Adelaide-based business accelerator program, ANZ Innovyz START, announced last week that 60 percent of the startups to graduate from the program raised almost $2 million in seed and angel investment, and secured contracts worth over $2 million. Dr Jana Matthews, Managing Direct of ANZ Innovyz START, spoke exclusively with Shoe String about the success of the program and the changing startup culture in Australia.
There’s no denying that the startup culture in Australia has evolved over the past five years. We are seeing more communities based around startups; more programs being introduced to help accelerate the growth of startup businesses; and more publications dedicated to telling the stories of startup founders.
But what brought upon this change? Dr Matthews believes the changing culture is a result of people making a concerted effort to help startups overcome adversity in an increasingly competitive market – whether this is by introducing accelerator programs, hosting networking events for founders to share their stories of success and failure, or just generally keeping discussion alive on the social and economic value Australian startups have to offer.
“There’s a tremendous amount of innovation in Australia that people are very much interested in. But the culture has changed because people are seeing others do it and talk about it,” says Dr. Matthews.
“For instance, we had an event here in Adelaide called Totally Blew It. There must have been 80 people who came together to talk about why companies fail. CEOs described what they did, how they failed and what they learned from that experience.”
She adds that people are increasingly starting to understand the importance of taking risks, and accepting failure as an opportunity to do better next time and build something truly innovative.
But not all is sunny on the horizon. Many startup founders feel that Australia can do better when it comes to investing in startups. They believe that startups are often drawn away from Australia and into the US where business opportunities appear much greater.
Dr Matthews, however, believes part of this is because there is some misunderstanding on what steps are necessary to attract investment.
“It’s not the starting up that’s attractive to investors, it’s finding the right product-market fit and knowing how to scale rapidly that becomes interesting to them. Good on you for starting a company. Now prove that somebody wants your product, prove that you can make money, and then come back for investment,” says Dr Matthews.
“Investors aren’t charitable, they’re not giving you money like your uncle might to help you along. They are looking for a return on their investment.”
She also points out that some investors are very risk-adverse because in the past they’ve invested in companies that failed.
“I had lunch with someone the other day who spoke about how he put a million dollars in a mate’s company. He didn’t know how to help the company and it failed. He ended up losing all of his money and he said ‘it’s going to be a while before I get excited about doing that again,’” says Dr Matthews.
“That’s why people like me and the mentors at ANZ Innovyz START, who know how to help companies grow are making sure they continue growing after they’ve received investment. With the right guidance, the probability of failing is much lower.”
She acknowledges, however, that investors also have a responsibility to do their own due diligence before they invest in companies. They need to assess whether companies are at the right age for investment. Too early, the money goes to waste; too late, the money isn’t worth putting in.
ANZ Innovyz START
Only 18 months old, the ANZ Innovyz START program has graduated two classes, with the third gearing up to pitch to over 450 investors and supporters on the 4th November at the Adelaide Town Hall.
One of their most exciting graduates, Dr Matthews says, is Singa. The company built an app where kids can record themselves singing live with a musical backtrack.
“Singa came in with a slightly different concept which the mentors helped reshape. In less than a week after its launch in Australia, they got 40,000 downloads. It takes 500 downloads a day to make it to the iTunes top list, and Singa got 5000 downloads on some days,” says Dr Matthews.
“There’s just so much market validation, people are so excited about the product. Families are singing together, mothers and daughters are singing together. It’s the total girl pop-star app. They’ve succeeded in finding the right product-market fit and it’s really exciting to see them continue to grow after graduating from our program.”
The right mentorship can, therefore, have a huge impact on startups.
“We have an amazing set of mentors from the US, Malaysia, Australia and New Zealand. I choose mentors who have started, grown and exited companies. They need to have a deep understanding of the whole startup journey, and be able to recognise problems when they see it and advise accordingly,” she says.
But the very first milestone startups have to hit, Dr Matthews stresses, is the right product-market fit. First and foremost, entrepreneurs have to create a product that people care about.
“You can’t just have a bunch of solutions and then try to find problems to match it up with … You have to start off with the right product, and only then can you move forward,” she adds.
Her second biggest advice to startup founders is to make sure before they start looking for investors, that they can stand in front of them and demonstrate their product, provide evidence that there is a market for that product, explain how they will attract target consumers, and of course, lay out their business model and exit strategy.
“It’s not that Australia doesn’t have the money. It’s about preparing yourself for investment and presenting your case convincingly to investors,” says Dr Matthews.
Applications are now open for the Summer 2014 ANZ Innovyz START program and will close on the 25th of November. The Summer 2014 program will kick off on the 10th of February 2014 and wrap up on the 8th of May 2014.
Companies selected for the Summer 2014 accelerator program will receive a $20,000 stipend, participants’ access to a $20,000 loan from ANZ, and education delivery and support services valued at $500,000.
For more information, visit www.innovyzstart.com.