPO.
“The biggest change we will see in the next few years is the superannuation funds investing their money in start-up emerging technologies. New growth businesses around the internet will be hot. Everyone is communicating by VoIP, on their mobiles, by internet. That all has to be monetised. And so there are going to be people who are going to make a lot of money.
“At the moment superannuation funds are all focused on buyouts but soon there will not be the deal flow for all that money. Once a few investors make millions investing in early stage, they will follow and then we’ll really have a bubble.”
Tuesday, 20 February 2007 By Amanda Gome
Ivan Kaye is a rare breed in Australia. The former accountant runs advisory company BSI and two venture capital firms, ADI and Information City. He chooses to invest small amounts of money in high-risk start-ups in hot new industries, a space ignored by most venture capitalists in Australia.
He tells SmartCompany how … and why he invests in emerging technologies.
“I am into innovation. All the fun is investing in early-stage companies because after that it becomes different – full of managers, accountants and lawyers. I am also an entrepreneur. And you can’t invest in start-ups with five people unless you are an entrepreneur and have run a start-up with five people.
“At present we invest between $50,000 and $300,000 in a start-up. We specialise in web 2.0, wireless, software, ASPs, new media and mobile applications. Very few people invest in Australia at such an early stage so many people come to me and ask for money.
“Often they’ll say, ‘I have this great technology and I need $3 million’. But they don’t need $3 million. They need relationships, grants, programs to help them commercialise and get to the next step like COMET (the Federal Government’s Commercialising Emerging Technologies program) and Export Market Development Grants. We get the companies ready for a fee (usually between $1000 and $100,000.)
“If the guy is right and the chemistry is right, we invest. Initially it might be $50,000 but if the company needs more – like $700,000 – we will get co-investors. Of the $3 million we have invested since we started in 2000, we have raised $35 million in co-investment.
“Often entrepreneurs just need ideas. I just had a great session with Rex Hunt. He asked me, ‘How do I take my brand worldwide? Why not go fishing with a star like John Travolta and get him to tell you his life story and put that on primetime TV?’
“My biggest tip to entrepreneurs? Avoid indecision. If you can’t make a decision you are in limbo. So it’s better to make a decision even if it’s the wrong one. At least you learn by that.
Don’t sack the entrepreneur
When the business is so small, it will not survive without the entrepreneur. Once the business starts making decent sales, of $5–7 million, that’s when you start to think about replacing the entrepreneur with a management team because the business needs new skills at that stage.
“If we invest in 15 companies, we’ll get seven to the stage of needing $1–3 million and then four of those to the stage of needing $3–6 million. When they need $12 million we’ve made our money.
“Our biggest success was investing in digital company Quickcut, which was worth about $750,000 10 years ago and recently sold for $50 million.
Is it a world-first innovation?
“When someone comes to see us with technology they often claim it is a world-first. What do I know? I am an accountant. But I know all the experts. If it’s wireless, I ring Walter and I say what do you think? There is always something similar being developed somewhere so being first to market isn’t everything. It’s usually innovations that are second or third to market that make all the money.
“So many venture capitalists take the attitude in Australia that they love the technology but to take the company forward, they want to sack the entrepreneur. But if the entrepreneur is committed to making it work, mostly it will work. And I have rarely seen a business work where they have sacked the entrepreneur.
“The biggest danger is the entrepreneur saying, ‘I am off to do something else’. The big question is: will the entrepreneur stick around until the business is sold? But there is no way to be certain about this before you invest; it is just one of the risks you take.
Best time to invest
“At present we have a $7 million fund and we are raising money for a $40 million fund.
I feel this is our time. We started after the dotcom crash and have done the hard yards.
"This is also the time to invest in Australian companies. You can get in at very low prices and if you take them to the US, you get 20 times the return. We are approaching another bubble and people should come along for the ride!
“There is lots of money available and it is so much easier to get three or four rounds of funding than it used to be so you don’t need to take companies to IPO.
“The biggest change we will see in the next few years is the superannuation funds investing their money in start-up emerging technologies. New growth businesses around the internet will be hot. Everyone is communicating by VoIP, on their mobiles, by internet. That all has to be monetised. And so there are going to be people who are going to make a lot of money.
“At the moment superannuation funds are all focused on buyouts but soon there will not be the deal flow for all that money. Once a few investors make millions investing in early stage, they will follow and then we’ll really have a bubble.”
Sunday, March 11, 2007
BSI Launches its Gateway to USA programme at GDAY USA 2007
Alex Daniel (BSI USA) Peter Johnston (BSI Queensland) Dieter Bohm (Catchlog) and Ivan Kaye at the Premier Gday USA Event.For pictures of the event and "FIshing with Rex Hunt" click here
BSI Launched its Gateway to the USA programme during Gday USA, Australia's Premier Showcase of products and services to the USA.
BSI Opens Doors in the ICT Arena
Article by Tony Kaye written for the Digital Harbour Website
Even with a fantastic idea, getting good projects off the ground is often difficult without the right knowledge, the right connections and ready access to capital.
But the path for many innovative Australian ICT companies has been made a lot smoother, thanks to the efforts of Digital Harbour-based Business Strategies International.
BSI, formed in 2001, actively assists ICT companies with raising capital, accessing government grants and business advisory – effectively opening doors that most start-up ventures would not even know about.
Every three months, BSI holds investor forums in Sydney, Melbourne and Brisbane, where it showcases innovative companies to around 200 high net worth individuals and funds. These companies have great technologies and the potential for exponential growth to export markets.
“Our whole purpose is to help companies to grow,” says BSI director Ivan Kaye, who co-founded BSI with business partner Alan Milwidsky. “Over the last three years, BSI has showcased 110 companies and, of those, 50 have raised finance in one form or another. In total, more than $30 million has been raised.”
BSI is sponsored by the Victorian Government through its VicStart Program, and by the Federal Government, which supports BSI’s Australian Distributed Incubator (ADI) fund. ADI is a $7 million fund that invests in ICT companies and has a joint venture to invest with another fund, Information City. Both ADI and Information City have invested in 35 companies since the program started.
Leads also come through from the Federal Government’s COMET Program, which provides finance to help companies get investor ready and validate their products for export markets.
“COMET rates BSI as a leading player in the industry and they refer a lot of companies to us to help them in the quest for raising capital and getting investor ready,” Mr Kaye says.
BSI is also a leading player in accessing the Government’s R&D tax concession and tax offset. “If you have tax losses and spend less than $1 million on R&D and turn over less than $5 million, you can actually cash in those losses as opposed to increasing the size of your tax loss,” Mr Kaye adds. “We help companies maximise that rebate and work on a success fee.”
Other support is for companies seeking to access the Export Market Development grants program run by Austrade.
Among the many interesting companies that BSI has supported is the automated document delivery group ConnXion, which is now listed on the Australian Stock Exchange. BSI has also incubated a company called EMStream, which streams music and video content to more than 200 pubs and clubs around Australia.
“We have supported many very interesting companies,” Mr Kaye says. “I love every one of those companies. They all have potential for exponential growth. They are all in various forms of incubation – not large companies but hopefully one day they will become large companies. It’s great that we’re supporting their foray in Digital Harbour.”
BSI has also invested significantly in assisting companies on a recruitment level, particularly given the specialist expertise required in the ICT sector.
“Over the years, as our clients have increased in value, and have increased their staffing levels and turnover, a major constraint that they’ve had is to recruit the right people,” Mr Kaye says. “We acquired a recruitment business (BSI People) in 2001 that has grown from three people to 30 people thanks to the skills and leadership of William Maudlin.” BSI People have acquired focussed recruiting companies, including Livingstones (recruitment of office and administration personnel) and Learned Friends (Legal Recruitment).This year, BSI People won the prestigious SARA award of “best executive recruiter of the year.”
