Greg Riebe is Chair of the Western Angel Investors Network and a company director of a number of technology start ups. Nick Markham talked to Greg about his role in WA's tech community.
Can you give us a bit of background into WA Angel Network and it's role?
Western Angel Investors Network has been around for a few years now but it's been more active over the last 2 or 3. It's model is very much premised off some of the other Angel Networks that have been developed out of the Australian Association of Angel Investors and others around the world. It's a not-for-profit organisation with an objective to provide a destination for early stage businesses to be able to connect with investors who have an appetite to invest and participate at that level.
Our focus is not necessarily sector specific and really quite eclectic, however we do tend to be interested in technologies, not necessarily just IT, we have looked at engineered products. The stage by which we tend to focus in on is at the commercialisation/development stage. We don't tend to get interested in research and development projects. We come in after that. What we tend to find of interest in our network are those that are at a stage where they have some level of validation of customer need and demand, and those customers are prepared to buy the innovation, the offering that the business is about.
We tend to find that the network likes to not only get involved in putting their financial capital in, but they do get an interest in looking at putting their intellectual capital in. They are not in there to get a job, they are in there to actually be active to try and help grow and add value to that business. On that basis that they can they seek to a return over time.
How many members are there in the Angel Network?
We have had something in the order of about 40 financial members when we run our Pitch Nights. We run the money once a quarter on the basis that we have a deal that we think is of good enough quality. If we don't think we've got good enough quality deals, we won't have a Pitch Night. We would have at those Pitch Nights, probably 30-40 people. At a particular Pitch Night we may have 25 of that 40 membership and 10-15 of others. That's probably the stats of where it sits at the moment. There is co-investing that comes out of those things, rather than just straight member investments.
So there is not a commitment to invest like some Angel Networks have where you have to commit a certain amount of funds and the group makes the decision on a whole?
That's correct. We have an expectation that members will participate in deals as part of the membership but, we don't force people to take investments. When investments are actually taken, they are taken on individual basis. At this point in time, interestingly in some of the other networks around Australia, they have tended to, or have had experiences in syndicating a deal through some vehicle where a number of members would come in via the vehicle. Brisbane for example, the Brisbane Angels are much more mature I think. In the way of having a vehicle by which where their members can actually participate in ventures.
Through our research, we've found that AngelList in the US is shifting the platform for angle investing. AngelList offers the credited investors opportunity to invest in a wide range of startups that doesn't have to come through that network, they are left to make the decisions. Do you think these sorts of vehicles provide an opportunity for people to put themselves in front of the list?
The answer for me is yes. I think at this level what is actually required is a co-investment model. If there is opportunities to co-invest through different vehicles, they are quite happy about their investing. That's the main thing we want startups to have, access to many investors. Not diluted and distracted but rather if there is a particular vehicle or network ... and you have co-investment across networks, good. It's what's required of getting the right people, the right money, at the right time.
Can you tell me what you identify as some of the critical factors for the growth of WA technology startup ecosystem?
For me, it's the market connection and being able to validate the global ability of any innovation that has actually been developed. I don't think our isolation is a hindrance, the reality is we are just a long way away. We are quite innovative and creative, but there is a lot of other things happening around the world. To be successful, you've got to understand that large market, to have connectivity to be able to get in there to compete. So to me, one aspect is market connection, technology does allow you to promote internationally, but at the same time, you do need to have those market connections to get your traction.
Do you see the lack of an active venture capital fund in WA, hindering that Series A, Series B model that we see typically?
It comes down to the style of and the position of that VC is funding. Yuuwa were actually reasonably well focused in taking a little bit earlier stage. You look at Blackbird VC, they in some ways have looked at and operated more as a micro VC rather than a typical VC. To me, it comes down to that level of definition, the type of VC that it is because most of the other VCs are retracting back up and almost becoming private equity businesses.
That seems to be a trend in the US especially.
Absolutely, around the world as well but the question is, do we need to have institutional money at that early stage? The answer would be that it would be great to have that, without a doubt but that institutional money needs to be positioned and understand the risk profile at this early stage.
The likes of Matt, Liddy and James (from Yuuwa) were very very good at that. Matt gets the technology side of things. To me, it' actually a lack of education in the private individuals, not institutional areas that we need to do a little bit more work on.
Who do you see making a very important contribution to WA's technology ecosystem?
I think there is a series of really good programs that are occurring like Ignition and Amcom upstart. There's also TechHub in terms of the Fusion program and some of those others with collaborative work spaces are doing a great job of providing us some of those physical focus in terms of doing that.
