Pathway to permanent Residency to Australia for High Net Worths

Permanent residency visas will be offered to people investing in innovative Australian ideas and emerging companies, as part of enhanced Significant Investment Visa (SIV) and new Premium Investor Visa (PIV)  from 1 July 2015.

These investor visas offer pathways to permanent residency.

Together with the new rules relating to the Medical Research Future Fund, crowd source funding, employee share schemes and tax breaks for small business - the government is looking to support innovation! 

Minister Robb said the programme aim is to drive innovation and make a real difference.

(And then he cuts back export entitlements to SME exporters? )

Minister of Immigration - Michaelia Cash  said “The Government is keen to attract international investors with business and entrepreneurial skills, who will bring the necessary capital to enhance investment into innovative Australian businesses,” 

Significant Investor Visa

From 1 July 2015, the Government intends that new SIV applicants will be required to invest at least $5 million in complying investments, which must now include: 

• At least $500,000 in eligible Australian venture capital or growth private equity fund(s) investing in start-up and small private companies. The Government expects to increase this to $1 million for new applications within two years as the market responds; 
• At least $1.5 million in an eligible managed fund(s) or Listed Investment Companies (LICs) that invest in emerging companies listed on the Australian Securities Exchange (ASX); and 
• A ‘balancing investment’ of up to $3 million in managed fund(s) or LICs that invest in a combination of eligible assets that include other ASX listed companies, eligible corporate bonds or notes, annuities and real property (subject to a 10% limit on residential real estate). 

The reforms to the SIV and introduction of the PIV were announced by the Prime Minister in October 2014 as part of the Government’s Industry Innovation and Competitiveness Agenda. 

Property does not count as a complying investment to qualify for a visa.

Further Information

Further information on the new complying investment framework for the SIV can be found on Austrade webpage: www.austrade.gov.au/invest/significant-investor-visa-and-premium-investor-visa-programmes.   

What happens when it all gets wrong before it all starts.

This post was inspired by Luke Hally from Dragonbill 

which was in turn inspired by Mike Moyer who wrote a great article in BRW called "Slicing the Pie" which discusses how to split the pie when there is no money in a start up - equity is split based on relative value that is agreed between the party based on what each brings to the table. (Eg 50/50 or 60/40 or 80/20! ) 

A common dilemma that I have seen all to often in a start - up is when a co-founder of such a company decide to split - but the company is still  effectively valueless 

Situation:-

2 people get together to commercialise an idea  that has been inspired by a pain in the marketplace.

The non- technical founder - the entrepreneur - let's call him Harry

The technical founder - let's call her Nadine

Both have no money - but decide to work together to create an MVP (minimum viable product) that's going to turn into the proverbial Unicorn (the next big thing)

It's now 1 year in - and the MVP is hot! The entrepreneur (Harry) is convinced that customers will be chomping at the bit and that the Unicorn will form.... But there is still much to do.

Nadine has had enough - she wants out - Harry is driving her mad - it's like Harry has come from a different planet and cannot communicate - he does not understand code - he does not understand that it cannot be done - and that it is impossible to do it his way - he is crazy - (it's like coders are from Mars and Entrepreneurs are from Venus :))

The business is effectively still valueless at this point .

Nadine has the code and will not release it until he gets paid for the work that he has done and is not prepared to get diluted!

Harry is seriously pissed off - as he cannot go forward - what does he do?

LESSON

"Whatever you do to set up you company and what ever contract and agreements you have, make sure you regularly get copies of the source code."

It’s not being untrusting or suspicious, it’s being prepared. Aside from arsehole protection, you need to be prepared for accidents or illness. Death or incapacitance is a tragedy, but it shouldn’t kill the business. 

(By the way - make sure you have in place a buy- sell agreement and key man insurance - it is key!!!)

ACTION POINTS to do TODAY

1. Do you have access to the source code for your project? If not, get it sorted out today. Call or message or email your tech cofounder right now and tell them you need to have a backup incase they have an accident, go rogue or die.

2. Get a developers agreement with your developer saying your company owns all the IP

3. Have the talk about equity and make it official - set up a company and have a shareholders agreement - so you all know where you stand and what is expected of each of you. Once everyone knows what is expected of them and the intention is that they will be fairly rewarded, you can focus your energy on building your empire together.

If you need any of the above feel free to email me on ikaye@bsi.com.au .

Tech Crunch disrupt - applications in by1 July 2015

If you are a startup - with a disruptive technology - call us , and we will hook you up with techcruch disrupt!!

TechCrunch Disrupt Battlefield

Hi Pages now raised 12m

From brw 

Home improvement marketplace HiPages has raised it’s second batch of $6 million inside a year, doubling down on a growth phase it hopes will see it become the ‘winner take all’ in a vertical where 99 per cent of revenue today goes elsewhere. 

The new round, which takes HiPages’ total external raising to $12 million after bootstrapping for a decade from 2004, was mostly returning investors including Right Click Capital, Australian Ethical Investments and former Packer family office, Ellerston Capital. Kestrel Capital was a new investor in this round, which was advised by Right Click’s Ari Klinger, and sees Vitek and his four co-founders (including brother Michael) retain a majority stake. 