BSI has also ventured into the Training Space, and together with Graham Raspass heading BSI Learning, they have developed a training business that provides strategies consulting and training in the areas of change management and leadership skills. As that business has grown, it has acquired other registered training organisations including Southern Edge Training and Hume Learning.
BSI holds regular events for the innovation community and has an entrepreneurial Masters Class Series involving high-profile speaker presenters. Last month Martin Hosking, a co-founder of Looksmart, presented to 80 people at Digital Harbour.
BSI is on a strong growth path, and in the last four years it has grown from a turnover of $1 million to $15 million. The company was voted the third-fastest upstart company by BRW magazine.
“We work strongly with alliances and view alliance partners as a major part of our business,” Mr Kaye says. “We’re very proud and look forward to the next stage of our journey, which hopefully will include setting up BSI internationally into marketplaces such as the US, Israel, Europe and South Africa.”
Even with a fantastic idea, getting good projects off the ground is often difficult without the right knowledge, the right connections and ready access to capital.
But the path for many innovative Australian ICT companies has been made a lot smoother, thanks to the efforts of Digital Harbour-based Business Strategies International.
BSI, formed in 2001, actively assists ICT companies with raising capital, accessing government grants and business advisory – effectively opening doors that most start-up ventures would not even know about.
Every three months, BSI holds investor forums in Sydney, Melbourne and Brisbane, where it showcases innovative companies to around 200 high net worth individuals and funds. These companies have great technologies and the potential for exponential growth to export markets.
“Our whole purpose is to help companies to grow,” says BSI director Ivan Kaye, who co-founded BSI with business partner Alan Milwidsky. “Over the last three years, BSI has showcased 110 companies and, of those, 50 have raised finance in one form or another. In total, more than $30 million has been raised.”
BSI is sponsored by the Victorian Government through its VicStart Program, and by the Federal Government, which supports BSI’s Australian Distributed Incubator (ADI) fund. ADI is a $7 million fund that invests in ICT companies and has a joint venture to invest with another fund, Information City. Both ADI and Information City have invested in 35 companies since the program started.
Leads also come through from the Federal Government’s COMET Program, which provides finance to help companies get investor ready and validate their products for export markets.
“COMET rates BSI as a leading player in the industry and they refer a lot of companies to us to help them in the quest for raising capital and getting investor ready,” Mr Kaye says.
BSI is also a leading player in accessing the Government’s R&D tax concession and tax offset. “If you have tax losses and spend less than $1 million on R&D and turn over less than $5 million, you can actually cash in those losses as opposed to increasing the size of your tax loss,” Mr Kaye adds. “We help companies maximise that rebate and work on a success fee.”
Other support is for companies seeking to access the Export Market Development grants program run by Austrade.
Among the many interesting companies that BSI has supported is the automated document delivery group ConnXion, which is now listed on the Australian Stock Exchange. BSI has also incubated a company called EMStream, which streams music and video content to more than 200 pubs and clubs around Australia.
“We have supported many very interesting companies,” Mr Kaye says. “I love every one of those companies. They all have potential for exponential growth. They are all in various forms of incubation – not large companies but hopefully one day they will become large companies. It’s great that we’re supporting their foray in Digital Harbour.”
BSI has also invested significantly in assisting companies on a recruitment level, particularly given the specialist expertise required in the ICT sector.
“Over the years, as our clients have increased in value, and have increased their staffing levels and turnover, a major constraint that they’ve had is to recruit the right people,” Mr Kaye says. “We acquired a recruitment business (BSI People) in 2001 that has grown from three people to 30 people thanks to the skills and leadership of William Maudlin.” BSI People have acquired focussed recruiting companies, including Livingstones (recruitment of office and administration personnel) and Learned Friends (Legal Recruitment).This year, BSI People won the prestigious SARA award of “best executive recruiter of the year.”
BSI has also ventured into the Training Space, and together with Graham Raspass heading BSI Learning, they have developed a training business that provides strategies consulting and training in the areas of change management and leadership skills. As that business has grown, it has acquired other registered training organisations including Southern Edge Training and Hume Learning.
BSI holds regular events for the innovation community and has an entrepreneurial Masters Class Series involving high-profile speaker presenters. Last month Martin Hosking, a co-founder of Looksmart, presented to 80 people at Digital Harbour.
BSI is on a strong growth path, and in the last four years it has grown from a turnover of $1 million to $15 million. The company was voted the third-fastest upstart company by BRW magazine.
“We work strongly with alliances and view alliance partners as a major part of our business,” Mr Kaye says. “We’re very proud and look forward to the next stage of our journey, which hopefully will include setting up BSI internationally into marketplaces such as the US, Israel, Europe and South Africa.”
BSI in BRW: 'Reinvent and thrive'
Article by Julia May in BRW, November 16-22, 2006
A small telecommunications company has reassessed its operations and structures to stay alive in a cutthroat industry.
A determined start-up company will reinvent itself if that is what it takes to improve sales and expansion prospects. VRoam Global changed its market positioning when its co-founders, Danny Nathanson and Ian Basckin, realised they were on the wrong track.
The company uses an advanced call-diversion technology to provide international SIM cards which allow travellers to receive calls to their Australian telephone number. By tapping into local networks overseas, VRoam says the cost of international mobile calls is dramatically lower than regular roaming services.
Between 2002 and 2005, Nathanson and Basckin pitched VRoam as a telecommunications provider to the telecommunications divisions of big companies by promising to reduce the communication costs of staf travelling overseas. The company rolled along, notching up sales of $1 million in 2004-05.
But when external investors, including venture capital firm Business Strategies International, took a stake and joined the board, Nathanson and Basckin realised VRoam was putting its clients in a difficult situation. In it s pitch for business, the company was effectively asking them to undermine relationships with bigger telecommunications suppliers that also offered roaming services.
To overcome the conflict, VRoam reinvented itself through marketing as a travel services company, pitching to the procurement divisions of companies and travel agents. Nathanson says that procurement departments, with their focus on reducing travel costs rather than meddling in telecoummunications contracts, feel less conflict and are more interested in the service.
The pair engaged a public-relations company that specialised in the travel industry and focused publicity in travel publications rather than telecommunications media.
Nathanson says the overhauled sales and marketing strategy required a shift in thinking for him and Basckin (who both came from the telecommunications industry) in the way they perceived the business. The strategy appears to have worked: sales doubled in 2005-06.
Nathanson balances relationships with clients and suppliers carefully, and liaises with his suppliers which are also competitors (many of the carriers have their own roaming services).
He says it is simple: he creates a 'win-win' situation. International carriers have a fair chance of picking up the signal for overseas mobile-phone users who do not use VRoam; for example, if a region has three mobile carriers, each has a 30 per cent chance of gaining that business. But when VRoam sells the carrier's SIM card, Nathanson says, it is guaranteed to receive all of that business.
A good track record also helps. Nathanson and Basckin are great believers of in the 'foot in the door' strategy, using pre-existing relationships with carriers in the United States, the United Kingdom and South Africa to gain referrals to other carriers. Being a minnow dealing with large conglomerates can be daunting, Nathanson admits, but he says:'We were too gung-ho for it to be daunting. We were also a bit aggressive and brash. Because of that we had some good early successes."
The company is in its final stages of launching the service with local carriers (its competitors) for overseas visitors to Australia. It has also introduced a pre-paid product and a service focusing on leisure travellers, which Nathanson says will counter the customary December-January sales dip when business people travel less.
A small telecommunications company has reassessed its operations and structures to stay alive in a cutthroat industry.
A determined start-up company will reinvent itself if that is what it takes to improve sales and expansion prospects. VRoam Global changed its market positioning when its co-founders, Danny Nathanson and Ian Basckin, realised they were on the wrong track.
