My name is Alan, I’m a co-founder of BugHerd, one of last year’s Startmarte companies. Some shameless self promotion first of all:
The 10 Start-ups to Watch
Aussie tech startup BugHerd strikes gold, raising $500k
We just raised $500k from Starfish here in Melbourne after having previously raised $240k 50/50 here and in the US in early 2011. We really wanted to stay in Australia, not only because we love it here, but because we felt an obligation to prove to other budding entrepreneurs that you can stay here and be a success (we’ve got a long way to go to be that success ourselves!). It’s been hard to see our Startmate colleagues, Grabble and Chorus, up and move their companies to the US with great success and wonder if we could’ve benefited from the same move. The big issue for me is that no company should be leaving our shores for greener pastures…ever.
Remaining in Australia has meant we’ve encountered significant challenges, not just from a business perspective, but a legal one. Many of the concepts that are natural and sensible in “the Valley” are foreign and complex here in Australia. For example, a couple of years ago I wrote a blog post about how difficult it was to get a USD Merchant account from the banks here in Australia. http://blog.angrymonkeys.com.au/why-being-an-aussie-startup-sucks
Ironically I was forced by our bank to take the blog post down before they’d open an account for us. The irony being that a post about lack of choice in banking was taken down because I had no choice in bank. I recently reposted it by request with the bank name removed. The fact that the bank couldn’t even grasp what a subscription model was or why anyone would give us money only compounds the problem.
Since that day we’ve encountered many other issues specific to being here in Australia. We’ve been trying for many months now to set up an Share option pool for our employees, but after having spoken to no less than 5 different accountants/lawyers there is still no consensus on how best to go about setting up (due to draconian tax laws here in Australia). A simple task in the US, but difficult to replicate here in Australia. Similarly, as founders, our own shares which vest over a period of time (another common fixture in the US) leaves us open to possible taxation events which we’d not be subject to in the US. This lack of understanding and acceptance of tech startups is prevalent throughout banking, legal and accountancy firms in Australia. Try getting a credit card or merchant account when your business has only been registered for 6 months! The difficulty in getting access to good advice and services makes it even more difficult to do business here in Australia.
Possibly the hardest thing about running a startup in Australia is finding talented people to work with you. The culture of “working for the man” is so ingrained in school leavers that the thought of running your own startup (or even working for one) simply doesn’t cross one’s mind. If it weren’t for my co-founder persistently harassing me to work with him on projects I may still be in my old desk job. With a lack of available talent and funding here in Australia, entrepreneurs are forced to take either their skills and companies to the US in search of that talent and funding. The more these people take their skills and success OS, the longer it will take us to combat the apathy towards this new, low-capital way of generating employment and wealth in this country. Until startups become a viable (and obvious) place for employment in Australia, top graduates will continue to gravitate towards high paying corporate roles meaning there will continue to be no one to start the next generation of companies.