Category Archives: STARTUPS

Australian start-ups X 13 to watch in 2016 with more to come.

Every investor dreams of getting in on the ground floor of the next Atlassian. Invest in a few start-ups and exit with an initial public offering – it’s as easy as that, right?

The future for Australian start-ups has never looked brighter, with Prime Minister Malcolm Turnbull last month announcing a $1.1 billion innovation package, including tax breaks for start-up investors, changes to crowdfunding legislation and initiatives to turn Australia into an innovation powerhouse.

These initiatives are definitely going to help more start-ups launch and grow, and make it far more attractive for investors.

Malcolm Turnbull has made start-ups a priority.image www.money-au.com

Malcolm Turnbull has made start-ups a priority. Photo: Dallas Kilponen

But investing in start-ups is still a risky proposition.

Reliable data is hard to come by for Australian-funded start-ups, due to the relatively low numbers of funded businesses and the time it takes to get a return.

In the US, Correlation Ventures released a study of 21,000 funded companies that either failed, were acquired or had an IPO during 2014-15. Sixty-four per cent of companies failed to return all the capital invested, with many of those being complete wipe-outs. The remaining 35 per cent delivered returns of five to 100 times.

Last year I reviewed hundreds of applications and pitches for some of Australia’s top incubators and accelerators, including the CSIRO Accelerator, The University of Sydney’s Incubator and Telstra’s muru-D Accelerator.

Here are 13 start-ups to watch in 2016:

Early stage start-ups

Persollo

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What? Platform for enabling e-commerce for small merchants across social networks without setting up sophisticated, expensive e-commerce sites.

Why? When I first saw the founders six months ago, this was little more than a business plan and they had not started building the service. Fast-forward to December and they have a slick product, have recruited hundreds of business customers in a few months, and are processing transactions. Things don’t normally happen so fast in finance and payment processing. Great team and they have been selected for Telstra’s muru-D Accelerator.

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Simpla

Simpla co-founders Shamir Karkal, CFO, and Josh Reich, CEO image www.money-au.com

What? Simpla is a content-management platform that makes it easy for non-technical website owners to edit web-page designs, text, images and video by clicking and editing in their browser, without the requirement to understand how to code or all the tools normally needed to download, modify and upload code.

Why? Really slick solution that completely replaces the technical and antiquated tools and systems needed to modify web pages. Business web pages are still a growth area, however, web-page design and construction is overly complicated and it’s virtually impossible for most business owners and employees to modify their pages without the assistance of developers.

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Drive Yello

Johnny Timbs- Co-Founder at YELLO Pty Ltd image www.money-au.com

What? Delivery service for restaurants and fast-food businesses to outsource their delivery capability.

Why? Normally, one avoids Uber-style businesses, except Drive Yello has traction, is going after business customers and the team is led by an experienced founder with an exit under his belt already from a previous business. Our guess is that it will pick up a lot of drivers and riders who don’t qualify for Uber because they don’t have a suitable vehicle.

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Later-stage start-ups

Coinjar

MELBOURNE, AUSTRALIA - JULY 18: Asher Tan, CEO and co-founder of CoinJar poses for a photo on July 18, 2014 in Melbourne, Australia. CoinJar is Australia's leading bitcoin platform. (Photo by Paul Jeffers/Fairfax Media via Getty Images) *** Local Caption *** Asher Tan
Asher Tan, chief executive and co-founder of CoinJar.

What? A bitcoin exchange based in Australia and now in Britain.

Why? I am a customer and it’s a pretty good experience. They have managed to combine bitcoin with local banking services, including connecting to a local bank account and a local EFTPOS card provider. Have raised significant funding and are one of the few bitcoin providers that have managed to connect bitcoin to the real banking world.

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Invoice2go

What? Invoicing app for mobile businesses, tradies.

Why? Although this business was established early last decade and probably shouldn’t be called a start-up any more, it spent many years trying to develop the right solution before it found product-market fit. It managed to get mobile invoicing right in the last two years and shot to prominence, raising $50 million in venture capital funding in the past 18 months. It now has 200,000 business customers sending 1 million invoices a month.

Founder of Invoice2Go, Chris Strode image www.money-au.com

Founder of Invoice2Go, Chris Strode. Photo: Daniel Munoz

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Bugcrowd

Casey Ellis-Founder and CEO-bugcrowd image www.money-au.com

Casey-Ellis-Founder-and-CEO-bugcrowd

What? Crowdsourced security testing for business owners, application developers and corporations.

Why? Real and pressing problem for most corporations, cost of security breaches can be extreme, high-profile breaches are becoming commonplace and reputational or transactional losses can bankrupt companies. Application and security testing is very difficult, most businesses are unable to manage this on their own. No one company or consultant can handle this for them. By building a community of 22,000 security consultants, they are able to provide testing for developers.

