Small Business


Meet the man with a million dollar idea - literally

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Andrew Birt is pretty happy. When we chat, the Melbourne-based entrepreneur is in the US sipping a glass of wine with his business partner Phil Bosua. Four days ago, they launched a project on crowd-funding website Kickstarter. It was based on Bosua's idea of creating wi-fi-enabled LED lights you can control from your smartphone.

That means you can dim the lights, make them change colour, set timers and eventually control all your lights over the internet, even if you're on the other side of the world.

While the pair knew they had a good idea on their hands, they didn't expect the phenomenal reaction they got. You can read the full story about the LIFX light bulbs here.

Beyond expectations

They were looking for $100,000 to get their project off the ground. They set themselves a target of 60 days to achieve their goals. They reached it in a single day. At the time of writing, they have raised over $1 million and there are still 56 days to go.

It's a response that has them reeling. Co-founder Birt says: "It's been surreal." However, this is the kind of entrepreneurial high that Birt is chasing. He met Bosua through another business he founded, start-up accelerator AngelCube, based in Melbourne.


Before then, Birt had been working in an agency consulting to start-ups on marketing. Through working with early stage companies, Birt found himself unwittingly helping his clients with capital raising and finding investors.

Creating an entrepreneurial community

So in June 2011, he scaled back his marketing consultancy to launch AngelCube. "I looked at organisations like Y-Combinator and liked the way it provided mentoring to new companies and helped them raise funds," he says. Birt, 30, launched what he says is the first start-up accelerator in Melbourne along with co-founders Adrian Stone and Nathan Sampimon.

Sampimon founded co-working space Inspire9, a warehouse-style open-plan space in the inner-city Melbourne suburb of Richmond, which also houses the start-ups who are accepted into AngelCube's program. Stone provided the initial $100,000 investment to get the idea going. Birt hasn't contributed financially to the project but runs the operations. "Adrian is very hands-on," says Birt. "He doesn't draw a salary and it's a labour of love. He could be retired but spends 30 to 40 hours a week working with our start-ups."

Entrepreneurs who think they have an idea that's going to be the Next Big Thing, but don't have the funds to turn it into reality, can apply to participate in this program. Last year, Birt accepted four out of the 140 applicants. Birt says he prefers teams that include a technical co-founder (that is, someone who can code or is a software engineer), to apply. Each team receives $20,000 in seed funding and the amount cannot be used for salaries. Birt says: "A lot of this will go into marketing expenses, getting a logo designed, trade marketing, travel costs to the US, operational expenses and so on."

Making the cut

"I love hanging out with entrepreneurs and the bigger the community, the better," he says. "I love the fact you can go from an abstract idea into something you can turn into a company."

Of the four successful teams from last year, Birt says that two have gone on to secure additional funding of $150,000 each, one is "bootstrapping" and the other is no longer operating.

When he opened applications for this year's intake in March 2012, Birt also received about 140 applications. "Of these we chose eight," says Birt, who explains that start-ups need to commit to weekly milestones and attend mentoring sessions. "I liken it to a semester of an MBA. We made the program tougher this year so two of the start-ups have already dropped out. People leave for a variety of reasons but the program is pretty intense so you find out fairly quickly whether it's the right path for you. Of the remaining six, two of them have already closed their funding rounds."

In exchange for mentoring (there are about 70 mentors who donate their time to provide advice) and introducing start-ups to likely investors, AngelCube takes 10 per cent equity in the company.

Birt says the aspiring entrepreneurs his team works with need to be committed. "When we hear that someone's sold their house to go on their start-up journey, they're probably serious about it. But if they say 'I'm going to quit my job if I get into AngelCube', I'm not interested. By the time they get to us, they have to think that they're all in. They need to work out how they're going to survive."

Some live off their life savings, others stay living with their parents. This year's intake of founders range from age 23 to 38. "We try to help them raise money as quickly as possible," says Birt. "Once you've raised your money, you can pay yourself a modest salary of $50,000 to $60,000."

Funding AngelCube

AngelCube itself has raised further investment from private investors to the tune of $625,000. "AngelCube is a five-year fund. We plan to invest in 40 start-ups in that five-year period," says Birt. "We're going to be a $2-million fund and, over time, we'll raise the next $1.275 million, but we're not in a hurry to do so. All the investors are from Australia and I don't see any reason to get international investment."

While 40 start-ups – and the investors they collect on the way – have the chance to hit pay dirt, success is not guaranteed by any means. "Obviously a financial return is what drives this," says Birt. No doubt investors hope the next Facebook will be among these start-ups. "But the worst-case scenario would be if not a single start-up gets a return. If that happens, we will have still created a lot of jobs in the start-up community and supported an ecosystem to nurture them."

Unsurprisingly, being around so many aspiring entrepreneurs has fuelled Birt to - you guessed it - co-found his own start-up, the company behind the LIFX globes. Along with Bosua and five other team members, their debut has obviously been a hit. "I feel like I have enough time to build a big company outside of AngelCube," he says.

But ultimately, whether it's AngelCube or LED light bulbs, it sounds like Birt is in it for the thrill of the ride. "I love hanging out with entrepreneurs and the bigger the community, the better," he says. "I love the fact you can go from an abstract idea into something you can turn into a company. I actually really believe in the concept of entrepreneurship as a career. You can take it any direction you want. You're not working for someone else counting down the days until Friday. It's a privilege to be able to do that."

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