Miles Burke

Thoughts on startups, small business, marketing & more.

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Some Unsolicited Dreaming on That WA Innovation Fund

The Western Australian government has just announced a $20 million innovation fund, and that’s absolutely fantastic, its a huge step for our great state.

Call me cynical, however I am concerned that a lot of it will be spent on consultants and internal Government process, instead of helping actual startups and innovators on the ground.

So, if I can give some unsolicited suggestions on how to allocate just 5% of that fund, $1m, here are my first thoughts on how to spend it, using a lean, grassroots approach.

Organise an early stage investment fund

If I were in charge of the fund, I’d be asking Startup WA and others if they can nominate a panel of five to seven people (all volunteers) to help allocate an investment fund of $500k. I’ll put my hand up to be on it. They would arrange grassroots pitch days and the short-listed businesses would be further researched, and 20 x $25k investments would be handed out. $25k is a relatively small sum, but for early stage pre-finance startups, it’s way more than not getting funded.

This wouldn’t be treated like a grant either; I would have it as a purely commercial-minded investment, so the state government investment pool would actually have equity in these twenty innovative businesses.

Help fund those existing promotional avenues

Then I’d spend $30k getting some part time editorial help for Startup News, which has already been encouraging and publishing information on innovation in our state for three years (Disclaimer: I voluntarily write for them sometimes).

There’s also Techboard, who are making great roads into raising awareness of local startups as well. I’m sure they could do a lot with an extra $30k as well.

Biased I know, but imagine I had $20k in funding for my humble @StartupPerth Twitter news account. I just know that with part time paid resources, this could grow substantially. It already gets read by 300,000 people across the globe per month, sharing news about startups in our state.

Get some local Entrepreneurs learning and networking

I’d allocate 10 x $10k travel packages for 10 inspiring innovators to get to the world’s best conferences and trade shows. Better yet, maybe dollar for dollar matching up to $5k, so we get 20 WA entrepreneurs getting in front of their global customers.

Help a few WA Associations already innovating

Now let’s get some funding into Startup WA, so they can have paid resources to help the organisation. Maybe set aside $70k for innovative organisations; you could have the great work they are doing, alongside say WA Internet Association, Australian Web Industry Association and a bunch of other WA innovative associations also getting small funds.

Throw a Few Conferences

Let’s have a few events, bringing in international speakers and representatives from some of the world best known VC’s. Outsource management to local event management companies, and ask for the same funds in sponsorship from the private sector.

I’ve helped run some large conferences; $100k would get you a great world-class event. Let’s say two big events, at $125k a pop.

Summary

I feel that’s a well spent million dollars, (remember, this is only 5% of the overall announced fund), going towards;

  • Investments in 20 early stage WA startups
  • Travel grants for 20 WA entrepreneurs to learn and network on the world stage
  • 3-5 not for profit associations promoting innovation given much-needed funds
  • 3 existing online startup media platforms part funded
  • Two conferences/trade fairs in WA being held

I’m keen to hear on how you feel you would allocate similar sums, knowing full well we aren’t the decision makers – feel free to comment (& disagree with me) in the comments below.

Note: No, I haven’t asked any of the above if they need the funds, want the funds or would find a grant or investment useful. Just from an outsider perspective (with a decade in NFP committees, and another decade of experience in local startups and business), I believe they would happily accept it.

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14 Comments

  1. Hi Miles some very good suggestions and I support all of these without a change but… Just add one more piece to this please. How about some funding for those businesses just like Tap into Safety who are just beginning to enter the market with a proven product. This is the valley of death… Just before sensible investment can occur. Select up to 10 early stage businesses in that 2-3 year stage and award $50-100K. Have criteria that includes staff growth, beta testing, product improvement. This way we contribute to, in our small way, addressing some of the states employment issues. Because we know startups and new ventures employ staff. This helps stabilise early stage ventures and assist in growth.

  2. Great thoughts, Sue. I totally agree.

    As someone who is running an employee-owned startup on the side, I have 13 staff who are split between that and ‘real’ client work. Would love to dedicate some real resource to it, as a start-up that has just celebrated one year of being public.

  3. Great ideas but sadly I fear it will be like the national #ideaboom where half the money is spent telling us they support innovation.

    You need to meet whoever is in charge of the folio are share our thoughts, otherwise it’s yet another blog post.

  4. I get what you’re saying, Simon, and thanks for your input. I’d happily meet with the politicians involved, Bill Marmion and Matt Taylor, however I am sure that the committee of Startup WA are already onto that, and I don’t want to tread on any toes. :)

  5. Ross

    I concur with Simon K’s comment. My biggest fear is that with a $20m fund, they allocate $1-2m towards marketing and ‘raising awareness’.

