Month: April 2013

Written by Christopher Golis and featured on www.evancarmichael.com.au

This was the title of a Executive Education seminar held last Tuesday night in Sydney hosted by UTS and sponsored by PriceWaterhouseCoopers. Based on the opening speech by the Chair, Dr David Band of UTS, the question posed was driven by the lack of venture capital and government support in Australia and the supposed solution requiring the entrepreneur going to Silicon Valley to raise VC.

There were two first-class entrepreneurs on the panel, Kathy Phelan and Richard White. Kathy is the Founder/CEO of Small World Social, a company which has developed an interactive online platform that puts the person back into the equation by explaining products, assisting people with the understanding of old and new technology and guiding them through complex systems. Richard is the Founder/CEO of WiseTech International, which is has developed several world class products including include CargoWise, a global leader in logistics technology solutions; and eHealthWise, a provider of electronic data services for the healthcare industry.

Both were spending a substantial part of the year overseas not however to raise capital but for reasons of marketing and management. Both used Australia to develop and beta test their products and then went overseas to scale their company.

Interestingly both had raised external capital not from VCs but from angels. The message they both gave was that you needed to be self-funding otherwise you would be screwed by either the VCs or angels no matter where they were located.

With regard to government support Richard is in the camp that believes best thing governments can do is get out of the way. Kathy was of a different opinion. First she described how she used the new Innovation Patents to protect her IP. She said that this had become particularly important when dealing with bankers and investors. She then described herself as first class ferret for obtaining government grants and benefits ranging from Comet Commercialisation grants to 457 visas. She had estimated that for the two businesses she had launched she had collected over $6 million in benefits.

While the question posed was never answered I would make the following observations.

The venture capital industry in Australia is effectively moribund. If the Australian Superfunds invest in venture capital they invest in USA venture capital funds. Interestingly USA VCs are now investing in Australian companies. This is a round-about way of getting there but it does seem to be occurring.

However there is has been major rise in angel funding in Australia. In addition the window for IPOs in Australia is beginning to open and this will probably be a major source of capital over the next five years. Indoor Sky Dive has just raised $12 million which 12 months ago would have been impossible.

If you do go to the US to try and raise capital remember it takes an entrepreneur something like 70 pitches to raise the ‘A’ round from Silicon Valley VCs. There are a lot more VCs there so you can make 70 pitches but it takes a considerable effort to do so.

Don’t underestimate the value of patents. Both Cochlear and Resmed had generated pretty hefty patent portfolio before they set out to raise funding. Finally a smart move, given the strength of the Australian dollar, would be to look to take over a US business in a similar industry rather than do a green-fields start-up.

Visit the original link here

Written by Nick Evans

The dire state of the capital markets for junior miners is clearly evident if you take a quick scan of this year’s IPOs.

The class of 2013 is, so far, a touch ahead of last year, according to IRESS data – 12 successful floats got away at the close of trading yesterday, as opposed to 10 at the same time last year.

But what’s striking about the list is how few resource companies are among that number.

All 10 of last year’s floats came from the resources sector. There were two oil and gas plays, including last year’s stand-out market star Pura Vida Energy with the remainder being traditional exploration juniors from the mining sector.

This year there have only been six. Oil and gas hopefuls Cott Oil and Gas, Strata-X Energy and Tiou Energy; coal plays Malabar Coal and Perpetual Resources; and Chinese-backed uranium explorer Zeus Resources. At a pinch, labour hire firm Oilfield Workforce Group could probably be added to that list.

The list is rounded out with two investment funds, an outdoor advertising and tech company focusing on the Chinese market (China Integrated Media Corporation), clean tech hopeful Ecosave Holdings, and novelty extreme sport company Indoor Skydive Australia Group.

Compare those figures to the situation two years ago. By this time in 2011, the market had welcomed 33 new floats, with 25 in the resources sector – and it becomes even clearer how complete the exodus from the resources sector has been.

Of the current crop, Indoor Skydive is the stand-out. Although it trades on very thin volumes, the company is up 85 per cent from its 20¢ January float, closing yesterday at 37¢. Ecosave, which also experiences light trading volumes, has been the other big winner, up 69 per cent to ¢1.69 from its $1 January issue price.

