After taking a look at what life is like for aspiring Australian start-ups at San Francisco’s StartupHouse, I decided to take the time to get to know “our man in the USA”, whose advice could mean the difference between success and failure for budding entrepreneurs.
Just like countries appoint diplomats, Australian state/territory governments also have representatives overseas who act in the interest of their ministry of commerce and local businesses.
That responsibility currently rests on the shoulder of Jason Seed, Director, Trade & Investment, North America at the NSW Government Business Office (NSW GBO) and we wanted to know his views about how companies should approach raising funds in the USA.
The NSW GBO facilitates business activities from NSW to the USA and vice versa. They deal with a wide range of NSW business people ranging from a smart person with a laptop and an idea to late stage companies. A half hour express train trip from San Francisco to Redwood leads to the NSW GBO headquarters and the office provides a free landing zone for NSW companies consisting of two weeks casual use of a four desk office with 100mbit synchronous internet access. Should they wish to stay the building has capacity so they can spin off and rent their own desk there after the free period is over.
Patience and perseverance
According to Seed, finding your feet in Silicon Valley is just the first step in a laborious process that usually ends in heartbreak.
“Impacting the world in a positive way is a Silicon Valley thing, so it’s good that the majority of Australian companies are in the USA to achieve financial success and change their industry for the better. However, something to understand in the valley is that raising money isn’t the sole measure of success, its step one of a long journey,” Seed says.
He is quick to point out that the streets of the valley aren’t paved in gold and hopefuls need an ample supply of perseverance.
“You won’t get funding first time round. Whether a company arrives facilitated by a NSW government grant or independently, the value of being in the USA is you can share 100 cups of coffee which are all inherently pitches, refining the message after each coffee.”
How to best refine the message should be the vital piece of every start-up’s playbook, Seed says.
“These meetings inevitably connect you with an unexpected group of other startup people, investors, academics etc. In this part of the world everyone including accountants, lawyers and landlords understands the startup environment and may offer to work on credit in return for equity if the company succeeds.”
Seed’s advice is a product of his ample experience on the ground. NSW GBO has already dealt with more than 50 different start-ups, primarily to date helping them through networking. In addition, Seed acts as a point man, guiding the startups by refining their pitch decks and their elevator pitches so they can better explain their business model at a pace fit for the pace expected in the USA, which is much faster than at home.
Pick your targets
Targeting is also a key as start-ups must understand that scattergun is not the best approach because the US venture capitalists (VCs) are quite specialised. In Australia there aren’t that many venture capitalists or startups so there is a tendency to keep an eye on disparate sectors. However, that’s not the case in the US, where the VCs can concentrate on certain stages or specific sectors. So Australian start-ups need to do a lot of research to focus on what VCs are investing in any given year.
Seed advises that rather than approaching lots of VCs it is far better to understand who is best suited to pitch to and contact them with a contextually relevant pitch.
“You need to divine their needs from their current portfolio. Treat it exactly like a job interview or first date but in a business sense”.
His advice to start-ups is to “spend at least three weeks in the USA. If successful at raising funds don’t move all your employees here, leave the developers at home where they will stay with you rather than being poached by other Silicon Valley companies”.
However, the CEO should live in the USA because US companies will invest in Australian companies even if the intellectual property stays in Australia but they need to have a local person in the USA that they can liase with on a day to day basis. An American VOIP number that redirects to Sydney isn’t good enough.
The NBN gamechanger
Towards the end of our discussion I brought up the issue of game changer technologies and unsurprisingly it was only a matter of time before the NBN made an appearance.
Seed believes the NBN is not just about Australians accessing new services via fast broadband but also using it as a conduit to reach out to the world.
“The returns from the investment in the NBN will be enormous. If you look at what we managed to do with the internet going down copper wires than fibre optics will transform our way of life and provide massive economic benefits with many positive externalities”.
The NBN will make it possible for someone sitting in Lismore or Illawarra to have the same business opportunities as someone living in the Sydney CBD. The ability to do a high definition video chat with somebody sitting in regional areas could unlock their ability to provide expertise worldwide.
As far as Seed is concerned, his personal experience with broadband in the US has opened his eyes to the promise of the NBN.
“I’ve got cable at home here in the USA which is 60 megabits down and 12 megabits up. Everything we do as a family of five comes down that line including TV, telework, phone conversations, gaming. It’s just not about speed but bandwidth that allows multiple applications and services to be used simultaneously by several members of the household,” he says.
“I challenge anyone to do that on even the best LTE wireless connection.”
While it may seem that winning grants and tax rebates is the key to success expanding overseas, Aussie start-ups simply can’t buy meetings with well-placed Australians in organisations like Apple, Google and Facebook at the drop of a hat.
That’s where Seed and his team come into play and whether it’s facilitating meetings or providing valuable localised advice, initiatives like NSW GBO play a key role in making sure our talent gets the credit and the capital that they deserve.