Angel Investors Fail Australian Innovation

Merimbula, Australia, October 9, 2015 (Newswire.com) - “Houston, we've had a problem” were the heart stopping words of Apollo 13’s astronaut James Lovell, who later followed up with: “Our mission was a failure but I like to think it was a successful failure.”

Why is Australia failing to innovate at the rate of other developed countries? Discussion about the myopia of government policy, the disconnect between interested parties and the priorities of those with funds starts to uncover some serious challenges for Australian innovation.

The true entrepreneur stands in tomorrow and shows us how to get there differently. Money is not more valuable than innovation yet some investors think they can take more equity. Lets start truly valuing Australian innovation and truly entrepreneurial innovators.

Christine Kaine, Founder and CEO

Digging deeper however, sheds light on a particularly harrowing challenge that has befallen the entire innovation sector - our attitude to failure. This surreptitious little virus clogs the cogs in all the moving parts necessary for true innovation. If novice entrepreneurs knew how hard it is to get funding or even access the right support networks, how much perseverance, how many pitches it takes, most would not bother. The problem now is that experienced entrepreneurs with demonstrated business acumen and apparently good ideas are not bothering, expending efforts instead on the job at hand rather than kicking the can.

Worse than that, you know that truly disruptive innovation will suffer the disruption peel-back - which is when the backers peel back the risk factors until the innovation looks familiar. Or, the innovation never sees the light day, like the Kodak digital camera invented in 1975. If that can happen to an established company with solid market presence, what hope the startup?

The first line of financial support for innovation is usually the ‘friends, family, fools’ trilogy, followed by Angel Investors and more recently Crowd Sourced funding. Sadly, the level of ‘Angel’ support for innovation in Australia has been a spectacular failure. Wealthy Australians have retreated to conservative property, hedge funds and shares when they could have stepped up to the plate on some great business opportunities, not only financially but also offering their business expertise.

The return of the Shark Tank, the television program that throws an often bewildered entrepreneur into the high-beams of four (somewhat arrogant) investors highlights two important aspects of Australian innovation – a) that Australians still love creativity; and b) the creators are still on the back foot. Perhaps when they introduce public voting and buying-shares into these startup companies from the comfort of the lounge, we will see a more widespread approach to backing Australian innovation.

After more than two decades running one of Australia’s first and most successful Business Angel matching services with the mission that it would revolutionise Australian innovation, Christine Kaine has seen how this mission was a failure, but a successful failure.

“We have learned so much about the Australian spirit of innovation, now we need to harness all the right support around it,” she said. “Our culture is one of innovation, pioneering and punching above our weight. We have never before seen such an abundance of great business ideas floating around the grassroots and established entrepreneurial networks. It’s time investors returned to the table.”

A Business Angel is someone with money and motivation to walk beside an entrepreneur and support the effort in whatever way is required. It is a partnership, a marriage of mind and effort, to successfully produce and market a product or service. The right team ensures success; people not funds create successful ventures. Part of the failure, Christine Kaine suggests, is the dehumanising of the innovator while placing too much focus on the funding. Also, overemphasising the importance of Startups, Incubators and Accelerators distracts from important innovation and IP in existing businesses.

Our current government policy and programs are geared to growing this spectator-style incubation model that puts a novice in a virtual office with fast internet and a receptionist, rather than growing existing businesses and incentivising those that want to grow. Like the Jobs Services Australia fiasco exposed earlier this year by Four Corners, where job agencies are rewarded more for bums-on-seats than real outcomes, this approach to Australian innovation may see more facilitators blossoming against internal KPI’s than truly successful business outcomes.

Innovation is required across all industry and government if we are to meet the needs of the immediate future. We can make a success of our failure if we find ways to work productively together and share our lessons from the past 20-years of commercialising and expanding Australian business. How many wealthy Australian retirees could walk beside an innovator so that the problem we have had (Houston) will skyrocket us into the next decade to create jobs and wealth for all Australian? <ends>