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."
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