Australian start-ups seeking capital and markets should look north to Asia instead of Silicon Valley where competition for funding and attention is intense, an Australian investor says.
“What Australian companies need to remember is it’s awfully competitive in the US,” Benjamin Chong, a partner at Right Click Capital, told StartupSmart.
He says if Australian start-ups go to Silicon Valley, a centre for innovation and investment in the start-up world, they would also be competing with peers from other countries seeking the same thing.
“You still need to pitch, you still need to compete with people from China, India and Europe,” he says.
Chong sees Asian centres such as Singapore and Hong Kong as places where Australian start-ups could make their mark and enjoy advantages based on proximity, similar time zones and relationships built on business and educational links.
Access to Asia’s large population was also an advantage.
“If you want to scale your business and want it to be meaningful in terms of shifting the dial, then you’ve got to go for a larger market,” Chong says.
Chong, who’s also a co-director of the Founder Institute in Sydney, says he is currently seeing investor interest in start-ups that are working in the e-commerce transactions space and in software services.
“Transaction and software services are the sweet spot,” he says, adding that as software becomes easier to develop without the need for expensive hardware, start-ups can focus on their core product.
Chong, whose firm recently sold out of its investments of website network OMG and US media network iMega for a “significant return”, has also questioned complaints of a lack of funding for start-ups in Australia, pointing out that earlier this year three new venture capital funds shared $100 million in funding from the federal government’s Innovation Investment Fund, which would be matched by private sector funding.
He said he had also heard there could be more new investment funds being created in Sydney and Melbourne, but declined to identify who could be behind them.