Some of Australia’s brightest young minds are turning their backs on the corporate ladder and going into business in search of internet riches.
Inspired by the likes of Facebook and Twitter, and a growing number of local success stories, the nation’s start-up scene has never been more buoyant.
Better access to seed capital and falling technology costs have also made it easier to get a concept into market quickly and scaled up to meet demand if it proves to be a hit.
Serial entrepreneur Jonathan Barouch, founder and chief executive of local events app Roamz, told The Australian Financial Review that there had been a resurgence in digital entrepreneurship during the past year.
“People are looking at these guys in their late 20s or early 30s, setting up and selling businesses worth tens if not hundreds of millions,” he says.
“They see it is an alternative to working in one of the big four banks or one of the law firms.
“You’re getting some pretty bright people who would normally have been snapped up by corporates getting their hands dirty because they don’t have much to lose.”
Barouch created Roamz out of frustration about the number of exciting things happening around Sydney that he didn’t find out about until it was too late.
He realised that mobile devices would play an increasingly important role in connecting people with their surroundings, and launched Roamz to help people make sense of the noise created by other social apps like Twitter and Instagram.
Roamz was launched at the Web 2.0 Summit in San Francisco last October, where Barouch got to demonstrate it to Google’s Sergey Brin and Microsoft’s Steve Ballmer, among others.
An updated version, unveiled last week, was Apple’s iPhone app of the week in Australia and has also been featured in Asia, Europe and the United States.
Download numbers doubled in a week to about 100,000. Roamz is funded by listed customer contact specialist Salmat, whose chief executive Grant Harrod sits on the board. This gives it access to significant Australian advertisers and brands. Barouch says it is close to doing a couple of major deals.
“A big retailer might have Twitter and Facebook as its social mobile tools, where you broadcast one message to everybody and if they see it, all well and good,” he says. “We can give brands the opportunity to localise a message for one state or even one suburb.”
Barouch was in Texas last weekend for the South By Southwest Interactive conference, where he was discussing distribution deals with partners capable of delivering global exposure to the technology.
At the same conference another Aussie entrepreneur, Freelancer.com chief executive Matt Barrie, was booked to speak about disruption in global labour markets. He wants his company, which employs 100 people in Sydney, Manila and London, to become “the eBay of jobs”.
It now has 470 categories that people can use to outsource tasks – website design, copywriting and internet marketing are its most popular – but it also covers everything from astrophysics to industrial design.
Noting that there aren’t many industries where a 27-year-old like Facebook founder Mark Zuckerberg could make $US30 billion in eight years, Barrie says the local start-up scene is now more vibrant than it has been since the dotcom bubble burst.
“Australia is now well and truly on the map for US venture capitalists,” he says. “There is a bubble in Silicon Valley valuations, so they are looking elsewhere to find good deals.”
A growing number of local success stories are fuelling interest. Start-ups such as Atlassian and 99designs have attracted significant investment from Silicon Valley during the past couple of years.
Chomp, which helps users find apps for their smartphones, was sold to Apple last month in a deal reportedly worth about $US50 million ($47.25 million).
Greater availability of seed capital and falling set-up costs have also been a factor. John Dyson, investment principal with Melbourne-based venture capital firm Starfish Ventures, says it has become easier for start-ups to raise between $50,000 and $250,000 through angel investors or incubator programs – a sum that was enough to test the viability of a good idea.
The advent of cloud computing, where technology resources are accessed via the internet on a monthly basis, had also drastically reduced the costs associated with going into business.
Dyson says there is currently much more investment activity related to information technology than life sciences or clean technology.
“Some IT spaces are very fashionable at the moment, whether it’s social media, gaming or internet commerce,” he says.
“It’s attracting some of our best and brightest young people because they have seen what’s happening overseas with the likes of Facebook, Twitter and Groupon.
“That encourages them to have a go because there’s nothing like success to encourage people to take some risks.”
Barrie, who also teaches technology value creation at Sydney University, says more must be done to push computer sciences into high schools and get people studying for engineering degrees at university.
Barouch criticises the government for its “shambolic” approach to start-ups.“We just don’t have the mentality of supporting young people in business, so it’s a tough gig in Australia,” he says.
“We’ve got to get our act together if we want an economy that doesn’t just dig shit up out of the ground and sell it to Asia.”
The Australian Financial Review