Start-ups test buoyancy of venture capital

Seed funding for tech companies is plentiful right now, writes Asher Moses.

Ask Melanie Perkins whether it's hard for Australian start-ups to find investors and she can only laugh - she's just closed a $3 million funding round before even launching her product.

Her firm, Canva, based in Sydney's Surry Hills, plans to unveil an online do-it-yourself professional-looking graphic design platform in May.

Australian entrepreneurs like Perkins are starting to find they can raise funds for their ideas without moving to the US.

"The funding climate for Aussie entrepreneurs has improved dramatically over the past few years," said Perkins.

One of Canva's investors is Blackbird Ventures, a new Australian venture-capital fund comprising capital sourced from 35 successful Australian tech entrepreneurs and other investors.

It is looking to place $2 million to $5 million bets on Australian technology companies that have the potential to go global.

Niki Scevak, co-founder of Blackbird and the start-up incubator Startmate, said he was looking for the next Atlassian, BigCommerce and 99Designs - Australian tech firms that are the best in their field globally.

As well as Canva, Blackbird has also invested in Ninja Blocks, which aims to connect every object to the internet.

Paul Bassat, one of the founders of Seek, said his relatively new Australian venture-capital firm SquarePeg Ventures had made nine local investments so far: Budge, Binu, Canva, Ninja Blocks, ScriptRock, ImageBrief, Shipping Easy, Glide and Bellabox.

Online group booking start-up TheBestDay, founded by student Whitney Komor in the University of Sydney Incubate program, raised $1 million at the end of 2012, half from Sydney Angels and half from Australian venture-capital firm OneVentures. She has hired four employees.

"I feel very fortunate to have the opportunity to keep chasing the dream," said Komor.

Perkins, who previously launched yearbook provider Fusion Books, got the ball rolling on her investment round by attending the invite-only MaiTai event in Hawaii, where investors and entrepreneurs can network while kiteboarding.

"Prominent US investors are starting to see Australia as a hot place to invest," she said.

Laurence Escalante, founder of Perth-based online gambling firm Virtual Gaming Worlds, revealed last week he had raised $2.5 million from Triple C Consulting, a West-Australian boutique investment brokerage firm.

Despite the launch of several new Australian venture capital funds, Matt Barrie, chief executive of Freelancer.com, said Australia's venture capital industry was still in "dire straits". He said aside from Southern Cross Venture Partners' $200 million renewable energy fund, just $40 million was raised by Australian venture-capital firms in 2012, down from $80 million in 2011 and $160 million in 2010.

"This is in the middle of the greatest technology boom of our time," he said.

Barrie and 50 others in the Australian tech entrepreneur community have launched Startup Australia to develop policy designed to create a thriving technology industry in Australia.

Phil Morle of Pollenizer said the availability and quality of early-stage capital had increased in Australia but there was "still a conflict of whether a company should move to the USA or Asia earlier to access more capital and bigger markets".

Michelle Deaker, managing partner with OneVentures, said more institutional investors were needed in the technology sector but she believed the "value investment window" would stay open for only another two to three years. "The concern I have is that the institutional investors will return to VC when the markets have turned and again they will invest at the peak of the cycle."