Startup funding still a major challenge in Australia

With funding still being a challenge for startups in Australia, governments and larger corporates are emerging as a source of support for promising new companies.
Written by Tim Lohman, Contributor

Australia's startups continue to face challenges in securing funding for their new ideas, according to startups themselves. However, funding and support programs from governments and major corporations are increasingly helping them compete on the global scene.

Speaking at Microsoft's TechEd 2013 conference, George Slavov of social application startup Nubis said the major challenge faced by startups in Australia is securing funding.

"There is money available from venture capital, but it is difficult to get and quite limited, so unless you are student just starting out with an idea or a very small team which needs very little money and has very little expenses, it is quite difficult," he said.

"You either have to go overseas to find investment or you have to find a way to self-fund."

Marty Smee of skills search startup Cooperating said conditions are difficult, but added that Queensland in particular is becoming supportive of startups.

As evidenced by the acquisition by Twitter of Brisbane-based music app We Are Hunted earlier this year, the state is also becoming recognised as a home for innovative companies.

"Brisbane seems to be a bit of a changing scene ... there is some momentum growing," Smee said. "For our concept, there is a social innovation fund which has just opened up in Brisbane. I feel like we are on the verge of something.

"That's what you need: A good exit, a good international story, and the world seeing that we work hard and don't cost quite that much. I feel better and better about the funding scene all the time, but I do agree it is difficult."

Catherine Eibner, startup adviser at venture technology investment agency BlueChilli, said that government incentives for startups — such as the NSW government's Innovate program — are growing. However, access to reliable funding remains an issue.

"Where we're seeing the key investment is friends, family, and founders for early stage investment," she said. "But at later-stage investment, it is corporates — companies like Microsoft, with its BizSpark program, and now Coca Cola is opening up an accelerator program as well, so there is a greater trend for that at the moment."

Jordan Knight at social photography app startup Project Tripod said grants from technology companies are becoming a greater source of funding, as well as commercial advice and technological assistance for startups.

"One piece of advice that [Microsoft and Nokia] gave us was on how to apply for the [Nokia and Microsoft-funded mobile application accelerator program] AppCampus initiative out of Finland. We did and we got it, and all of a sudden we had €50,000, and idea and a product to build."

Knight said Project Tripod has also benefited by graduating from Microsoft's BizSpark program, which provides technology, support, and promotion to startups and entrepreneurs.

"People just see [Microsoft's] BizSpark as a way to get free software sometimes, but that is completely not true," he said.

"All too often, monetary considerations come into [play], because we are a low-funded startup, but we are able to make technology decisions, not funding decisions, which completely free us up to work on what we are good at."

Tim Lohman travelled to TechEd 2013 as a guest of Microsoft.

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