For some reason I'm on the AVCAL
mailing list... oh wait, it's because I started a business. Silly me. Anyway, so today's email congratulated Southern Cross Venture Partners on the first close of their first fund at A$100 million
. The fund will be capped at A$200 million, a level expected to be reached by the end of 2006.
“The Australian marketplace is highly attractive for early-stage technology investing due to the excellent deal flow and persistent shortfall of early-stage venture capital,” said Southern Cross Venture Partners Managing Director Bob Christiansen.
“The fallout from the tech bust saw investors move towards more conservative later-stage investments, but the time is now ripe for early-stage investing as a new stream of experienced entrepreneurs and interesting innovations emerge.
“Our experience shows the Australian early-stage market is grossly undercapitalised with not enough capital to support the qualified deal-flow for at least the next four to five years.
Okay, that's all well and good. But this only crystallises, to use a Butterssism
, what I have been hearing and experiencing about the local VC market. I have had my own attempts to secure venture capital backing, as have fellow local consumer Web plays b5 media
and The Podcast Network. I'm not talking out of turn with any of these Aussie companies here, they've all blogged about it themselves. And they have, as far as I know, had no joy. Nik Cubrilovic basically moved to the US to get VC
for Omnidrive. Minti managed to snare A$1.5 million
in February but it wasn't done through an actual VC firm AFAIK, was only Perth-based, and sounded more like angel funding.
Thus I present the top 10 ways that non-Valley-area 2.0 entrepreneurs have found to get around the fact that VC funds in your area are shitscared of consumer-facing businesses.1. Don't spend any money at all.
This is largely my strategy. Our outgoings are negligible, and have so far been covered by AdSense. (AdSense doesn't count as its own item, it's assumed. We're Web 2.0, baby!)2. Spend your own money.
You used to work at a dead end job at a multinational conglomerate as a salariman, and you had the bright idea to strike out on your own into the bright blue future. Good job, idiot, your bank balance is losing digits fast.3. Spend the bank's money.
If you already have one mortgage on your house, what's so bad about having another one? Interest rates will come down again, won't they? Surely?4. Spend your parents' money.
Ah yes, the bosom of one's familial units. I plead guilty to sponging a roast dinner once every week, although admittedly the benefits may be outweighed by the petrol costs in driving 100km round trip to get there.5. Spend the government's money.
Have you heard about this NEIS program
? It's like angel funding for no equity! All you have to do is sit through three months of boring seminars, then you get $10,000 in cold hard cash! Sweet!6. Spend money you don't have.
You know this one guy who built a million-dollar business just by buying supplies on his credit card. No worries! Not only will those pesky interest rates be coming down again real soon, you get all those lovely frequent flier points to fly to places to spend more of this money you don't have.7. Earn consulting money.
Sure, your skill sets may not fit with being an actual entrepreneur, but you can always dip your toe back in your old industry. Just one more day and you'll get back to your own business. Honest. Well, that per-hour rate is pretty tempting.8. Go back to work for The Man and become a silent partner.
You were never the main guy anyway, you've made your contribution. Someone needs to earn some money around here! 2.0 is stupid anyway. I've still got equity, remember!
9. Spend MSM money.
This is great, we're screwing The Man for real dollars! By day we tug the forelock and get ordered around by middle managers for phat consulting bank, and by night we undermine the MSM on our blogs. We're engineering the revolution from the inside, man! And yes, if you want to buy us, of course we're not tainted by association.10. Hope you'll get some MSM money at a future, indeterminate date.... guilty as charged.