The company uses an advanced call-diversion technology to provide international SIM cards which allow travellers to receive calls to their Australian telephone number. By tapping into local networks overseas, VRoam says the cost of international mobile calls is dramatically lower than regular roaming services.
Between 2002 and 2005, Nathanson and Basckin pitched VRoam as a telecommunications provider to the telecommunications divisions of big companies by promising to reduce the communication costs of staf travelling overseas. The company rolled along, notching up sales of $1 million in 2004-05.
But when external investors, including venture capital firm Business Strategies International, took a stake and joined the board, Nathanson and Basckin realised VRoam was putting its clients in a difficult situation. In it s pitch for business, the company was effectively asking them to undermine relationships with bigger telecommunications suppliers that also offered roaming services.
To overcome the conflict, VRoam reinvented itself through marketing as a travel services company, pitching to the procurement divisions of companies and travel agents. Nathanson says that procurement departments, with their focus on reducing travel costs rather than meddling in telecoummunications contracts, feel less conflict and are more interested in the service.
The pair engaged a public-relations company that specialised in the travel industry and focused publicity in travel publications rather than telecommunications media.
Nathanson says the overhauled sales and marketing strategy required a shift in thinking for him and Basckin (who both came from the telecommunications industry) in the way they perceived the business. The strategy appears to have worked: sales doubled in 2005-06.
Nathanson balances relationships with clients and suppliers carefully, and liaises with his suppliers which are also competitors (many of the carriers have their own roaming services).
He says it is simple: he creates a 'win-win' situation. International carriers have a fair chance of picking up the signal for overseas mobile-phone users who do not use VRoam; for example, if a region has three mobile carriers, each has a 30 per cent chance of gaining that business. But when VRoam sells the carrier's SIM card, Nathanson says, it is guaranteed to receive all of that business.
A good track record also helps. Nathanson and Basckin are great believers of in the 'foot in the door' strategy, using pre-existing relationships with carriers in the United States, the United Kingdom and South Africa to gain referrals to other carriers. Being a minnow dealing with large conglomerates can be daunting, Nathanson admits, but he says:'We were too gung-ho for it to be daunting. We were also a bit aggressive and brash. Because of that we had some good early successes."
The company is in its final stages of launching the service with local carriers (its competitors) for overseas visitors to Australia. It has also introduced a pre-paid product and a service focusing on leisure travellers, which Nathanson says will counter the customary December-January sales dip when business people travel less.
Tips for reinventing:
- Ask clients for testimonials.
- Create relationships with industry associations.
- Attend conferences and expos in the sectors you want to sell to.
- Engage a public-relations company to sell your story and advise on communications.
- Seek investors with expertise in areas you lack.
Start-up champion
"Start Up Champions - Ivan Kaye, Adrian Vanzyl and Viki ForestSmart Company - Tuesday, 20 February 2007 By Amanda Gome
Ivan Kaye is a rare breed in Australia. The former accountant runs advisory company BSI and two venture capital firms, ADI and Information City. He chooses to invest small amounts of money in high-risk start-ups in hot new industries, a space ignored by most venture capitalists in Australia.
He tells SmartCompany how … and why he invests in emerging technologies.
“I am into innovation. All the fun is investing in early-stage companies because after that it becomes different – full of managers, accountants and lawyers. I am also an entrepreneur. And you can’t invest in start-ups with five people unless you are an entrepreneur and have run a start-up with five people.
“At present we invest between $50,000 and $300,000 in a start-up. We specialise in web 2.0, wireless, software, ASPs, new media and mobile applications. Very few people invest in Australia at such an early stage so many people come to me and ask for money.
“Often they’ll say, ‘I have this great technology and I need $3 million’. But they don’t need $3 million. They need relationships, grants, programs to help them commercialise and get to the next step like COMET (the Federal Government’s Commercialising Emerging Technologies program) and Export Market Development Grants. We get the companies ready for a fee (usually between $1000 and $100,000.)
“If the guy is right and the chemistry is right, we invest. Initially it might be $50,000 but if the company needs more – like $700,000 – we will get co-investors. Of the $3 million we have invested since we started in 2000, we have raised $35 million in co-investment.
“Often entrepreneurs just need ideas. I just had a great session with Rex Hunt. He asked me, ‘How do I take my brand worldwide? Why not go fishing with a star like John Travolta and get him to tell you his life story and put that on primetime TV?’
“My biggest tip to entrepreneurs? Avoid indecision. If you can’t make a decision you are in limbo. So it’s better to make a decision even if it’s the wrong one. At least you learn by that.
Don’t sack the entrepreneur
When the business is so small, it will not survive without the entrepreneur. Once the business starts making decent sales, of $5–7 million, that’s when you start to think about replacing the entrepreneur with a management team because the business needs new skills at that stage.
“If we invest in 15 companies, we’ll get seven to the stage of needing $1–3 million and then four of those to the stage of needing $3–6 million. When they need $12 million we’ve made our money.
“Our biggest success was investing in digital company Quickcut, which was worth about $750,000 10 years ago and recently sold for $50 million.
Is it a world-first innovation?
“When someone comes to see us with technology they often claim it is a world-first. What do I know? I am an accountant. But I know all the experts. If it’s wireless, I ring Walter and I say what do you think? There is always something similar being developed somewhere so being first to market isn’t everything. It’s usually innovations that are second or third to market that make all the money.
“So many venture capitalists take the attitude in Australia that they love the technology but to take the company forward, they want to sack the entrepreneur. But if the entrepreneur is committed to making it work, mostly it will work. And I have rarely seen a business work where they have sacked the entrepreneur.
“The biggest danger is the entrepreneur saying, ‘I am off to do something else’. The big question is: will the entrepreneur stick around until the business is sold? But there is no way to be certain about this before you invest; it is just one of the risks you take.
Best time to invest
“At present we have a $7 million fund and we are raising money for a $40 million fund.
I feel this is our time. We started after the dotcom crash and have done the hard yards.
“This is also the time to invest in Australian companies. You can get in at very low prices and if you take them to the US, you get 20 times the return. We are approaching another bubble and people should come along for the ride!
“There is lots of money available and it is so much easier to get three or four rounds of funding than it used to be so you don’t need to take companies to IPO.
“The biggest change we will see in the next few years is the superannuation funds investing their money in start-up emerging technologies. New growth businesses around the internet will be hot. Everyone is communicating by VoIP, on their mobiles, by internet. That all has to be monetised. And so there are going to be people who are going to make a lot of money.
“At the moment superannuation funds are all focused on buyouts but soon there will not be the deal flow for all that money. Once a few investors make millions investing in early stage, they will follow and then we’ll really have a bubble.”
He tells SmartCompany how … and why he invests in emerging technologies.
“I am into innovation. All the fun is investing in early-stage companies because after that it becomes different – full of managers, accountants and lawyers. I am also an entrepreneur. And you can’t invest in start-ups with five people unless you are an entrepreneur and have run a start-up with five people.
“At present we invest between $50,000 and $300,000 in a start-up. We specialise in web 2.0, wireless, software, ASPs, new media and mobile applications. Very few people invest in Australia at such an early stage so many people come to me and ask for money.
“Often they’ll say, ‘I have this great technology and I need $3 million’. But they don’t need $3 million. They need relationships, grants, programs to help them commercialise and get to the next step like COMET (the Federal Government’s Commercialising Emerging Technologies program) and Export Market Development Grants. We get the companies ready for a fee (usually between $1000 and $100,000.)
“If the guy is right and the chemistry is right, we invest. Initially it might be $50,000 but if the company needs more – like $700,000 – we will get co-investors. Of the $3 million we have invested since we started in 2000, we have raised $35 million in co-investment.