I think there is a lot of activity going on, there's some good programs starting to develop in terms of understanding the entrepreneurial process and building tech businesses.
And what about the individuals?
I think the likes of Andrew Larson, Marcus Tan, those sort of guys are doing a really good job. I think Andy Lamb and Brodie those guys are doing very very good at developing the environment. And then there's people building businesses. I'm involved in in-house, Andrew Larson and Markus Tan, Health Engines. And some of the other ones from Engineered.
Do you see opportunities for greater collaboration between all the people and organisations facilitating the growth of the ecosystem?
I do think there is a chance of greater collaboration and I think a greater collaboration between stages. I believe you provide an environment, then you provide the process and the framework by which people can grow businesses. In the last Ignition program, one of the things that really was the biggest benefit to those ventures there was the technological framework on how to build a business. Once you actually gave those very smart people a framework on how to do that, they were rocketing. Most of them start off with out a framework.
In your role in the WA Angel network, what do you want to change to make your deal flow options better?
I think the out coming would be in terms of the quality of deal flow that is being brought through. I think we are getting better at the entrepreneurial process in terms of understanding what's required of framework that you can actually develop. That is slowly getting better to actually make those deals investment ready. A lot of that process of manage, still doesn't quiet make them business ready. They make sort of a slow branch out of that. That I think would would increase the quality of the field, that actually do come to Angel Investment Networks, and grow through us.
The other part to the growing net availability of capitol to fuel that better quality deal flow. I think there's a bit of education in terms of, how do you actually engage at those early stages? There's a lot of good people that have got a lot of high net worth, that just support their investments in a different way. They haven't missed ... Well let's face it there is a lot of us at the moment buying a lot of tech stock for this, while still buying through out the others. It's not that their no tech, it's just that that's how they know how to buy.
I think that issue .. I think we would intellectually probably to actually do more through a private entry, rather than a public entry into those early stages.
I think it's an education issue on helping investors on how to do it. And certainly providing an environment which is more in similarity of what happens in the UK in terms of the EIS System and so on. This marvelous sort of results have occurred there by providing that environment for people to want to participate at that risk, at that level.
Do you think the other cities in Australia, your Sydney, Melbourne, Brisbane, play a big role in the WA community?
I don't think they play a bit in our ecosystem at all, we are too far away. I guess if you were actually taking a look at it, at that environment through lenses. That environment places framework in investment. Most of the environment type stuff, there's some areas that have been most of that. So there is a collaborative of which both. They are not linked. In the framework sort of thing. There has been a lot of learning from that, an upstart from Dos Martin's sorts of programs over there. But they are not the same.
Investors, very few investors come this way to the WA from the because institutionally we just talked about the fact they're hidden. Private wise, for individuals it's too far away. They only tend to invest locally.
I'm not sure that I see a great indication. Where I would like to see more involvement is actually utilizing them as market connectors. For example, Larry Lopez on the development tube with Canva in terms of getting that connected from here to there. There's some models from me.
Do you think our technology sector needs to look at becoming a specialised cluster of tech? Or do you think a more generic approach is a more suitable?
Without a shadow of a doubt. It becomes a question as to what type of tech we should focus on, doesn't it?
To me, yes. The answer is yes, and it comes down to market connection again. You need to build ... You do actually have a look at Israel, its a very good one. You have a look at Silicon Fen in Cambridge, they're another very good one. But have a look at Silicon Valley and some other triangles in the US. It's because they have a natural comparative advantage of certain areas that have been clustered around. So for us to cluster around generic technology which are typical around the world, which we can work with, Canva is a great example of that. But because they didn't leverage off any natural entitlement from Perth at all. But I think for our community, we should have some sort of linkage that gives us access to market locally quicker. And take it from there.
In fact we are regarded as the Silicon Valley of Mining Software. Technology. There is a lot of people that do say that. In fact, if you were to look at some of the software technologies for the mining sector, there are quiet excellent mine maps. There was a couple of others. Some of those words had a genesis in WA, and Australia. Yet we actually don't even hear about those companies really. Yet those guys are exporting world wide.
How has the WA startup community changed over the last 5 years? What have you seen that has really shifted the landscape?
I think mining tech is where I have seen the biggest growth. I think there has been a growth in people providing that framework and facilitation, the income upstarts Ignition, that's the stuff that's been sort of a real growth. I don't think there has been a commiserate growth in that talent pool of people that built technology business and we're getting into that. That's probably what I have seen focus.