Starfish Ventures sees room for US funds

John Dyson, a cofounder of Melbourne-based venture capital firm Starfish Ventures, welcomes the entry of US competitors such as Peter Thiel, Accel Partners and Sequoia Capital to the Australian market, saying it will help support local entrepreneurs who have business plans but need capital.

“There are plenty of opportunities but not enough capital” for Australian startups, Dyson told DataRoom. “The entry of US VC firms is absolutely fantastic and an endorsement of Australian entrepreneurs and the entire market.”

Starfish, founded by Dyson and Michael Panaccio, has invested in more than 60 companies from which 14 trade sales and initial public offerings have occurred including the IPO of financial comparison shopping web site iSelect, which listed on the ASX in June. The firm also invests in university and research institute projects. 

“The best and the brightest know if they want to make a contribution to the economy and to their bank balances, they have to go out and build their own businesses rather than work at McKinsey, Goldman Sachs or KPMG,” says Dyson.

Previously, budding Australian technology, health care and biomedical firms sought to relocate to the US if their businesses excited the VC industry. Now the world is more agnostic as to where companies are based, says Dyson, as technology means entrepreneurs can operate almost as well on the Gold Coast as in Silicon Valley.

Local entrepreneurs are finding they can tap a group of self-managed superannuation funds for up to $500,000 as there has been a sea change in Australian attitudes towards backing new ventures, says Dyson.

“People are now much more open-minded about writing a $50,000 cheque for a start-up,” he says.

If such self-managed superannuation funds-backed start-ups make it through a year or two, then angel investors can come along and provide up to $5 million of capital and help initial backers monetise their investments, says Dyson.

A new generation of Australian technology and health care companies such as the world’s biggest job outsourcing company Freelancer Ltd and Starfish-backed dorsaVi Ltd, a company that has developed a wireless sensor movement monitoring system for athletes, have launched IPOs in the last month.

“It’s been an overnight success that’s taken 10 years of hard work,” says Dyson.