“Conservative” investors blamed for Aussie start-ups’ funding woes

Australian start-ups suffer from a conservative approach by investors, rather than a lack of funds, industry experts have claimed, as they prepare to speak at the National Angel Conference.

The 2012 National Angel Conference, hosted by the Australian Association of Angel Investors, will be held from February 29 to March 2 at the Melbourne Convention and Exhibition Centre.

The conference aims to address the ongoing issue of the lack of seed capital for Australian start-ups, which forces many entrepreneurs to move offshore.

Local entrepreneurial companies will share their experiences and discuss possible solutions at the conference, including Pollenizer, Startmate, River City Labs, 99designs and Posse.com.

The need to ensure the supply of angel investors will also be discussed through a series of case studies, including:

• What do entrepreneurs think has gone wrong previously, and how do we improve it?
• Why do many entrepreneurs go overseas rather than build a business in Australia?
• Do successful entrepreneurs think they can work within a collaborative angel investor community by themselves becoming investors?

Pollenizer co-founder Mick Liubinskas says he doesn’t believe there is a shortage of funds for Australian companies.

“There’s more than enough money but not enough is being put into start-ups. There’s money around but investors are still too conservative,” Liubinskas says.

“[Australian] investors believe they should only invest in a lot of [companies with] high returns. One thing that would really help us is for smaller companies to [secure] smaller deals.”

Meanwhile, Liubinskas says start-ups need to be more focused on growing their revenues because “Australians have a fear we’re going to just back an idea”.

He also believes many investors are wary of web-based start-ups due to their limited knowledge of the industry, which is a shame.

“There are a lot of great opportunities there and I will be encouraging the entrepreneurs to starting putting these smaller amounts of money into this category to learn about it,” he says.

“The main reason they won’t invest is because they don’t know the industry enough. They don’t know how to invest in this space.”

“I will try to encourage them to make smaller investments, and then make bigger investments and go on from there.”

Tech entrepreneur Stephen Baxter, of new Brisbane co-working space River City Labs, agrees with Liubinskas that there are plenty of investment opportunities in Australia.

“There’s no shortage of deal flow… [However,] a lot of excess funds are coming from overseas investors because they see Australia as a bit of a different place to invest,” he says.

“I see myself personally investing as much as I did last year. Hopefully, there will be opportunities [for start-ups in 2012] but it’s too early to be seen.”