A little over a month ago, a new player entered the real estate research market, but brought a twist. Instead of licensing data from the Department of Lands, like RPData, Melbourne-based Home Price History has created a site where users can store their own information about property and, in the meantime, contribute to a communal pool of property research information that will be accessible by all users.

It’s an interesting idea. There’s certainly a lot of information that’s available whether through real estate sites, the relevant Department of Lands or newspapers, which could help build up the communal database. The obvious issue, however, is that many properties don’t trade hands for years, and unless data is brought in from non-user generated sources, there will be gaps in the information.

Because of that founder Robert Reith, and the Home Price History team, have chosen to focus on building a site that helps people store information about property rather than going straight after the RPData type services.

That doesn’t mean that there’s no scope to add to that in the near future, however.  For instance, while RPData does have excellent historical data, which Home Price History would struggle to compete against, they do charge $59.95 for a suburb history report for the past 12 months, which is something that Home Price History could conceivably begin to compete against in the not too distant future. A bit of recent data scraping (where permitted, of course) or aggregation, to compliment the user input, and they might be able to compete even sooner.

Then again, the obvious question is how do you charge people for data that they’ve participated in creating? Maybe there could be a credit system of some sort, where the more data you put in the more you can take out, otherwise you have to pay for credits. Maybe they plan to sell supporting services like financial services. Maybe the team have something completely different in mind. Who knows? Either way, it’s clear that the key at the moment is to minimise the barrier to participation in order to build the critical mass that will make their service viable in its current incarnation.

I’ve had a play with the site and the interface is easy enough to use. Signing up is easy and the services around the information storage are simple and intuitive. There’s even a pretty neat SMS function that let’s you SMS in notes to your profile notepad.

Growth wise, the site’s doing well. As I mentioned earlier, they launched last month and there are already over 4000 properties which are being profiled.

The truth though, is that I’m still not certain about whether or not this is a stand-alone winner. Then again, I’m not really in the market to buy a property (or rent one, seeing as there is a rent watch feature as well) so it’s probably best to sit back and keep an eye on adoption rates.

I can’t help but think though that in conjunction with other services, like another Melbourne-based startup property research site, Street Advisor, there’s real potential for them to disrupt the fairly closed local real estate research market.

Should be interesting to see what happns in this space.

This is Part 3 of a 3 part interview series with Mike Zimmerman (the VC with the perspective), General Partner at Technology Venture Partners (TVP), one of Australia’s leading tech VCs.

Mike agreed to talk with TechNation Australia about his perspective on the local tech industry, startup funding and his thoughts on what we need to do to take advantage of recent momentum in the local scene.

In Part 1 – we were introduced to the local VC industry
In Part 2 – we learnt about why better Angel networks are critical
In Part 3 – we pick up the conversation by addressing the current state of the tech startup and VC funding industries and how Government policy could help improve the industry as a whole

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I have a confession to make.

As we spoke (in Part 2) of needing better tech Angels, and other industry issues, it made me wonder if we hadn’t gone too far down the analysis track. I mean, there’s a question that isn’t being asked enough, which I think should be, before we talk about needing more funding.

The question?

“Is there actually enough demand, i.e. enough good, value creating, tech startups in Australia, that could take advantage of better conditions for VCs and Angels?”.

After all, what’s the point in focusing efforts on building better Angel and VC funding networks if we simply don’t have enough good startups to use them.

I put this to Mike and while he didn’t want to speculate on an answer to my question he did offer these numbers:

There are about 20-30 VC backable deals a year which, once you extrapolate, means that we can support 4-6 venture firms of scale in Australia.

Those 20-30 are not all web startups, they may be biotech, they may be products, they may be innovative technologies (e.g. increasing bandwidth of existing copper wires).

That’s an interesting number. In Q2 2008 in Silicon Valley there were 306 VC deals done at an average deal size of just under US$10M. Extrapolated that’s over 1200 deals for the year. So while 20-30 is probably a larger number than most people would have thought  are getting done in Australia, it’ still minuscule in comparison to the deal flow in Silicon Valley, let alone all over the world.

My feeling is that Australia has the necessary human and physical assets to create startups that capture more than the equivalent of ~2% of the Silicon Valley deal flow. It may be a cultural issue with risk it may be something else. Maybe more funding will release latent projects of value, who knows?

In any case, I think that the jury is still out on my original question – do we have enough good value creating tech startups that cold potentially be worth $100M+?

I’m keen to hear what people think.

Local Tech Fund Stages

Even though we mentioned that there are 20-30 backable deals a year doesn’t mean that every year that will be the case. VC funds have lifecyles, starting at investing (portfolio building) in the early years, through to management in the middle and then, of course, exits.

I asked Mike about what’s happening in the tech VC industry at the moment and this is what he provided:

There are only 3 top tier firms with money to invest at the moment – i.e. that are in the portfolio building, as opposed to management, phase of the fund lifecycle.

• Starfish Ventures
• Southern Cross Venture Partners; and
• Innovation Capital (a newer tech VC that recently raised a smaller $50M fund.)

Other than that, other top tier firms such as:

• TVP
• Accede Capital,
• CM Capital; and
• Allen & Buckridge

are all working with existing companies.

(NB: If you are a tech VC, or know of one, that hasn’t been included here and have details re: where in the lifecycle the fund is, feel free to contact me and I’ll post an update)

A short note. That’s not to say that the second list of firms won’t look at new investments, it’s just a valuable lesson in understanding where in the lifecycle of the fund the VC you may be approaching is when speaking about how long it’s going to take to build your company into something that’s has a potential acceptable exit within the fund lifecycle.

So that’s a brief summary of the state of the market at the moment. The next question is, assuming that more VC funding is required, and keeping in mind the difficulty many top VCs are having raising money, what can be done (while we wait for more big wins and a better tech Angel network) to make venture a more attractive asset class for LPs?