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Envato

envato founder cian ta'eed image www.money-au.com

Envato co-founder and executive director Cyan Ta’eed. Photo: Pat Scala

What? Created a marketplace for web designs, WordPress Themes, plug-ins and other digital assets.

Why? Probably one of the most successful Australian start-ups never heard of outside the web development and start-up community. Envato bootstrapped its way to $50 million a year in revenue and has more than 5.5 million customers and developers.

Straw poll from a few of my Twitter buddies

Steve Baxter: Shark Tank investor and entrepreneur @sbxr

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Go1

Andrew-Barnes-left-and-co-founder-Chris-Eigeland-of-GO1image www.money-au.com

Andrew Barnes (left) and co-founder Chris Eigeland of GO1

What? Online training platform for businesses.

Why? Great team including a Rhodes Scholar, lots of early revenue and they have been accepted into Y Combinator, which is the start-up equivalent of an Australian singer making it into the finals of American Idol.

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Cohort Solutions

Paul Jones (left) and Mark Fletcher's Cohort Solutions aims to look after foreign students image www.money-au.com

Paul Jones (left) and Mark Fletcher’s Cohort Solutions aims to look after foreign students

What? Provides a comprehensive service for overseas students attending Australian universities, including health insurance, telecommunications and foreign exchange services.

Why? Significant traction with more than 10,000 customers, each of whom have to transfer $20,000 to $30,000 from overseas every six months as well as handle all sorts of other banking and logistical issues.

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Pocketbook

Pocketbook co-founder Bosco Tan image www.money-au.com

Pocketbook co-founder Bosco Tan. Photo: Louie Douvis

Mick Liubinskas, Entrepreneur in Residence at Telstra’s muru-D Accelerator @liubinskas

What? Personal finance app that brings together all of your banking, budgeting and credit cards and automatically categorises the transactions on each of them.

Why? Probably the only Australian personal finance app that has managed to get integration working with all of the major banks, very slick app and significant transaction.

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Lawpath

Norton Rose Fulbright managing partner Wayne Spanner (l) and LawPath's Damien Andreasen are teaming image www.money-au.com

What? Online legal service that provides standardised legal documents for common transactions as well as access to hundreds of lawyers for customised solutions.

Why? This model has been very successful in the US and the team has significant traction.

James Alexander, chief executive of Incubate, Sydney University @jamesasyd

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Basketball Forever

Alex Sumsky from Basketball Forever image www.money-au.com

What? World’s largest online basketball community

Why? A total of 850,000 Facebook followers and 20 million views a month make this one of the most popular sports sites in the world, originally founded in Australia and run by a very small team they are in the process of working out how to monetise the business but they have massive user adoption.

Nicole Williamson, country head at Lanzatech @nicolewill100

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HerFashionBox

Kath Purkis co-founder of Her Fashion Box & founder of Le Black Book image www.money-au.com

Kath Purkis co-founder of Her Fashion Box & founder of Le Black Book

What? Monthly fashion box subscription service.

Why? Very new business has managed to achieve significant traction with 30,000 boxes shipped to customers.

Mike Nicholls is responsible for developing new technologies and prototyping products from the Invention Development Fund patent portfolio at Intellectual Ventures. He is a Telstra ICT Industry advisory board member, blogger at Startup88.com, and mentor at CSIRO Accelerator, muru-D and incubate.org.au. Follow Mike on Twitter @mikenicholls88. Follow MySmallBusiness on Twitter, Facebook and LinkedIn.

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This is not intended as financial advice. Mike Nicholls has no financial interest in these start-ups. Some surveyed in the straw poll may have interests in the start-ups they mentioned.

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Henry Sapiecha

I am now of the quiet active searching mind in the twilight of my years

How refugee Sam Bashiry turned a $1000 router into a $15 million internet business

Sam Bashiry says life was tough when he moved to Australia image www.money-au.com

Sam Bashiry, founder of Broadband Solutions. Photo: Alex Ellinghausen

Sam Bashiry fled Iran in 1989 with his mum and his sister when he was only 10 years old and the family arrived in Australia to start a new life.

Bashiry says the experience gave him the courage to take the risk and start up his own business with Broadband Solutions now turning over $15 million a year and employing 25 people.

It is so courageous to make that journey. Timidity cannot be part of that tool kit.

Bruce Billson

Bashiry’s story is not uncommon among refugees with a report published by the UTS business school last year finding refugees have significant entrepreneurial potential and, with the right support, can contribute to the economy, create income for themselves and employ others.