The money will be spent improving “liquidity” in the marketplace, says HiPages co-founder and CEO David Vitek.

“For a localised marketplace like us, liquidity is a much bigger challenge than in that Freelancer model, where anybody anywhere can design you a logo,” he says. 

“Finding a concreter in Bilgola is a completely different proposition to finding a plumber in Randwick. We have to make sure we can keep solving for both, and putting the tradie and the consumer in touch as quickly as possible.”

The recent rollout of iOs and Android apps has helped alleviate the “phone tag” problem which Vitek admits bedevilled HiPages users in its early years.

A bigger liquidity challenge to overcome is the sheer amount of Australia’s home improvement market still transacted offline, or through HiPages’ major competitor, Sensis, owner of the TrueLocal brand.

“We put together the IBISWorld figures for all the trade categories we cover and came up with an annual spend in Australia of $130 billion, with 8.9 million households averaging six home service jobs per year,” Vitek says.

HiPages brokered jobs worth $1.35 billion in the 12 months to the end of March, almost exactly a 1 per cent revenue share, at a current run rate of 60,000 new job postings a month on the platform.

Tradespeople pay a subscription for access to the HiPages platform, receiving rights to an increasing number of ‘leads’ (essentially the opportunity to be one of up to three tradies quoting on a posted job) up to a top subscription rate of $300 per month.

HiPages check applicants’ credentials upfront, an expensive challenge itself according to Vitek. 

“For instance there’s totally different painters’ licence requirements just between NSW and Victoria, you wouldn’t believe how complex it is.”

It also trains tradespeople how to use its platforms, including the new apps.

No commission is charged on a completed job, at this point at least.

“We haven’t pushed monetisation too hard, it’s all about getting the customer experience right and continuing this growth phase,” says Vitek. He does not rule out applying HiPages’ marketplace systems to new verticals and geographies, but says winning a dominant position in Australian home improvement is the top priority for now.

Know your Funding Rounds if you want to hold on to your Equity

Great insights by Steve Baxter in BRW this week

As an innovator in the tech world- who doesn't want to be that billion dollar multinational?

These magical and mystical creatures even have their own name in start-up land:unicorns, says Steve Baxter - entrepreneur and investor, founder of co-working space River City Labs, founding director of StartupAUS and a Shark on Shark Tank Australia

Earlier this month, Heidi Roizen a Silicon Valley venture capitalist, wrote a great blog post on how to build a billion dollar company and walk away with nothing. 

One thing that I learnt 12 years ago from my friend and mentor Jerry Engel - a Professor of Business at HAAS  School of Business at Berkeley University in the Valley - was that the average successful startup could expect to be diluted to 2% of the company once there is a final exit, however very often, the founders and management will also get a percentage (up to 20pc of management and founder stock). 

Savvy investors know how important is to "keep the soul" of the business alive!

As a startup with a great idea - know  what equity you should hold on to as you grow your business. Understand the process and begin with the end in mind.

On Shark Tank, week after week, we have entrepreneurs ask for crazy amounts of cash for their business, or offering a shareholding that will see future fundraising eating into their ownership. And as an investor, if the founder doesn’t have enough skin in the game to justify the blood, sweat and tears they need to grow their business, it’s game over. And that’s no fun for anyone- says Steve.

So below is Steve’s 4 gems before doing a Cap Raise and starting the process of raising capital

1. Have a funding game plan and know your numbers 

Understand that there will be multiple raisings as the business grows - remember "exponential growth invariably means "cash burn"


A successful startup will often have a seed round, a series A, B and C round.

Every time you sell more of your business, you and your existing partners will get diluted - but remember , 15pc of a $100m is more than 100 percent of $1m!
Be upfront to your FFF investors (fools family and friends ) about what is likely to happen to their stake in the business as you hit your targets and continue growing.
From voting classes to vesting, discounts to dilution clauses, loan funding, government grants, convertible notes, backdoor listings etc etc – there are many different ways to manage how you get funds into your business.
Convertible notes are popular - a loan that converts into equity at a discount to a later valuation, which can allow for greater flexibility. 

2. Know the tricks of the trade

Investment is never straightforward.

Do your homework - the 5 day management course at HAAS Berkeley University is gold.

3. Get yourself a Team 

A team or advisory board who can help you with the process - a great innovation lawyer, patent attorney and investment banker or a Venture Capitalist that you know like and trust is gold! 

(Contact me and I will give you a referral to a few in Australia, Silicon Valley and Boston.)

Do your homework before you speak to any investors, and get an idea of the tools and ways that you can ma

4. Don’t be led by ego

Column inches or start-up buzz is fantastic to build your start-up into a business worth hundreds of millions, or even that billion-dollar figure. But don’t let ambition cloud your mind. Your value on paper is just that - and being perceived as too big too soon isn’t always a good thing.

Often, when tempted by a large valuation, a founder can lose sight of the real value of their equity holding.

But remember the plan, focus on the fundamentals, raise money with the Exit in mind. Hopefully, when you find yourself exiting your business, you’ll be well rewarded for your hard work.

Steve Baxter is an entrepreneur and investor, founder of co-working space River City Labs, founding director of StartupAUS and a Shark on Shark Tank Australia. Shark Tank airs on TEN every Sunday at 9pm.

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