A Silicon Valley state of mind
Silicon Valley is no longer just a place, its a state of mind. Photo: Michel A Bunn
While the startup community in Australia is growing, it's still a far cry from the dynamic eco-system that is driving the tech epicentre of Silicon Valley. However, entrepreneur and Silicon Valley native Tony Perkins wants to change all that.
Perkins is the founder of AlwaysOn, a US-based media company that has its sights set on the Australian startup scene.
"Ultimately, whether or not someone succeeds is a combination of luck, smarts, skills and the ability to get backing. We're there to put every one in the sandbox and see who will build the biggest castle."
Connecting the players
Tony Perkins is hoping to take advantage of a funding gap for start-ups Photo: firstname.lastname@example.org
This week, Perkins is in Sydney to promote what he hopes will be a leading event for startups in Australia, AlwaysOn Australia, which will be held on 11-12 April 2013. While tech events are not new in Australia, Perkins plans to combine this event with a trade mission where he plans to bring 30 CEOs of US tech companies and representatives of US-based venture capital firms to Australia to explore the startup scene.
Perkins hopes that his trade mission will create awareness among US firms about the opportunities available in Australia. "This way they can get the lay of the land and move into this 21 million-person market more rapidly," he says. "In addition, a lot of these folks are looking at the possibility of establishing in Australia to use it as an outpost to the Asia-Pacific region."
According to Perkins, alongside the emerging economies of China, India and Brazil, Australia is ripe with opportunity. In essence, Perkins is taking advantage of what he describes as a funding gap for startups. He is referring to the common complaint heard from founders that while they can access angel investment in Australia, they are faced with challenges when they need bigger venture capital (VC) funding.
Typically, there are fewer options available; those that do exist appear far more risk averse than US VC firms; and many startups are forced to head overseas as a result.
Perkins points out that this also means some Australian startups focus on building smaller operations with smaller customer bases, potentially missing out on scalable global opportunities. It's a sentiment reflected in a recent report "Silicon Beach: A study of the Australian Startup Ecosystem", an initiative of Deloitte Private, Pollenizer, startup publication From Little Things and the global Startup Genome Project.
Challenges facing Aussie startups
The research reported that fewer than 5 per cent of Australian startups are scaling into sustainable, global businesses. It also reported that US companies are raising 4.8 times more capital in the early stages, and a whopping 100 times more when they are ready to scale their operations.
Perkins believes that Australian geographical barriers are being broken down. "I believe that Silicon Valley is no longer a description of a geographic location – it's a state of spirit," says Perkins. "And I strongly believe that this spirit is being globalised. It's spreading all over the world, especially Australia."
A media company focused on connection
To help connect all the players on a global scale – whether they are founders, VCs, angels or advisers – Perkins also plans to launch a social network catering specifically for the startup and innovation community on 1 July 2013.
He also believes that his event and associated publications (such as his newsletter, which has over 500,000 subscribers) will help Australian founders get in front of the right people in the US. "Almost 100 per cent of the Australian entrepreneurs I speak to feel they need to have some kind of US connection. And they want to move into the US market sooner rather than later in order to legitimatise their business."
At the core of Perkins's work is essentially a media company (AlwaysOn) that plays an active role in facilitating connections. It's not the first time Perkins has built a media brand around all things tech.
He was creator and former editor-in-chief of Red Herring, one of the first magazines which focused primarily on tech-related, Silicon Valley-based companies. "I get a lot of personal satisfaction championing entrepreneurs because I'm an entrepreneur myself. I can feel the entrepreneurs' pain. I think that gives me a unique ability to observe the market."
It's the insight of someone who has lived and breathed Silicon Valley since he was a child. Perkins grew up in Menlo Park, an area dominated by venture capital and private equity firms. His father was a medical doctor who counted David Packard (of Hewlett Packard) as one of his patients. Perkins's geeky older brother used to attend meetings of the Homebrew Computer Club, a group of computer enthusiasts which included Steve Jobs and Steve Wozniak, before they founded Apple.
After Perkins graduated from a degree in political science and Western European history from the University of California, he realised these skills were unlikely to help him create the Next Big Thing in technology. Instead, he joined Silicon Valley Bank and began writing loans to the Next Big Things in technology. Perkins also co-authored The Internet Bubble: Inside the Overvalued World of High-Tech Stocks in 1999, a book that forewarned the dotcom crash.
Facilitating survival of the fittest
These days, he is passionate about ensuring that AlwaysOn is a business that nurtures a global marketplace for all stakeholders in the tech community. A key initiative is to connect US investors with Australian startups. "Innovation companies will drive the global economy," he says. "There are a lot of great companies here that serve the national market. And I fully believe that the government and investment community here will understand that this is the future of the economy.
"Over time, we will see the national market continue to mature, but the good news is that we're now living in a globalised world. So while it's maturing, Australian startups can tap into the resources in this global market. The US in particular will come in and help plug the holes. Eventually we'll see more Australian investors get involved in the market and become more competitive with US investors."
Perkins doesn't boast that AlwaysOn has all the answers. "It's not a perfect road. We're like a sandbox where people can come in and play. Ultimately, whether or not someone succeeds is a combination of luck, smarts, skills and the ability to get backing. We're there to put every one in the sandbox and see who will build the biggest castle."