“Often entrepreneurs just need ideas. I just had a great session with Rex Hunt. He asked me, ‘How do I take my brand worldwide? Why not go fishing with a star like John Travolta and get him to tell you his life story and put that on primetime TV?’
“My biggest tip to entrepreneurs? Avoid indecision. If you can’t make a decision you are in limbo. So it’s better to make a decision even if it’s the wrong one. At least you learn by that.
Don’t sack the entrepreneur
When the business is so small, it will not survive without the entrepreneur. Once the business starts making decent sales, of $5–7 million, that’s when you start to think about replacing the entrepreneur with a management team because the business needs new skills at that stage.
“If we invest in 15 companies, we’ll get seven to the stage of needing $1–3 million and then four of those to the stage of needing $3–6 million. When they need $12 million we’ve made our money.
“Our biggest success was investing in digital company Quickcut, which was worth about $750,000 10 years ago and recently sold for $50 million.
Is it a world-first innovation?
“When someone comes to see us with technology they often claim it is a world-first. What do I know? I am an accountant. But I know all the experts. If it’s wireless, I ring Walter and I say what do you think? There is always something similar being developed somewhere so being first to market isn’t everything. It’s usually innovations that are second or third to market that make all the money.
“So many venture capitalists take the attitude in Australia that they love the technology but to take the company forward, they want to sack the entrepreneur. But if the entrepreneur is committed to making it work, mostly it will work. And I have rarely seen a business work where they have sacked the entrepreneur.
“The biggest danger is the entrepreneur saying, ‘I am off to do something else’. The big question is: will the entrepreneur stick around until the business is sold? But there is no way to be certain about this before you invest; it is just one of the risks you take.
Best time to invest
“At present we have a $7 million fund and we are raising money for a $40 million fund.
I feel this is our time. We started after the dotcom crash and have done the hard yards.
“This is also the time to invest in Australian companies. You can get in at very low prices and if you take them to the US, you get 20 times the return. We are approaching another bubble and people should come along for the ride!
“There is lots of money available and it is so much easier to get three or four rounds of funding than it used to be so you don’t need to take companies to IPO.
“The biggest change we will see in the next few years is the superannuation funds investing their money in start-up emerging technologies. New growth businesses around the internet will be hot. Everyone is communicating by VoIP, on their mobiles, by internet. That all has to be monetised. And so there are going to be people who are going to make a lot of money.
“At the moment superannuation funds are all focused on buyouts but soon there will not be the deal flow for all that money. Once a few investors make millions investing in early stage, they will follow and then we’ll really have a bubble.”
How to seduce start-up experts
The venture capital path can be a rewarding one, but very few have what it takes to attract the funding, writes Tony Kaye - The Australian Feb 23 2007
WHEN Susan Jersky launched her innovative music and video streaming business EMStream six years ago, she knew straight away that it had huge market potential.
After 18 months of exhaustive software testing, gaining regulatory approvals and piloting her multimedia system with various pubs and hotels around Sydney, Jersky was ready to rock 'n' roll.
"I'd sort of done all the groundwork and basically I was ready to start rolling things out, and at that stage I realised I needed more cash," Jersky says.
"I realised I needed to bring on additional people and start setting up the business."
To make that happen, Jersky made an approach to integrated business services provider Business Services International, which offered guidance and support -- as well as providing access to venture capital.
BSI is a power player in the Australian marketplace, matching up promising technologies with investors and even providing incubation support to ensure start-ups receive management expertise and guidance.
Every three months, BSI holds investor forums in Sydney, Melbourne and Brisbane where it showcases innovative companies to 200 rich individuals and funds.
These companies have great technologies and the potential for exponential growth to export markets.
"Our whole purpose is to help companies to grow," says BSI director Ivan Kaye, who co-founded BSI with business partner Alan Milwidsky. "Over the last three years, BSI has showcased 110 companies and, of those, 50 have raised finance in one form or another. More than $30 million has been raised."
BSI is sponsored by the Victorian Government through its VicStart Program and by the federal Government, which supports BSI's Australian Distributed Incubator (ADI) fund. ADI is a $7 million fund that invests in ICT companies and has a joint venture to invest with another fund, Information City. Both ADI and Information City have invested in 35 companies since the program started.
Leads also come through from the federal Government's COMET Program, which provides finance to help companies get investor-ready and validate their products for export markets.
"We work best with entrepreneurs who welcome our involvement as well as our venture capital funding," says Kaye. He adds that key characteristics that BSI looks for are "possessing unusual intelligence, energy, vision, talent, persistence and drive to get their ideas into tomorrow's leading technology companies. We value entrepreneurs who identify impressive market opportunities and are not afraid to go after them."
EMStream is one of the success stories, with its system now being used in more than 200 pubs and clubs around Australia. And Jersky has aggressive plans to expand.
But Michael Quinn, manager partner of venture capital firm Innovation Capital, says very few companies have what it takes to get their foot in the venture capital door.
Most, he says, come with their cap in hand but are totally unprepared when they come to present their case. "We probably see three deals a day and there's probably only one in 20 where the people have done some homework, and put a package together and presented it in a way that's going to get our attention," Quinn says. Of that one in 20, he adds, only 5-10 per cent will make it to a venture financing.
A common mistake, Quinn says, is looking for funding with only basic business plans, which fail to provide vital financial details or explain the opportunities to deliver a profitable return to their investors. Jersky says that accessing venture capital through BSI was definitely a big advantage, but so was the management support she was given.
After initially meeting BSI, Jersky was given the opportunity to locate her business there, so its team could better understand EMStream and assess the potential business opportunity. "It was very helpful, as it was basically like an incubator situation. They gave me free space in their offices and they got to understand our business, and about six months later we got a deal going," she says.
"I would never be where I am today without BSI -- there's absolutely no doubt about it in my mind."
After 18 months of exhaustive software testing, gaining regulatory approvals and piloting her multimedia system with various pubs and hotels around Sydney, Jersky was ready to rock 'n' roll.
"I'd sort of done all the groundwork and basically I was ready to start rolling things out, and at that stage I realised I needed more cash," Jersky says.
"I realised I needed to bring on additional people and start setting up the business."
To make that happen, Jersky made an approach to integrated business services provider Business Services International, which offered guidance and support -- as well as providing access to venture capital.
BSI is a power player in the Australian marketplace, matching up promising technologies with investors and even providing incubation support to ensure start-ups receive management expertise and guidance.
Every three months, BSI holds investor forums in Sydney, Melbourne and Brisbane where it showcases innovative companies to 200 rich individuals and funds.
These companies have great technologies and the potential for exponential growth to export markets.
"Our whole purpose is to help companies to grow," says BSI director Ivan Kaye, who co-founded BSI with business partner Alan Milwidsky. "Over the last three years, BSI has showcased 110 companies and, of those, 50 have raised finance in one form or another. More than $30 million has been raised."
BSI is sponsored by the Victorian Government through its VicStart Program and by the federal Government, which supports BSI's Australian Distributed Incubator (ADI) fund. ADI is a $7 million fund that invests in ICT companies and has a joint venture to invest with another fund, Information City. Both ADI and Information City have invested in 35 companies since the program started.
Leads also come through from the federal Government's COMET Program, which provides finance to help companies get investor-ready and validate their products for export markets.
"We work best with entrepreneurs who welcome our involvement as well as our venture capital funding," says Kaye. He adds that key characteristics that BSI looks for are "possessing unusual intelligence, energy, vision, talent, persistence and drive to get their ideas into tomorrow's leading technology companies. We value entrepreneurs who identify impressive market opportunities and are not afraid to go after them."
EMStream is one of the success stories, with its system now being used in more than 200 pubs and clubs around Australia. And Jersky has aggressive plans to expand.