Sam Bashiry says life was tough when he moved to Australia- image www.money-au.com

Sam Bashiry says life was tough when he moved to Australia but he has seized the opportunities he has been given. Photo: Alex Ellinghausen
Starting with nothing

“We were refugees and were sent to the Maribyrnong detention centre,” Bashiry says. “When we arrived in Australia we didn’t have our passports and we were at the detention centre for over a year.”

From here the family moved to a migrant hostel in Springvale and Bashiry started school.

“I couldn’t speak English so it was a bit of a shock to the system,” he says. “I remember standing up when the teacher came into the classroom and everyone laughed and said, ‘We don’t do that here’.”

The family left a comfortable life to come to Australia and start again with nothing.

“We went through a lot of hard times,” Bashiry says. “It was a massive lifestyle change for us. I remember getting teased at school because I had my shoes from Target. As a person you can go two ways, you can be the victim and think, ‘Why me’, or you can think, ‘It’s part of the journey’. Why not turn it into a positive and do something into your life?”

Bashiry went on to study at Swinburne University “because university is something that is expected in the Persian community”, but even then Bashiry knew he was more interested in creating things.

Bashiry got his first job at a dial-up internet company through Centrelink for $7.50 an hour working in computer support.

“I just learnt on the job,” Bashiry says. “I asked a lot of questions and and I came in early and left late.

From here Bashiry moved to work at KeyPoint and saw that besides Telstra and Optus nobody was focused on providing internet to small businesses.
A gap in the market

“I saw a niche there,” he says. “I just sat down one day and said, ‘I’m going to do it’. One of the biggest things holding people back is fear, but coming from where I did and coming to Australia … I thought, ‘What can go wrong?'”.

To start off Bashiry shared an office with some university friends and the first challenge was to pay the rent.

“We had the smallest office in the whole building,” he says. “We were quite embarrassed so the first thing we did was tint the windows so nobody could see in.”

Bashiry started off selling domain names but realised it was too hard on his own so pitched a half share of the business to former work colleague Brad Hughes.

The pair needed a router so found a second-hand one on eBay in Broadmeadows for $1000. “We used that to set up the company and started selling from there.”

Bashiry says the early days of Broadband Solutions were tough with turnover of about $20,000 a month and “really long hours”.

“It was difficult and there were times you thought, ‘Have I made the right decision?’,” he says. “It wasn’t about the money though, we were passionate about it.”
The turning point

For Bashiry the turning point was a phone call from what was the Carlton Crest hotel inquiring about an internet connection for an upcoming conference.

Bashiry quickly patched together a solution.

“I don’t think you get lucky, you get opportunities and it depends what you do with them,” he says.

That first conference led to more work from other hotels and Broadband Solutions had found its market.

Now Broadband Solutions supplies hotels directly across Australia and has set its sights on the education market.

“We sat down and just talked to schools about how they are dealing with bring your own devices and how they deal with systems upgrades and bandwidth,” Bashiry says. “It just took one school to make the jump and now we have 150 schools using our services and it is going to be a really big market for us. There are over 10,000 schools so it’s a much bigger market for us than hospitality.”
The entrepreneurial spirit

Former small business minister Bruce Billson is a passionate advocate for Bashiry and says there is a “real entrepreneurship” in the journey of the Bashiry family to Australia.

“It’s a terrific story about the entrepreneurial spirit that brings people to this country in the first place and the contribution that can be made once they are here,” Billson says.

“It is so courageous to make that journey. Timidity cannot be part of that tool kit.”

Billson says what Broadband Solutions does is also great for small business.

“Half of Australia’s businesses are invisible online, a lot of small businesses that are extremely gifted and talented at their business find that technology side of things quite confronting,” he says. “What Sam is doing helps you navigate all that stuff and makes it easy.”

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Henry Sapiecha

Atlassian: the Australian millionaire factory. Story in videos & pics.

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Atlassian surges in debut

Shares of Australian business software maker Atlassian soar in their Nasdaq debut.

They’re known as the “Royals” and “the chosen ones” — the select few invited to be in New York on Thursday morning to ring the bells celebrating the opening of the stock exchange and Australian tech darling Atlassian’s massive IPO.

About 40 Atlassian employees — many of whom were hand-picked by co-founders Mike Cannon-Brookes and Scott Farquhar in the company’s early years — celebrated overnight as they became multi-millionaires and Atlassian became a company with a market cap of $US5.74 billion ($7.9 billion).

