Picked up an Venture Capital investment article in
the Australian Age earlier this month regarding investment in Australia by US VC's
and how the dollars are increasing. The only Silicon Valley VC I'm aware of that
has offices here and Australia is Southern Cross run by John Scull, Larry
Marshall & Tristen Langley. There
are Australian VC's but there aren't very many and the competition is much
stiffer in the US - if you take out the tyranny of distance.
One of the tenants of the article is that Start-ups
don't need to move to the US to succeed. My feeling on that one is mixed. I think that initially an Australian startup
can gain traction and sales in Australia (in fact I often advise they get sales
in Australia before looking for US capital) but in order to really grow big
they will need to have office(s) in the US in order to access the market just
like they always have. One of the
drivers not mentioned in the article is that US Venture capitalists like to
have their investments close at hand.
They want this so they can keep an eye on them and their business
network has the greatest potential to help the fledgling company as much as
possible.
The other interesting note was the authors idea that
many US start ups were overvalued and therefore Australian start ups were more
attractive. I don't know if that is actually the case but in my experience the
big hitters Sequoia Capital, DFJ, Kleiner Perkins Caufield & Beyers, Khosla
Ventures, LightSpeed Ventures etc., have always been willing to look at
Australian companies as long as they have a disruptive idea and they are
properly prepared and introduced. My hit
list of items necessary for an Australian VC to raise US capital includes:
- Disruptive technology or service with lots of room to grow (Most VC's want home runs - more than singles)
- Good core management team
- Passionate Leadership - investors believe management can do it
- Great Elevator pitch - You're able to quickly get to the "I get it" stage when describing what your product or service does - to the buyer as well as investor
- Have sales already in place with customers that are happy to sing your praises
- Pitch Deck - 10 slides - Short, Sweet, no fluff - the Pitch deck should be the starting point to great conversation not explain everything
- Know that no VC will sign any non-disclosure agreements to hear your pitch
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