But Michael Quinn, manager partner of venture capital firm Innovation Capital, says very few companies have what it takes to get their foot in the venture capital door.
Most, he says, come with their cap in hand but are totally unprepared when they come to present their case. "We probably see three deals a day and there's probably only one in 20 where the people have done some homework, and put a package together and presented it in a way that's going to get our attention," Quinn says. Of that one in 20, he adds, only 5-10 per cent will make it to a venture financing.
A common mistake, Quinn says, is looking for funding with only basic business plans, which fail to provide vital financial details or explain the opportunities to deliver a profitable return to their investors. Jersky says that accessing venture capital through BSI was definitely a big advantage, but so was the management support she was given.
After initially meeting BSI, Jersky was given the opportunity to locate her business there, so its team could better understand EMStream and assess the potential business opportunity. "It was very helpful, as it was basically like an incubator situation. They gave me free space in their offices and they got to understand our business, and about six months later we got a deal going," she says.
"I would never be where I am today without BSI -- there's absolutely no doubt about it in my mind."
Mark Steadman and Jason Ashford of Melbourne Business School interviews Ivan Kaye of BSI about key trends and Insights
Key trends & insights:
(1) VC market in Australia is maturing
- But is lagging a few years behind the US
- Biggest constraint to growth is credibility of very early stage funding (Series A+ funding has never been an issue).
- Market needs to see more successful investments (i.e. exits) to encourage more investment. However these are in the pipeline and now starting to come through. Once this happens it should give investors (especially fund managers) confidence to start investing.
- Government is pumping in money to help develop this sector. $200m over 5 years to be matched with private equity (IIF3 programme)
(2) Between 2001 and 2005 there has been a dearth of funding available to make investments between $200K - $5m by venture capital, and Angel Funding in Australia is in its infancy
- Funding mainly provided by HNW investors, but there has been a lack of structure with these investments.
- The BSI Investor Forum has been addressing this gap in the market place, having held 25 Investor Forums over the past 4 years, showcasing 8 companies every 3 months to an Audience of +150 Early Stage Investors in Sydney, Melbourne and Brisbane.
- The early stage VC Industry is in a Catch 22. Because the Venture Capital industry is in its infancy, there has not been many exits in the early stage VC space, which has in turn not attracted Funds from Institutions. Once fund managers show exits and strong returns of these funds, fund managers should start to loosen the purse strings.
(3) Australian VC’s are increasingly partnering with overseas VCs
- Australia has same issues as Singapore and Israel…. Strong education, strong R&D Science , Strong Innovation, but lack of population. Good for a testing ground. Australian companies usually have to move to US, Europe, China or India to get scale of operations.
- As a result US VC market is very important to Australia
- As a result, early Stage Companies will get their biggest Exits via trade sales in the US
- This doesn’t cause a problem with money flowing back into Australia however as a virtuous cycle is in place as successful entrepreneurs who have exited in the USA turn into investors who invest back in Australian Companies.
(4) Australia is well placed to make the most of a bubble in 3-5 yrs
- Money is not a constraint
- Deal flow is good here – even compared to the US.
- Good quality technological, scientific development & innovation is definitely here.
- There is plenty of government support.
- Hot sectors are the Internet, and Biotechnology.
(1) VC market in Australia is maturing
- But is lagging a few years behind the US
- Biggest constraint to growth is credibility of very early stage funding (Series A+ funding has never been an issue).
- Market needs to see more successful investments (i.e. exits) to encourage more investment. However these are in the pipeline and now starting to come through. Once this happens it should give investors (especially fund managers) confidence to start investing.
- Government is pumping in money to help develop this sector. $200m over 5 years to be matched with private equity (IIF3 programme)
(2) Between 2001 and 2005 there has been a dearth of funding available to make investments between $200K - $5m by venture capital, and Angel Funding in Australia is in its infancy
- Funding mainly provided by HNW investors, but there has been a lack of structure with these investments.
- The BSI Investor Forum has been addressing this gap in the market place, having held 25 Investor Forums over the past 4 years, showcasing 8 companies every 3 months to an Audience of +150 Early Stage Investors in Sydney, Melbourne and Brisbane.
- The early stage VC Industry is in a Catch 22. Because the Venture Capital industry is in its infancy, there has not been many exits in the early stage VC space, which has in turn not attracted Funds from Institutions. Once fund managers show exits and strong returns of these funds, fund managers should start to loosen the purse strings.
(3) Australian VC’s are increasingly partnering with overseas VCs
- Australia has same issues as Singapore and Israel…. Strong education, strong R&D Science , Strong Innovation, but lack of population. Good for a testing ground. Australian companies usually have to move to US, Europe, China or India to get scale of operations.
- As a result US VC market is very important to Australia
- As a result, early Stage Companies will get their biggest Exits via trade sales in the US
- This doesn’t cause a problem with money flowing back into Australia however as a virtuous cycle is in place as successful entrepreneurs who have exited in the USA turn into investors who invest back in Australian Companies.
(4) Australia is well placed to make the most of a bubble in 3-5 yrs
- Money is not a constraint
- Deal flow is good here – even compared to the US.
- Good quality technological, scientific development & innovation is definitely here.
- There is plenty of government support.
- Hot sectors are the Internet, and Biotechnology.
The Summer 2007 Investor Forum showcased 6 Innovative Companies in Sydney, Melbourne and Brisbane to 150 potential Investors at its 15th Forum
Lisa Donath, Brad Klibansky and Candida Dacosta of BSI - organising the events
Alan Milwidsky and the Sydney Forum
Melbourne ForumBSI held the Summer 2007 BSI Investor Forum, at the Grand Hyatt in Melbourne and Hilton Hotels in Sydney and Brisbane. 6 innovative companies presented their opportunities to 150 potential Investors.
The Companies presenting have three things in common:
They have innovative technology, are leaders in their area and are in need of funding to take the next big step.
For pictures of the event click here
The Companies presenting have three things in common:
They have innovative technology, are leaders in their area and are in need of funding to take the next big step.
For pictures of the event click here
SEEKing Business - From Conception to IPO with Paul Bassat
Ivan Kaye (BSI) WIlliam Maudlin (BSI People) and Paul Bassat (Seek)On Thursday, 22nd Feb 07 Digital Harbour was buzzing with young entrepreneurs who had the chance to gain insight into how to run a successful business from one of the best Master Entrepreneurs: Paul Bassat, CEO and Co-Founder of SEEK.com.au
Paul talked about how SEEK was born and developed and went through its different stages from setting up the business to its current state. He explained what competition they were against initially and issues they had to solve along the way: from getting new clients to receiving enough funding.
Paul talked about how SEEK was born and developed and went through its different stages from setting up the business to its current state. He explained what competition they were against initially and issues they had to solve along the way: from getting new clients to receiving enough funding.
Courses for Men
Women In Charge Of Everything) is proud to announce the opening of its EVENING CLASSES FOR MEN!
OPEN TO MEN ONLYALL ARE WELCOME Note: due to the complexity and level of difficulty, each course will accept a maximum of eight participants.
The course covers two days, and topics covered in this course include:
DAY ONE
HOW TO FILL ICE CUBE TRAYS
Step by step guide with slide presentation
TOILET ROLLS- DO THEY GROW ON THE HOLDERS?
Roundtable discussion
DIFFERENCES BETWEEN LAUNDRY BASKET & FLOOR
Practicing with hamper (Pictures and graphics)
DISHES & SILVERWARE; DO THEY LEVITATE/FLY TO KITCHEN SINK OR DISHWASHER BY THEMSELVES?
Debate among a panel of experts.
REMOTE CONTROL
Losing the remote control - Help line and support groups
LEARNING HOW TO FIND THINGS
Starting with looking in the right place instead of turning the house upside down while screaming - Open forum
DAY TWO
EMPTY MILK CARTONS; DO THEY BELONG IN THE FRIDGE OR THE BIN?
