US investors scout Aussie tech start-ups

Australian tech start-ups are an increasingly attractive proposition for overseas investors due to the NBN and fierce competition in the US venture capital market, according to a local industry expert.

The comments follow the visit of Azure Capital Partners’ Mike Kwatinez and Cameron Lester, who travelled to Australia from San Francisco last week to hold investment talks with several technology start-ups.

Azure currently has three part-owned companies operating in Australia. SilkRoad makes talent management software, K2 is a business process management company while Fonality provides IP-PBX systems for small businesses.

These companies are headquartered in the US, but Azure is now on the hunt for Australia-based businesses to invest in.

It has recently invested in start-ups in Israel and South Africa and, following this recent trip, an Australian investment is highly likely in the near future. Over the past three years, Azure has exited six companies for a combined market value of $US2.2Billion, returning $US300 million to its funds.

“Venture fundraising has been down significantly,” Lester told the Australian Financial Review. “It’s actually a good time to be a venture capitalist because the scarcity of venture capitalism is driving valuations down.”

Reuben Buchanan, founder of Wholesale Investor and StartupSmart blogger, says that the upcoming roll out of the National Broadband Network and domestic competition faced by US investors has triggered the investor interest in Australian start-ups.

“The US is the heart of venture capital and there are deals there that just wouldn’t take place in Australia,” he says. “Investors are definitely interested in Australia. There are a lot of VC firms in the US and they are looking for the next big thing, the next Facebook or Groupon.”

“Competition is fierce there, so they have to look further than the US. Ideas in Australia are just as good as the US.”

“Also, the Government committing such a large amount for the NBN means that there are opportunities there that weren’t there 10 years ago. It’s a positive thing.”