    The best possible way to raise awareness is to create some local success stories, let’s focus on making that happen.

    And if that’s not sufficient, let’s at least put the responsibility of marketing the outcomes of the WA Innovation Fund into the hands of some local Perth startups (which will no doubt require an exemption to the state’s Open and Effective Competition policy).

  6. Hi Miles, I think a co-investment fund would be better than a ‘pure’ early stage investment fund, as at least there would be validation by other investors. The fund would then piggyback off the terms negotiated rather than having to negotiate fresh each time. Would funding for expanding accelerator programs also assist? Cheers Toby

  7. I agree with the first part of your article, that there is a high chance the funds will not be effectively used, but I don’t 100% agree with some the ideas:

    1. Investments in 20 early stage WA startups
    Government should not attempt to pick startups, this is proven time and time again to fail. Instead they should do matched funding (even 2/1 for example with a minimum of say $10k). This means startups still have to pitch their idea to angel investors/ F&F, it will also help give the angel community in Perth a kick, which it desperately needs. This combined with the new tax incentives should be sufficient!

    2. Travel grants for 20 WA entrepreneurs to learn and network on the world stage.
    Having been on 3 of these types of trips, I don’t find them useful. There is real work that needs to be done back in the office.

    3. 3-5 not for profit associations promoting innovation given much-needed funds (same as 3 existing online startup media platforms part funded?)
    This is a bit flawed in my opinion, it’s like saying “no one is paying attention to WA startups, let’s make a website that gives them more coverage”… there are already heaps of Startup websites (inc. StartupNews) in Aus I don’t think making more is a good idea.

    4. Two conferences/trade fairs in WA being held
    Everyone has different opinions on startup conferences, mine is that they are full of tyre kickers, accountants and lawyers.

    5. Help a few WA Associations already innovating (you missed this one?)
    Agree, but should be done in same manner I suggested in part 1, the startups should have to find some funding on their own first!

    So in summary my opinion is that it should be deployed via matched funding as per my suggestion in 1.

    Going to be interesting to watch!

  8. Hi Al,

    Great feedback, thanks! As someone who has been doing well growing their startup since inception, your thoughts are really valued here. You’ve been through investment, etc, which is something I have not.

    The early investments, I didn’t mean for them to pick the startups, but rather ask the community for nominations on a panel of angels, founders, etc who would do the work. I really like your matching funds idea.

    The point about Startup News, I’m saying we shouldn’t create yet another promotional avenue, but fund the ones we have (who are also startups).

    In the media release, they stated “Mr Marmion said convening an innovation summit and opening a web portal would be his early priorities. ”

    Firstly, what the hell is a web portal (that’s a time machine to the 90’s?) and secondly, why create yet another innovation promotion tool?

    Point 5, there are NFP associations already funded, but they need more money to really fulfill their aims. I was National Chair of the Web Industry Associaiton for 10 years; it’s very hard to Gov money, and we could have utilised it so well.

  9. Hey Toby,

    Great point. I had envisaged the same term sheet to be applied to all, however the more you and Al raise the co-investment, the more I believe that’s a good model. In any case, being funded by this entity will certainly lift attention to those startups.

  10. Great thinking as always, Ross.

    What about encouraging state departments to actively seek startups products and services? We could have them promote WA startups that are suitable to different agencies. There are plenty who would love a Gov Dept as a client. I know I would.

  11. Mal Gordon

    been hearing alot about how it is becoming prohibitively expensive for startups to do business/live in San Fran/SV. Perhaps some of the funds could be used to convince them to migrate to Perth where the cost of living seems to be either falling or has stagnated with the resources downturn.

    This may accelerate the scene via the importation of know-how and funds and feed off itself if it builds momentum.

  12. Toby Eggleston

    Hey Al,
    Re: point 4: What’s wrong with lawyers? :)
    Cheers
    Toby

  13. Miles,

    Sadly I find no mention of a fund rather we have scholarships, incentives, grants, a new website and Techtober!

    I agree with all your suggestions in particular an early stage investment fund that provides matched funding, picking up on Al’s comments.

    At Vocus Upstart we have a $500K fund from which we invested $40k in 8 startups last year and are doing the same again right now. It is amazing how much a startup can accomplish with 40K.

    If the governments invested just 5% or $1,000,000 in our fund , and we matched that with $1 million of private investment, we could help launch up to 50 startups!

    We can only dream!

  14. Robert, thanks for your insights. I agree, $40k is an amazing injection for many early stage businesses, and you should be proud of what you’ve accomplished so far. Let’s all get our dreams, I mean views, to them and see what tumbles out. Maybe there’s a chance some of it can be spent in an innovative way. After all, it’s an innovation fund. :)

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