Group discussion and role play
HEALTH WATCH; BRINGING HER FLOWERS IS NOT HARMFUL TO YOUR HEALTH
PowerPoint presentation
REAL MEN ASK FOR DIRECTIONS WHEN LOST
Real life testimonial from the one man who did
IS IT GENETICALLY IMPOSSIBLE TO SIT QUIETLY AS SHE PARALLEL PARKS?
Driving simulation
LIVING WITH ADULTS; BASIC DIFFERENCES BETWEEN YOUR MOTHER AND YOUR PARTNER
Online class and role playing
HOW TO BE THE IDEAL SHOPPING COMPANION
Relaxation exercises, meditation and breathing techniques
REMEMBERING IMPORTANT DATES & CALLING WHEN YOU'RE GOING TO BE LATE
Bring your calendar or PDA to class
GETTING OVER IT; LEARNING HOW TO LIVE WITH BEING WRONG ALL THE TIME
Individual counselors available
OPEN TO MEN ONLYALL ARE WELCOME Note: due to the complexity and level of difficulty, each course will accept a maximum of eight participants.
The course covers two days, and topics covered in this course include:
DAY ONE
HOW TO FILL ICE CUBE TRAYS
Step by step guide with slide presentation
TOILET ROLLS- DO THEY GROW ON THE HOLDERS?
Roundtable discussion
DIFFERENCES BETWEEN LAUNDRY BASKET & FLOOR
Practicing with hamper (Pictures and graphics)
DISHES & SILVERWARE; DO THEY LEVITATE/FLY TO KITCHEN SINK OR DISHWASHER BY THEMSELVES?
Debate among a panel of experts.
REMOTE CONTROL
Losing the remote control - Help line and support groups
LEARNING HOW TO FIND THINGS
Starting with looking in the right place instead of turning the house upside down while screaming - Open forum
DAY TWO
EMPTY MILK CARTONS; DO THEY BELONG IN THE FRIDGE OR THE BIN?
Group discussion and role play
HEALTH WATCH; BRINGING HER FLOWERS IS NOT HARMFUL TO YOUR HEALTH
PowerPoint presentation
REAL MEN ASK FOR DIRECTIONS WHEN LOST
Real life testimonial from the one man who did
IS IT GENETICALLY IMPOSSIBLE TO SIT QUIETLY AS SHE PARALLEL PARKS?
Driving simulation
LIVING WITH ADULTS; BASIC DIFFERENCES BETWEEN YOUR MOTHER AND YOUR PARTNER
Online class and role playing
HOW TO BE THE IDEAL SHOPPING COMPANION
Relaxation exercises, meditation and breathing techniques
REMEMBERING IMPORTANT DATES & CALLING WHEN YOU'RE GOING TO BE LATE
Bring your calendar or PDA to class
GETTING OVER IT; LEARNING HOW TO LIVE WITH BEING WRONG ALL THE TIME
Individual counselors available
Wednesday, February 07, 2007
Innovation, Incubation and Venture Capital is thriving in the tiny State of Israel
Innovation, Incubation and VC in Israel is alive and well. Published by Ivan Kaye 10 November 2006
For more pictures click to BSI Website
The Delegates on the Helen Coonan Delegation 5-11 November 2006
The past week in Israel on the Australian Israel Chamber of Commerce Mission headed by Helen Coonan, Minister of Communication, Technology and the Arts , has been an eye opener and a learning experience as to why Venture Capital and Overseas Investment has flourished and continues to flourish in the tiny state of Israel.
The entrepeneurial spirit, the focus on Education and Innovation, the strong links between Universities, Centres of Excellence such as the Weizman Institute, Incubation and Venture Capital and the Alignment between the Government Programs and Innovation Community has provided a WIN WIN WIN WIN
What is the Incubation program?
Simply put, a registered Incubator (of which there are 22 in Israel) receives up to an 85% loan from the government for every investment it makes in an incubatee.
What does this mean?
Company A needs a $600k investment - the Incubator invests $100k by the Incubator and $500k is Invested by the Government (to be repaid with Interest at LIBOR if the venture achieves a succesful outcome thorough an exit).
Company B needs a $900k investment - and $500k is Invest by the Government (to be repaid with Interest at LIBOR if the venture achieves a succesful outcome thorough an exit).
The result:-
A Win for the Incubatee – he receives the money needed to commercialise his idea with the support of professionals in an encouraging environment, that does not slate failure, but learns from it. This results in confident, passionate Entrepeneurs willing to “have a go”
A Win for the Venture Capitalists – A rich source of deal flow that has been validated by the supply chain (the Incubator is often connected to a Venture Capitalist). This saves time on due diligence and gives the VC an opportunity to make Series A and B rounds with a fair certainty that the exit will give a decent multiple for the fund and the Investors. Israel has the 3rd most Companies listed on the NASDAQ.
A Win for Government – Entrepeneurship and Innovation drives the Economy, Increases Employment, Increases Exports and encourages Foreign Investment. The recognition of the Education and focussed Innovation has resulted in the major Conglomerates building R&D Centres of Excellence in Israel (Motorola and Intel to name a few.)
Haim Kopans of Incubator JVP Studio, which is owned by Venture Capitalist JVP said that their fund resulted in Private Coinvestment to Government of 7:1 after the 3rd year of operation, and will be a lot higher over the forthcoming years. A clear indication of the programme’s success.
EXITS
Exits through IPO’s are more difficult than before. The requirement for high profitability and growth rates which young companies have difficulty reaching, and the stringent regulatory requirements of the Sarbanes Oxley rules have made it difficult for companies to make an IPO . We are in a period that is exactly the opposite of the bubble period when you could float unstable companies which didn’t make any profit at all.
9 out of 10 exits in the US last year were through acquisition deals in which the return on investment for VC’s have been high. The reason is because the buyers are technology companies which prefer, for financial and organizational reasons, to acquire an off-balance sheet R&D activity which will not be seen in the company’s financial statements, and which will not affect the organizational character of a mature, publicly-traded company. These companies are willing to pay five times the R&D costs of start-up companies, or five times revenue, which is a great exit, and a great buy for the acquirer.
VC’s need to work with Investees to build good, profitable businesses, with revenue and proof of scalability before an exit. The VC’s who do this will get their exponential returns, but over a longer period of time says Chemi Peres of Pitango Venture Partners, who has recently raised their 4th Fund.
RETURNS
Investments in venture capital have delivered the highest profits over the long-term, compared with those in other fields: a 15-20% yield over 20 years, compared with 10% in stocks and 4-5% in bonds.
We are in a global market that is expanding continuously especially in markets such as India and China, Brazil and Eastern Europe,who have a large untapped market for technology products. This means that demand for new technologies and their products is on the rise, and one will get high premiums on technological innovation.
This bodes well for Venture Capital.
RECENT SUCCESS STORY IN ISRAEL
The sale of Passave Inc. to PMC-Sierra Inc. (Nasdaq: PMCS) for $300 million, after $13 million had been invested in it, (BRM Capital made a 20 fold yield on Passave, which returned one third of the $150 million fund) Maenashe Ezra says “we invested in Passave at the lowest point of the depression in 2002. No one wanted to invest, companies’ values were low, as were the amounts of capital that were raised. It turns out that these were the good years. A professional investor knows that you invest when prices are low, and not when they are rising. To sum up, I’m optimistic.”
Israeli companies that have become significant players, include M-Systems Flash Disk Pioneers (Nasdaq: FLSH), Amdocs (NYSE: DOX), Mercury Interactive Corp. (Pink Sheets:MERQ.PK), Comverse and others.
To put it in a Nutshell, ”Innovation and venture capital is alive and well in Israel.”
