Geographical isolation sharpens Australia’s tech entrepreneurs, giving them an advantage over their counterparts in Silicon Valley, according to Terry Gold, Managing Director of Techstars Adelaide. He and fellow US-expat Chris Chang, Program Manager with Techstars Adelaide, spoke with Dynamic Business about the global entrepreneur network, why “unique ideas” raise a red flag for them and who might be the “next Atlassian”.
Chang said that Techstars seeks to “support entrepreneurs from inspiration to IPO” by providing them with access to a suite of events (Startup Weekend, Startup Week, FounderCon), resources (Startup Digest) and 13-week tech accelerator programs. Plus, there are opportunities for entrepreneurs to draw on Techstars $265m VC fund and leverage the organisation’s global network of contacts to establish “useful 2nd or 3rd degree connections”.
Of the 1300 startups that have been through one of Techstars’ 40 themed accelerators worldwide since the network was founded in Boulder, Colorado 12 years ago, Chang said 90% are either still in business or have been acquired. Reasons for this success rate, he explained, include a vigorous selection process (“we vet for great teams, not just talented founders) plus Techstars’ emphasis on connecting startups with great mentors.
“We recruit industry-specific mentors for our vertical-based programs as well as mentors from across the entrepreneurial ecosystem,” he said. “This provides well-rounded access to knowledge through the course of each program. Industry specific mentors often are recruited from our corporate partners to provide domain experience, while entrepreneurial mentors have backgrounds from the startup space to provide access to practical ‘been there, done that’ startup knowledge.”
Launched in 2017, Techstars Adelaide is the first Techstars accelerator in the Asia-Pacific region as well as the only accelerator in the organisation’s network focused on the Security and Defence industry.
“Our program’s corporate partners – Boeing Defence Australia, Saab Australia, Thales and Codan Defence Electronics – all have headquarters in Adelaide, meaning participating startups can expect to rapidly scale, with great resources at their disposal,” Chang said. “It might take a startup years just to get a meeting with some of the corporates we’re working with.”
Global from day one
Asked what he and Chang look for when vetting startups for the Techstars Adelaide accelerator, Gold replied, “We have a chant that goes ‘founder, founder, founder, product/market fit – so, for us, the founders and the founding teams are what’s most important”. In addition, Gold said he and Chang look for founders who are not only coachable but who think global from day one.
“Chris and I come from the US, where companies don’t think global for a long time,” he explained. “Due to the population of the States, they don’t have to work as hard to have an addressable market, which is probably why they fall on their face a lot of the time. Plus, it’s very hard to go overseas in any direction. Conversely, companies here in Australia and New Zealand are forced to dream beyond Australian markets from the get-go. It gives them an advantage because it forces them to be resourceful and adopt a unique global outlook. In Australia, you can build a big business that only sells locally, but probably not a tech business that only sells locally.
“Of course, Adelaide is such a nice place to live, so why not start here and sell to the world? Our view at Techstars is that you shouldn’t have to go to Silicon Valley to make your company work. We think you should be able to do it in your home community and we’re facilitating that in Adelaide. People here were worried about their kids moving to Sydney or moving to San Francisco and never coming back but now they’re starting to see there are a lot options here.”
Chang added, “Not only is the quality of living great in Adelaide, there’s an abundance of talent and resources in SA, where the government has made having a defence innovation pipeline a priority. Further, fixed operational costs are low for businesses, so if companies can manage to stay close to their customers, it’s a great place to be headquartered out of.”
“Unique ideas worry us”
Although Chang and Gold are drawn to work with coachable, resourceful and ambitious founders, they are suspicious when entrepreneurs claim their ideas are unique.
“Many entrepreneurs we encounter think they’re ideas are unique when they usually aren’t,” Gold said. “If an idea is unique, we usually worry a bit. When we ask a founder ‘who’s your competition’, if they reply ‘I don’t have any’… well, either their addressable market is too small or they haven’t done their homework, including a competitive analysis. The best response is ‘we have these three competitors but here’s how we’re better than them and our plan for beating them’. Often, you don’t even have to beat the competitors – most markets are so big all you’ve got to do is wedge in between two to have a $100m business or bigger.
“When I hear about founders who are working hard and who’re eating ramen noodles just to scrape by but who spend what little money they have on a provisional patent, I think ‘wow, some lawyer just took advantage of them’. Getting the patent just gives you a paper that maybe you’re going to be able to defend. Getting a product that’s really working and users that really like it – that’s what we really catch on to and like.”
Chang added, “The point Terry is making is that even though you may not have a direct competitor, there’s always someone with deeper pockets who could be doing the same thing as you. So, what makes you unique to execute? Do your homework and know why your product is unique (or will be faster to market).”
Gold said that one of the success stories to emerge from the inaugural Techstars Adelaide accelerator, last year, is Teamgage – an Adelaide-based startup that has developed an online tool to help organisations build and maintain a team culture focused on continuous improvement.
“When we accepted Teamgage for the accelerator, some people asked us ‘how is this a defence company?’ Our reply was ‘we love the founders, and we love what they’re doing to help people communicate’. In a cohort that featured three companies working on drone tech, Teamgage ended up doing the most business with our corporate partners and they’re growing rapidly. In fact, two of the mentors involved in the program are confident they could be the next Atlassian. They’re made of the right stuff, so we expect big things.”
