How to raise money in Australia vs Europe - an interview with SBC alumnus Liquid State
We are happy to announce that Startupbootcamp Berlin alumnus Liquid State raised 785,000 australian dollar from a government grant as well as several Angel Investors. In order to help future companies with their funding process we asked their CEO Philip Andrews to share his insights on the european and the australian investment system in the interview below.
You talked to European Investors as well as Australian Investors. In your opinion, what were the main differences and challenges?
We met with lots of VC, Angels and Angel syndicates over the last few months and I can truly say that we have learnt something from all of the meetings. Yes even the ones that didn't go that well.
We started looking for investors while at Startupbootcamp Berlin after having bootstrapped the company for the first 15 months. We found that for the amount of money we were looking for (900,000 Euros) and the stage of the company (pre-release and pre-revenue) it was difficult going. We had interest from several organisations but when pushed either they didn't want to 'lead' the round, they were concerned about investing in an Australian company that was so young, or they wanted to wait a few months to see how our executions plans went.
So armed with this knowledge we spread our funding search wider and started to contact individual business angels and angel networks and syndicates. These folks are generally made up of successful individuals with high net worth who want to invest in companies at an early stage and see their investment grow as the company matures. We started a round of furious meetings which ran over a couple of months and ended up finding our foundation investor and then several others who wanted to also be involved. This group formed the bedrock of our current round.
At the same time, we were investigating other forms of investment including government grants and co-funding arrangements. We found some great schemes in the UK, Germany and Australia. Most of these required the company and its IP to be located in the country where the grant was administered, so because we already had an Australian company structure we applied for a grant there first. The paper work was challenging but in answering the questions we really needed to think about the company and our financial and business plans. So it was work we were doing anyway.
In the end we were successful in obtaining a Commercialisation Australia grant of A$350k towards a A$700k project over the next 18months. Part of the grant application process required us to match the government money dollar-for-dollar. We did this with the money we raised from the angels.
In the end we found talking with Australian investors and government funding agencies easier than those in Europe and the UK but this may be because when we pitched to them we had released and had some revenue coming in, we knew more about pitching our company or we were pitching in our native tongue (what we speak in Australia is not quite English).
You moved from Australia to Europe and went back to Australia again. What were your expectations when you came to Europe and why did you go back?
We made a conscious decision to go to Europe after a period of time developing in Australia so we could verify the product market fit in a different environment to our home territory. We also wanted to put the business through as much scrutiny as possible to ensure that our models and plans were as good as they could be. And we wanted to build out our customer and mentor networks. SBC Berlin was perfect for achieving all these goals.
We returned to Australia to obtain funding, but would have stayed in Europe if we had raised there. We still see Europe in our long term plans. In fact, we just hired a business development guy in the UK. So expect us back as soon as we can get the logistics to work.
What can you expect in terms of non-financial support from the government vs support from a VC when it comes to expertise, network connections etc.?
We have been amazed at the quality of the non-financial support we have been able to access from our Government sponsor. He is incredibly well connected and does warm introductions for us to potential clients and follow on investors on a weekly basis. You get the feeling that they really want the company to succeed and are working hard to help you make it happen.
Why has the government an interest to invest in you?
The Australian government wants to stop the 'brain drain' of ideas people to Europe and the 'Valley'. They also want to encourage people to build GSB(Global Small Businesses) at home and to keep the IP they develop in these companies in Australia. Plus they are interested in Liquid State because they knew a bloody good company when they saw one!!
What is your product in 140 Characters and where can you sign up?
Liquid State is the quickest and easiest way to create custom digital publications suited to all devices. Signup at liquid-state.com
Thanks for sharing your experience Phil!
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