Australia vs the US for start-ups

I’m writing today from the plane travelling between San Francisco and New York.

I’m in the US for six days and it’s the third time I’ve been here in five months. Last time I was out, I had some great meetings with a bunch of investors.

The problem is – after I pack up my PowerPoint deck and leave the room, no matter how excited everyone is, it’s hard to close deals from the other side of the world.

It’s important for investors and entrepreneurs to spend time together before making a commitment, so everyone is comfortable that the relationship will work. So I keep travelling back and forth until our product and team is in a position where I can move over here full-time.

We’re still at the fairly early stage of our start-up but the more time I spend here the more obvious are the advantages and disadvantages of starting a tech company in Australia as opposed to the US.

Other than the clear market size difference, here are some of my experiences:

Funding

Above: The view I spend the most time admiring in New York: Starbucks coffee and my laptop.

Negatives

It’s harder to raise early stage capital in Australia.

If you’ve seen an episode of the new ‘Silicon Valley’ TV show you may be scratching your head wondering how such terrible ideas gain funding. It doesn’t just happen on TV, either.

There’s a culture of backing new ideas and entrepreneurs and not expecting them all to work out. This doesn’t happen in Australia where a handful of funds back proven businesses who need to grow, rather than new ideas.

US funds don’t like backing early stage Australian companies; many have a policy against seed investments outside the US. This is because they like to add value by getting involved and think it would be hard to do this beyond the US.

Positives

But Australia has an awesome government grant system that backs start-ups like ours. We’ve been fortunate to receive assistance from Commercialisation Australia as well as the Export Incentives and R&D Concession schemes.

The level of support the Australian Government gives start-ups amazes our US directors and investors; there’s nothing like this for companies out here.

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