At the close of trade yesterday, none of the rest were trading ahead of their listing price. Four were trading at their float price, and the remainder were down.

Zeus has fallen most, down 13.9¢ or 69.5 per cent to close yesterday at 6.1¢. Since listening in mid-January at 20¢, the company has not issued a single release to the market about its uranium exploration activities, and has drifted steadily downwards.

Malabar Coal is down 28 per cent and Cott Oil and Gas is off 22.5 per cent. Overall you would be slightly ahead if you had taken a speculative punt on every float so far this year, even though half your investment would be down.

If you had thrown a speculative $5000 into each of this year’s floats, your $60,000 portfolio would currently be worth $60,885.

Written by Sylvia Pennington

Determination, mateship and a big dream have propelled former special forces soldiers Wayne Jones and Danny Hogan from some of the world’s hottest trouble spots to the Australian Stock Exchange.

A scheme to build a $10 million indoor skydiving tunnel, the country’s first, at Penrith in Sydney saw them parachute out of the SAS last year and land in an arena where millions of dollars, rather than life and limb, are placed on the line.

Due to open next January Indoor Skydive Australia’s tunnel will operate as a training and recreational facility for corporate groups, enthusiasts and the military. Similar facilities are planned for Melbourne, Perth, the Gold Coast and the Sydney CBD.

The venture has scored $2 million in backing from another former soldier, Steve Baxter, who made the BRW Rich List after selling fibre optic company PIPE Networks to TPG for $373 million in 2009. ISA floated on the ASX in January.

Dodging bullets was par for the course in Jones’ and Hogan’s previous lives, courtesy of a series of assignments in places most people find little cause to visit.

Between them, the pair have been on every deployment of the past two decades – from Somalia and Rwanda as young infantry soldiers, to stints in East Timor, Afghanistan, Iraq, Fiji and the Solomon Islands with the SAS. Hairy moments notwithstanding, a life in uniform had always appealed, Jones says. “The adventure side of it is why I joined up – to go and see the world.”

Skydiving in a wind tunnel in the US had formed part of their training and Jones’ segue from SAS operative to CEO began with a conversation at the SAS’s 50th anniversary celebrations in 2007.

Hogan says his initial response to the notion of building a tunnel in Australia was sarcasm: “These facilities are expensive – we’ll never be able to afford one.”

The pair mulled the proposition for a couple of years before taking long service leave to “war game” the nitty-gritty of how it could be done.

“I’d never really looked at leaving the military until we started looking at this project,” Jones says.

“We had to move on, we couldn’t do both – we had to set it up properly.”

Meticulous planning had saved their lives in the past and also saved their financial bacon as they navigated the minefield of capital raising and developed contingency plans for every “what-if” imaginable, according to Hogan, ISA’s chief operating officer.

“There were some challenging moments – there always are when you’re presented with the threat of the unknown – but it’s how you process that, is what we’re good at,” Hogan says.

Corporate psychologist Campbell Thompson says drive, clarity of thinking and precision planning are hallmarks of many career soldiers, particularly those who’ve served in adrenalin pumped, sharp-end roles.

“The stakes are high so they learn to focus their efforts,” Thompson says.

“They’re often responsible for a lot of people … it’s a bit like being an elite sportsperson, only even more so.”
Former infantry officer Brad Jones agrees. He says younger years in uniform provided many of the skills that have enabled him to forge a thriving second career building mobile banking systems across the developing world.

Jones’ Singapore-based consultancy Mobile Accelerate helps clients, including the World Bank, develop financial services infrastructure for communities in Indonesia, India and China, where locals transact all their business in cash.

He says army training provides people with a strong methodology to take in information quickly, assess their options and make decisions – often from a very young age.

“Military leaders are taught to articulate their objectives or visions very clearly, create detailed operational plans to support them and provide their teams with flexibility so that decisions can be made and strategies changed on the ground when circumstance demands it,” Jones says.

“These are the sort of people we need more of in business.”

Read the original article here