JavaScript disabled. Please enable JavaScript to use My News, My Clippings, My Comments and user settings.

If you have trouble accessing our login form below, you can go to our login page.

If you have trouble accessing our login form below, you can go to our login page.

We'll never be home to the next Google: experts


Alexandra Cain

They've got plenty of ideas, but Aussie start-ups struggle to find the capital to compete on the world stage.

They've got plenty of ideas, but Aussie start-ups struggle to find the capital to compete on the world stage.

The ‘next Google’ will never be built in Australia, according to early stage venture experts. They say start-ups will never be able to find Australian investors with the appetite to fund a speculative tech venture with a potential global reach.

“You need a bigger market to fund something like a Google. Although it has become much easier over the last five years to grow a global business with world-changing ambitions from here,” says Phil Morle, co-founder of start-up incubator Pollenizer.

We need to create the same ecosystem as there is in the States, where investors are prepared to invest in start-ups. 

“Because of the size of our market, its capacity to reach customers and lack of access to capital, start-ups have to make a decision about which path to fund, global or local.”

Alex French has his sights firmly set on the global stage.

Alex French has his sights firmly set on the global stage. Photo: Supplied

Pollenizer was part of a consortium of firms including Deloitte Private, Australian start-up publication From Little Things and global research group Startup Genome Project that recently released the report Silicon Beach: A study of the Australian Startup Ecosystem.

The research showed Australian firms struggle to access capital to grow and find it tough to build businesses that have the potential to expand internationally.

Morle rejects the idea that Australian start-ups are not looking to operate on the global stage.

“Australian entrepreneurs are ambitious. It’s just that the context here means they have to go offshore,” he says.

“When we do scale a business it’s incredibly robust and unlikely to fail because we’ve struggled so much to get it there.”

Dr Jana Matthews is the managing director of ANZ Innovyz START, an accelerator program for companies starting up the growth curve. She says one of the reasons Australian start-ups are not scaling up to take on the world is that the ecosystem to support them is still relatively young.

“We don’t have as many entrepreneurs who have already built start-ups who can recycle their experience. There are also fewer service providers and angel investors with experience dealing with growth companies,” she says.

“We need to educate people so they know what it means to invest in early stage ventures.”

Matthews also says entrepreneurs need to understand that starting a business is very different to growing a business. “To grow you need to delegate, bring people in, figure out your market and focus on it.”

She believes entrepreneurs looking for investment funds need to understand investors don’t just want a dividend; they want several times their money back

One Australian who has his sights firmly set on the global stage is Alex French, CEO of The Captioning Studio.

French has developed a video search engine that allows users to search for spoken words within millions of videos and navigate instantly to the point they wish to watch.

To date, the business has been largely self-funded - French says he has invested ‘‘hundreds of thousands of dollars’’ - but has also been through the ANZ Innovyz START program. It received about $120,00 in seed funding from private investors to develop a prototype product. It is currently raising $1.5 million, which will be used to take the product to market.

“We’re in discussions with investors and we’re speaking to a couple of venture capitalists. The process is about each side getting to know each other because it’s also about what the investor can bring to the table,” says French.

He found the contacts through the ANZ Innovyz START program where one of his mentors has now become an investor and chair of the business.

“We need to find funds to scale up and launch a huge product,” says French, who has his eye on international growth as well as domestic markets. “We’d love to be doing this in Australia but we may need to go overseas.”

Long-term, French is hoping to win a slice of the global search engine market, as well as develop other products. He agrees it’s important to create a strong start-up infrastructure in Australia.

“We need to create the same ecosystem as there is in the States, where investors are prepared to invest in start-ups. People are much more cautious here.”

Another entrepreneur with global ambitions is Alexander Stamp, who is establishing a global online livestock market called CloudHerd. Stamp’s strategy is to make the business work in Australia before establishing it overseas.

“The idea is to start small and blow up internationally,” he says.

Once he is ready to tackle international markets he plans to develop networks and connections from here before establishing a team offshore. “That way when we launch we’ll already have the pedal to the mettle.”

Stamp raised initial funding for the business through Incubate, the University of Sydney Union’s funding program for early stage ventures.

In the future he will explore raising capital in the US. “Raising capital in the US is easier for me because I’m an American citizen. It’s easier to go global if you’re prepared to go to the US and it’s harder to raise money here."

8 comments so far

  • Frankly I'm tired of these start-up stories. What's the point? It's representative of nothing more than a generation that seeks a 'quick buck' without expending physical effort. Websites and software based 'innovations' that offer no tangible benefit to society. For example Groupon, Twitter, and arguably, Facebook. Where did all the keen business minded folk, inventing new products, go? Products that are actually useful.