BSI Showcases the 14th BSI Investor Forum in Melbourne, Sydney and Brisbane- Where Innovation Meets Capital
7 Innovative Companies presented at the 14th BSI Investor Forum (The Spring 06 Collection)
With the support of Victoria's Innovative Vicstart Programme, BSI showcased the 14th BSI Investor Forum at the Crown in Melbourne.
for more pictures see BSI Investor Forum
Presenters and the BSI Team doing the 14th BSI Investor Forum Roadshow in Sydney, Melbourne and Brisbane
Steve Rafter and Anthony of CBTV
Steve Rafter founded CBTV, a producer and broadcaster of niche content, such as technology- based educational content exclusively for the internet, with the revenue model based on advertising before and after each session which is broken up into 3-5 minute bytes to meet consumer demand. 5 Episodes have been prototyped with 3-5 thousand hits per day. Partners include M&C Saatchi, Hot House, DCITA. Advertisers could include Canon, Sony, Samsung, Qantas, Harvey Norman and Motor Dealers.
David Wong presented the E2E It opportunity. E2E IT provides wireless temperature monitoring solutions with its patented product Temp Track. Temp Track automates temperature monitoring and recording 24/7 and provides auditable records for temperature management. The system is scalable, easy to install and unique in design and performance. Customers can include Health Companies for Vaccine Wastage prevention, Pharmaceutical Industry, Hospitals, Food Manufacturers. International Expansion via Distributors. ETE is a spinoff from Ericssons R&D Centre in Melbourne.
Gary Smith of WinappTechnology presented the Echo opportunity, an administration tool that sits on top of Sharepoint. Echo is currently selling to large corporates in Australia, Europe and the USA. Gary is seeking capital to develop the USA infrastructure to capitalise on the growth of Sharepoint 2007
Dieter Bohm of Catchlog and Ian McManus of My Business Manager
Dieter Bohm, a fisherman by trade, founded CATCHLOG, and has built a best of breed Fishing Vessel Management System, which includes, amongst other functions an Electronic Logbook, Catch Analysis, Industry Benchmarking, Stores Inventory and Maintenance. The system includes a government approved electronic logbook, authorised by Australian Fish Management AUthority (AFMA) and Dept of Primary Industries and Fisheries. The product is easy to install and productive from day 1. The Value Proposition to the Ships Captain (Increase focus on fishing - less time on admministration) Government (Accurate real time data, analysis of fishong stocks, Fleet (asset management capability and real time catch position analysis, and Environmentalists (Data to track endangered species). The first installation occurred in 2005, and currently 80% (70) of Northern Prawn Fisheries are using the system. The Catchlog Suite is a must for all Commercial Fisherman. Funding is being sort to take Catchlog International.
Ian Mcmanus presented My Business Manager, which provides real time dashboard reporting that links in with major accounting software such as MYOB, Quickbooks and Pastel. It takes accounting data and transforms it into management reports in minutes. My Business Manager has been developed with the SME in Mind. For an upfront fee of $399 and $100pa , the small business manager will get reports that are easy to understand, and will impress investors and bank managers. It enables the SME to make informed decisions, and is based on the premise "what you can measure you can manage". The product is intended to be rolled out via accountants, VARS of accounting packages, bookkeepers, direct sales from Eb and referrals.
Branka Korac and a team of 8 have developed and commercialisedPortfolio Business Technology, a scalable enhancement to powerpoint. It currently has 30 blue chip corporate clients in Australia, and is now looking to expand Globally. PBT will scale through Direct Sales, Targeted Distribution Channels and the Web
MHelp replaces text help with full Multimedia help using a combination of animation, audio and graphics to provide a step by step easy to follow format within a 1-3 minute movie clip. Increased productivity, improving skill base, retention of knowledge and improved business processes creates a powerful business case for large corporations to use MHELP.
John Crossley and Sandra D'Souza of Varietee and David Ehrlich of MBill
David Ehrlich presented the MBILL opportunity.
MBILL has created a mobile marketing and billing platform that has already integrated with 90% of US and UK Mobiles. It is currently seeking funding for a USA Rollout.
John Crossley and Sandra D'Souza founded Varietee which has developed a patented adjustable golf platform that enables you to practice your golf sewing from a variety of positions. The product can be installed at home for the avid golfer, or at Golf Clubs or Golf Ranges.
MELBOURNE
With the support of Victoria's Innovative Vicstart Programme, BSI showcased the 14th BSI Investor Forum at the Crown in Melbourne.
for more pictures see BSI Investor Forum
Presenters and the BSI Team doing the 14th BSI Investor Forum Roadshow in Sydney, Melbourne and Brisbane
Steve Rafter and Anthony of CBTV
Steve Rafter founded CBTV, a producer and broadcaster of niche content, such as technology- based educational content exclusively for the internet, with the revenue model based on advertising before and after each session which is broken up into 3-5 minute bytes to meet consumer demand. 5 Episodes have been prototyped with 3-5 thousand hits per day. Partners include M&C Saatchi, Hot House, DCITA. Advertisers could include Canon, Sony, Samsung, Qantas, Harvey Norman and Motor Dealers.
David Wong presented the E2E It opportunity. E2E IT provides wireless temperature monitoring solutions with its patented product Temp Track. Temp Track automates temperature monitoring and recording 24/7 and provides auditable records for temperature management. The system is scalable, easy to install and unique in design and performance. Customers can include Health Companies for Vaccine Wastage prevention, Pharmaceutical Industry, Hospitals, Food Manufacturers. International Expansion via Distributors. ETE is a spinoff from Ericssons R&D Centre in Melbourne.
Gary Smith of WinappTechnology presented the Echo opportunity, an administration tool that sits on top of Sharepoint. Echo is currently selling to large corporates in Australia, Europe and the USA. Gary is seeking capital to develop the USA infrastructure to capitalise on the growth of Sharepoint 2007
Dieter Bohm of Catchlog and Ian McManus of My Business Manager
Dieter Bohm, a fisherman by trade, founded CATCHLOG, and has built a best of breed Fishing Vessel Management System, which includes, amongst other functions an Electronic Logbook, Catch Analysis, Industry Benchmarking, Stores Inventory and Maintenance. The system includes a government approved electronic logbook, authorised by Australian Fish Management AUthority (AFMA) and Dept of Primary Industries and Fisheries. The product is easy to install and productive from day 1. The Value Proposition to the Ships Captain (Increase focus on fishing - less time on admministration) Government (Accurate real time data, analysis of fishong stocks, Fleet (asset management capability and real time catch position analysis, and Environmentalists (Data to track endangered species). The first installation occurred in 2005, and currently 80% (70) of Northern Prawn Fisheries are using the system. The Catchlog Suite is a must for all Commercial Fisherman. Funding is being sort to take Catchlog International.
Ian Mcmanus presented My Business Manager, which provides real time dashboard reporting that links in with major accounting software such as MYOB, Quickbooks and Pastel. It takes accounting data and transforms it into management reports in minutes. My Business Manager has been developed with the SME in Mind. For an upfront fee of $399 and $100pa , the small business manager will get reports that are easy to understand, and will impress investors and bank managers. It enables the SME to make informed decisions, and is based on the premise "what you can measure you can manage". The product is intended to be rolled out via accountants, VARS of accounting packages, bookkeepers, direct sales from Eb and referrals.
Branka Korac and a team of 8 have developed and commercialisedPortfolio Business Technology, a scalable enhancement to powerpoint. It currently has 30 blue chip corporate clients in Australia, and is now looking to expand Globally. PBT will scale through Direct Sales, Targeted Distribution Channels and the Web
MHelp replaces text help with full Multimedia help using a combination of animation, audio and graphics to provide a step by step easy to follow format within a 1-3 minute movie clip. Increased productivity, improving skill base, retention of knowledge and improved business processes creates a powerful business case for large corporations to use MHELP.