Atlassian, a leading provider of collaboration software for teams with products, opened for trading on The Nasdaq Stock Market image www.money-au.com

Atlassian, a leading provider of collaboration software for teams with products, opened for trading on The Nasdaq Stock Market on December 10, 2015. Photo: Christopher Galluzzo

By the end of Thursday’s trading in the US, however, more than just those 40 became millionaires. Former Atlassian employees say more than 100 staff are now either millionaires or multi-millionaires.

It’s also understood the shares of a number of staff who joined in recent years are now worth six figures.

“There are going to be a hundred people who are going to be millionaires today — at least on paper,” a former Atlassian employee, who didn’t wish to be named, told Fairfax Media.

Atlassian co-founders Scott Farquhar (right) and Mike Cannon-Brookes image www.money-au.com

Atlassian co-founders Scott Farquhar (right) and Mike Cannon-Brookes. Photo: Trevor Collens

They added that the Royals had been “going out on lavish dinners and celebrations” while in New York in recent days and were already discussing how they should splurge their cash, and whether it should be on luxury cars.

Many are also considering investing their money in Australian start-ups, or starting their own.

“Mike and Scott’s legacy will be beyond Atlassian,” the former Atlassian employee said. “They want to make billionaires in Australia that are going to invest in Australian companies — the next wave of start-ups

Those likely to make the most from the IPO are those who joined between 2002, when the company started, and 2008. That’s when Atlassian offered employees the chance to buy shares at a much lower price than $US27, the price shares were trading for on Thursday as the market closed. For employees who were offered — and purchased — shares at 50 cents several years ago, their stake is now 5300 per cent more valuable.

While some employees chose to hedge their bets and sell some of their shares last year for $US16 to T. Rowe Price and Dragoneer Investment Capital in a financing round, many are understood to have held on to most of them.

When Atlassian received that financing, which valued the company at $US3.3 billion, Mr Cannon-Brookes declined to specify how many millionaires his company had made at the time, but said it was “not double digit”.

“That number [of millionaires] blew both Scott and I away,” Mr Cannon-Brookes said at the time to The Australian.

“That was probably the biggest achievement to come out of this [new investment] and [something] we hadn’t thought about.”

There’s never been a more exciting time to be an Australian — as Prime Minister Malcolm Turnbull would say — or, in this case, to be an Atlassian employee.

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Henry Sapiecha

‘The richest database I’ve seen’: why AussieCommerce bought Jeremy Reid’s PinchME

pinchme Jeremy Reid image www.money-au.com

Jeremy Reid has managed to attract stellar investment despite still serving an ASIC ban. Photo: Louie Douvis

Its revenues might be negligible in the context of a group tracking toward $200 million revenue this financial year, but AussieCommerce co-founder Adam Schwab thinks the Australian arm of product sample distributor PinchME can turn his e-merchant into “a media company”.

AussieCommerce began negotiations before Christmas with PinchME’s now New York-based founder, Jeremy Reid, who despite still serving a two-year ASIC ban on providing financial services following the collapse of his hedge fund-of-funds Everest Babcock & Brown, managed to attract stellar backer for his sampling start-up: Kerry Stokes, the Liberman and Smorgon families, Toll Holdings founder Paul Little, SEEK co-founder Andrew Bassat and advertising heavyweight David Droga.

That group will continue to part-own PinchME’s US business, which now employs 25 people in New York and according to president Adam Caplan, has completed 200 campaigns and shipped four million samples for brands including Johnson & Johnson, P&G, Unilever, L’Oreal, Revlon, Coty, Pfizer, Kimberly-Clark, Kraft, and Kellogg’s.

The eight employees of PinchME Australia are already installed at AussieCommerce’s offices at Wynyard in Sydney, and its 500,000-strong database of subscribers are a source of wonder to Schwab.

“The fact that you’re giving these people free samples means they’re incredibly engaged,” Schwab says.

“The open rates on PinchME emails are twice or three times what you get at a typical e-commerce business, and the information they’ve gathered on subscribers is the richest I’ve seen.”

Its multinational clients pay PinchME to provide narrowly targeted sampling campaigns, and the fact that each sample is accompanied by six questions – which the subscriber must complete if they want another freebie – means the ability to segment its database is always improving, Schwab says.

“The more targeted the offer, the more powerful. PinchMe is going to be a great complement to [group buying platform] Spreets that we bought last year,” Schwab says.

Of particular interest to Schwab is the full-fledged marketing campaigns which PinchME can produce alongside the sample deliveries.

“This acquisition turns us into a media company,” he says, pointing out that revenues from AussieCommerce’s original flash sale and ‘daily deal’ activity is now “a single digit percentage” in terms of the overall group.

Terms of the deal were undisclosed. PinchME Australia’s revenues are not known however it’s understood to have not yet turned a profit since its 2013 launch.

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Henry Sapiecha