    Date and time
    December 12, 2012, 12:32PM
    • Desmond, so damn negative. open your eyes, you don't seem to realise the huge potential websites and software based businesses can provide to society, just check out these companies:
      Pozible - Crowd Funding
      Freelancer - connecting freelance employees with employers
      Xero - Online Accounting
      Bigcommerce - ecommerce site creator
      and don't forget sites like twitter and Facebook played a very important role in the Arab Spring so they definitely provided a tangible benifit to society.

      open your eyes
      Date and time
      December 12, 2012, 2:26PM
  • @open your eyes.
    accounting and commerce provide no benefit to society. Place commerce folk on a deserted island they'd be the first die. Seriously, making a living out of counting other people's money is no benefit to society. Take for example wall street and the bankers.

    As for freelancer, how did freelance employees deal with employers in the past? That's right the humble telephone, and possibly even email. Nevertheless the jobs required, were still completed, on time.

    In regards to facebook and twitter aiding the arab spring that is not entirely true. Social oppression came as a result of the liberties provided by the internet. See the Net Delusion, or Whither Internet Control, by Evgeny Morozov.

    Look I'm not saying that all internet based startups are pointless however I urge people to be realistic. Let's not forget the tried and tested small business approach. Invent, craft, and bring a product or service to market. This as opposed to a website where revenue is sourced solely, or mostly, through advertising. Advertising for companies that bring the aforementioned products and services to market.

    Date and time
    December 12, 2012, 3:23PM
    • Not sure why you think accounting and commerce provide no benefit to society then you explain that people should start up a small business, invent something then bring it to the market. Sounds like they may need to do the following;
      1) invent their product
      2) who would have thought products would cost so much to get to production stage? maybe they could list their product on Pozible to get crowed funding for the product.
      3) before putting your product up on Pozible they may want to jump on freelancer to get some help with their marketing material.
      4) with all this money coming in they may want to jump on Xero to help them track their budget forecast.
      5) now that the product is ready to sell they should probably jump on BigCommerce and build them-self a really nice looking eCommerce site.
      6) may need to jump back on freelancer to get some help with Search Engine Optimisation

      Then again how does any of this provide a benefit to society?

      open your eyes
      Date and time
      December 12, 2012, 10:10PM
  • The problem is that most startups fail and the people raising capital and the eco-system around this activity simply goes on to the next 'investor' with another bright idea. It's really more like gambling than investing.

    So many business plans are not worth the paper they are written on and many of the so called inovators are simply recycling ideas they've brought back from overseas anyway. The venture capitalists take commissions regardless of whether the idea is good or not so no wonder investors are wary. The motivations are these groups are not the same as long suffering investors who will probably never see a return on their money! The good news is smart investors can do so much more research themselves these days so perhaps the small Australian pool of investors is a sign of intelligence .....

    Date and time
    December 12, 2012, 5:13PM
    • I created a "start-up" which provides online naturopathic advice to people, usually in remote areas who don't have access to "alternative" sorts of health care. It hasn't been easy, but I'm proud of what we have achieved so far, and it has all been self-funded.

      Desmond if I could send you a link to our site I would, just to get your opinion on whether you feel something like this is of net benefit to society. fyi - we do not accept advertising or sponsorship of any kind so our advice can be independent.

      Date and time
      December 12, 2012, 11:21PM
      • Let's say that byy some miracle a New Google finds a way to get started in Oz. So what?! Will it continue to employ Aussies for long, or will it outsource its IT employment to the cheapest developing country it can use? Will it pay corporate tax here, or will it just do the 'Global Capitalist Shuffle' to ensure it pays a pittance in Bermuda or some other laundrette? And what will we have paid in government (i.e. public) start-up financial and tax releif assistance for all this?

        Come on. Get real. Resist the rent-seekers!

        Google Capitalism
        Date and time
        December 13, 2012, 9:24AM
        • There are investors and there is money available in Australia, but they are far too cautious. Investors think they can use expertise and experience to pick a winner, but they can't. Combined with their limited funds it means they dont make enough bets and the bets are too safe.

          Investors in the US understand it's a numbers game and they have the deep pockets to play. It doesn't matter how good you think your expertise is, most of the investments you make in early stage companies will fail. The path to success is to make lots of investments, to make them at earlier stages, and to make them in companies with new ideas, global markets and low barriers to adoption. This way, when you do have a success or two, they will easily pay for all the failures and provide an ROI that matches the risk.

          Entrepreneurs all think they have the ideas and expertise to be different (myself included), but most will fail anyway. Investors understand this, but then fall for the same trap themselves. If they stopped trying to pick sure things and went for more and riskier bets, the probability will start to work in their favour and we will see some bigger successes.

          Mark I
          Date and time
          December 13, 2012, 10:37AM

          Make a comment

          You are logged in as [Logout]

          All information entered below may be published.

          Error: Please enter your screen name.

          Error: Your Screen Name must be less than 255 characters.

          Error: Your Location must be less than 255 characters.

          Error: Please enter your comment.

          Error: Your Message must be less than 300 words.

          Post to

          You need to have read and accepted the Conditions of Use.

          Thank you

          Your comment has been submitted for approval.

          Comments are moderated and are generally published if they are on-topic and not abusive.

          Featured advertisers
          Small Biz newsletter signup

          Small Biz newsletter signup Small Biz news delivered to your inbox twice-weekly.

          Sign up now