John Crossley and Sandra D'Souza of Varietee and David Ehrlich of MBill
David Ehrlich presented the MBILL opportunity.
MBILL has created a mobile marketing and billing platform that has already integrated with 90% of US and UK Mobiles. It is currently seeking funding for a USA Rollout.
John Crossley and Sandra D'Souza founded Varietee which has developed a patented adjustable golf platform that enables you to practice your golf sewing from a variety of positions. The product can be installed at home for the avid golfer, or at Golf Clubs or Golf Ranges.
MELBOURNE
TOP 10 LEGAL MISTAKES OF EARLY STAGE COMPANIES
Presentation by Andrew Arnold - Partner of Deacons at the TiE Angel Forum
Recently, an article written by James T Greenberger concerning the top 10 legal mistakes of US early stage companies was brought to my attention. I thought that it would be worthwhile to produce an Australian version of the top 10 legal mistakes of early stage companies. This article focuses in particular on issues that emerging companies should bear in mind when dealing with proposed venture investors.
1. Intellectual Property Searches
An early stage company should obtain adequate trademark and business name searches before commencing to trade under its chosen name. Registering an exciting or catchy domain name will not provide sufficient protection if there is an existing business conducted under the same name, or a substantially similar name. The last thing an emerging business needs is to establish goodwill under a proposed new name only to find out that the name must be changed in order to avoid threatened action from an existing user of the name. Potential consequences of commencing trading under someone else’s name include threatened actions for passing off and trademark infringement.
2. Failing to adequately secure intellectual property rights
Uncertainties concerning ownership of key intellectual property can kill a proposed investment. Any significant problems in this area must be identified at an early stage. The following are examples of commonly encountered intellectual property issues.
(1) Ownership of Intellectual Property versus Licence
Where intellectual property is a key asset of a new business, then the ownership rights in that intellectual property must be clear. Key documentation concerning ownership of intellectual property should be in place from the outset. If the company does not own key intellectual property, but merely licences that intellectual property from the founders, then this may be a problem for some venture investors. We have also seen instances where intellectual property rights are claimed via a complicated series of licences and sub‑licences, in some cases involving overseas entities, and in other cases involving documentation in foreign languages.
(2) Registrations
To the extent that a company has key intellectual property assets that can be registered such as trademarks, business names and domain names, cost effective registrations should be undertaken at the outset. In addition, if the investee owns patentable intellectual property, then it may be necessary to consider patent applications within Australia, or on a worldwide basis.
3. Inadequate contracts with employees and contractors
An early stage business should critically analyse the proposed form of employment contract or engagement letter to be used with key employees. It should be determined whether the contract adequately deals with issues of confidentiality and ownership of intellectual property. For example, the employment contract should specifically state that all intellectual property rights concerning inventions and ideas developed during the course of employment are assigned to the company. The ideas and contributions of key employees are fundamental intellectual property assets of the company. It is also important to attempt to sign up key employees for a specific agreed term, for example 2 to 3 years.
4. Treating Shares and Options as a Substitute for Cash
There is a temptation for early stage companies to offer consultants and other third parties shares or options in the company in lieu of cash payments. This has the advantage of reducing the demands on the limited cashflow of an emerging business, however it can also create a number of problems. Venture investors prefer to deal with a small number of shareholders, rather than facing the prospect of negotiating with a large body of shareholders. Therefore, the temptation to issue shares to a large number of family members at the outset should be resisted. Similarly, to the extent possible, shares should not be issued to contractors and other third parties as a substitute for cash. This can also create problems under the applicable securities laws, and is discussed under heading 6 below.
5. Failure to adopt a clear policy for employee shares and employee options
Two structures that are commonly used by companies wishing to issue shares or options to employees as part of an incentive package are as follows:
(1) Shares could be issued to the employees at market value and the company could lend funds to the employees to assist in the acquisition of the shares. In that circumstance, the employees potentially have access to a 50% CGT discount if they hold the shares for at least 12 months.
(2) An employee option scheme could be adopted. One benefit of options is that they are ideally suited to the concept of incentivising senior employees and directors. Options can be tied to performance milestones so that they only become exercisable in stages upon the achievement of those milestones. One disadvantage of options is that the establishment of an employee option scheme is more costly and time consuming.
In addition, whenever shares or options in the company are being issued, great care must be taken to ensure that there is no breach of the prospectus provisions of the Corporations Act 2001, as discussed in section 6 below.
6. Compliance with Securities Laws
A fundamental aspect of the professional management of the company is ensuring compliance with the law. An early stage company must take clear advice concerning the securities laws in the jurisdictions where it will raise money. Strict compliance with those securities laws must occur in order to avoid future problems.
Offers of securities can only be made pursuant to a prospectus that has been lodged with ASIC unless a specific exception applies. Most of the exceptions are found in section 708 of the Corporations Act 2001. Early stage and emerging companies issuing shares to angels and venture investors in Australia rely entirely on exceptions of the type found in section 708. Strict compliance with these exceptions is required.
7. Company Documentation
It goes without saying that in order to attract venture investors, a company must be able to demonstrate that it has a sound business, good quality management and clearly articulated plans for the future.
The managers of early stage companies must deal with many competing demands on their time and resources. One matter that is often given insufficient attention is putting in place the key documentation and legal structures that will ensure that the company is continuously “investor ready”.
Most emerging companies will focus on one key type of product or service. The core dealings of the company with both suppliers and customers should be conducted using appropriately drafted terms and conditions from the outset. This will minimise potential “leakage” of key rights, such as intellectual property rights in core software supplied to customers during the early stages of the company’s trading.
8. Legal Structures
In many jurisdictions, the choice of legal entity is a key issue for new businesses. In Australia, the entity of choice is usually an Australian proprietary company limited by shares. However, in some circumstances, there are other entities that may be appropriate. The choice of entity must be governed not only by the founders’ taxation considerations, but also with the view to the company’s future investment audience, ie, a structure must be put in place that is both very familiar to venture investors and can easily accommodate the issue of securities to new investors.
If a short term objective is to move into international markets, then the proposed structuring for such expansions should be considered at the outset. The founders’ taxation circumstances and the needs of future venture investors are paramount considerations. For example, incorporating in the British Virgin Islands may be attractive for some founders, however, it may make a business less attractive to future investors who are unfamiliar with that jurisdiction.
9. Shareholders Agreement
Many companies do not have a shareholders agreement until their first round of venture funding. I recommend that most early stage companies should have a simple shareholders’ agreement between the founders long before the company starts talking to venture investors. This shareholders’ agreement will identify the founders’ expectations and the rights of shareholders. In particular, it is important to place restrictions on the transfer of shares by existing shareholders and the issue of new shares. This will help to avoid difficult negotiations where circumstances change, for example, where one of the founders departs or a new key manager joins the company. If there is already a shareholders’ agreement in place at the time that the company begins talking to venture investors, then this will minimise the need for parallel negotiations between the founders at the same time as negotiations take place with potential venture investors.
10. Selecting a Venture Capitalist
The process of finding a venture capitalist does not simply involve looking for someone with money to invest, rather it is a process of selecting a trusted business partner who will add value to the company above and beyond a cash investment. The founders should thoroughly investigate potential venture investors, including their other investments in similar companies, the venture capitalist’s exit strategy and time horizon, whether or not the venture capitalist is willing and able to participate in future rounds of financing and the outcome of any previous disputes between the venture capitalist and management of other companies.
The company should be continuously aware that each potential investor has its own needs and expectations. Failure to adequately respond to the particular needs of a proposed investor may cause the company to miss an investment opportunity.
This article is intended as a general summary only and should not be relied on as a substitute for legal advice.
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