Government Support In Promoting Tech Innovation

It should be noted that I spoke to Mike about this several weeks ago, before the Cutler Report was handed down. Some of the below things were covered in that report. Some weren’t. That doesn’t mean there isn’t scope to have some of his suggestions included in policy or part of funding processes, just that it may be harder to get some issues that weren’t in the Cutler report on the agenda now, than it was when we first spoke.

Covering Government innovation policy Mike raised the following points:

Existing Policies

Commercial Ready

• Commercial Ready wasn’t perfect but it was valuable
• Commercial Ready shouldn’t have been cut off without any grandfather clauses and no replacement plan.

Local R&D

• In the past, because of our local expertise, low dollar (compared to the $US) and government R&D grants, keeping R&D in Australia was a very attractive option.
• As the dollar has risen in value it is critical to adjust R&D grants or else the goal of keeping R&D local becomes less and less feasible.

Innovation Investment Fund (IIF)

• The Government has some other valuable innovation policies such as the IIF, which is 2-4 matching grants to VCs to help them raise money
• The grants are up to 20M and, because government requires lower returns than your typical LP, it’s like a subsidy.
• There are some issues however:
  • The Focus is on building new managers so more experienced fund managers (with a track record and more able to help the companies) are not valued as highly as newer managers.
  • A $40M fund (i.e. 20M+matching 20M = $40M) is too small to build a diverse portfolio and invest in international deals

It’s clear that the overarching message is that we are still in the very early stages of building a sustainable VC funded tech startup industry and we need good help from the government to ensure that we make it through to the end.

The markets we look to, the US and, on a smaller scale Israel, both relied heavily on government support (NB: not intervention) when they were kicking off their tech VC industries, so we could do worse then look to those models to see what we can learn.

Suggestions For New Types Of Support

In addition to speaking about existing policies, Mike suggested some new areas of focus that would be helpful:

International networks

• Should government be giving grant money to hire overseas executives or bring them onto boards or subsidise locals to go to conferences overseas to get experience ?

More effort by government to subsidise the high cost of rent and broadband for startups

• This could be done by providing them a grant for office space/expenses
• Something like 50% so that it’s easer to get startups into co-working spaces and to have that transfer of skills, experience etc.

And of course, better tax incentives for investing in tech startups

• The question remains, what’s the difference between movies and tech and why is one treated so favourably over the other?

As we started to wrap up our conversation, Mike made a few last points that I thought were really interesting.

First is that there’s a great ecosystem starting to build organically but some support from government would help it along. For me, it was pleasant to hear another industry veteran recognize that we’re getting somewhere in our efforts to build the industry despite the current conditions.

Second is that Australia is really starting to build a brand in the Valley. More and more people in the Silicon Valley are running into Aussie deals. When this type of brand started to build around Israel what happened was one partner from US-based VCs would put up their hand and say “I’m going over there to work on deals”. What Australia has over Israel though is that lots of international entrepreneurs and executives are looking at Australia as a place to bring their families. It may only take one of those to make the move to be the tipping point which kicks things off from the top down.

As Mike says, there is some very cool stuff happening and he’s just really keen to make more stuff happen.

I couldn’t agree more.

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That brings to an end our 3 part series. A huge thanks to Mike for being so open about his thoughts and the industry. Hopefully he has helped many of you better understand an integral part of the tech startup industry.

For those who didn’t know – last night was WebJam8.

300+ people crammed into Bar Broadway to hear 18 presenters (including me ) speak for 3 minutes each.

A massive well done to Lachlan Hardy, Lisa Herrod and the whole WebJam8 team for pulling the night together.  The night was action packed from the outset and didn’t really have a chance to get boring with all the activity. It’s a real example of how an event should be run and I’ll be lining up to make sure I get a spot in the next WebJam, whenever that might be.

The winner of the event, by popular vote, was Mister Speaker and his awesome TurnTubelist which allows you to mix (cross-fade etc.) YouTube music videos for hours of party fun.

Second and third place went to…um…the truth is that a that stage I’d had a few beers and don’t really remember. But congratulations to all the presenters for their entertaining presentations.

I’ve borrowed some photos below from JJ Halans and his WebJam8 Flickr photo set so you can see what the night was like. Sorry about not having my own photos, I forgot the camera in the rush to prepare a presentation. And in any case, JJ’s a much better photographer than me!

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Mr Speaker + TurnTubelist = Winner (photo by JJ Halans)

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The Crowd + Lachlan Hardy (photo by JJ Halans)

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Make sure you check out the WebJam website for more details on prizewinner etc. later on (thanks to the excellent sponsors and the associated bar tab, I’m guessing Lachlan has a bit of a sore head today and will be updating the site in his own time)

Just popped back into the office after a morning at Web Directions South .

As an overall note, the conference has a real tight feel to it. Well done to John And Maxine for organising such a great event.

Before I went into the event, I got to have a play with the Microsoft Surface they have at the Silverlight stand. The videos out there don’t do this thing justice. Yeah, it’s the size of a coffee table and yeah, it’s not exactly Minority Report – but it’s not far off, and what’s best is that you don’t have to wear one of those gloves! Can’t wait to get one in my office.

After leaving the Surface alone, I headed into the keynote

To kick things of Aboriginal Elder, Allen Madden gave a Welcome to Country speech on behalf of the Gadigal Clan of the Eora nation. With tech generally looking forward from an international perspective, it was a nice show of respect by the organisers to take the time to recognise the indigenous people of the land and their long history of ownership over the area we were holding our conference.

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After a brief and entertaining intro from John Allsopp, Lynne D Johnson came up on stage to give her keynote. The title – “New Media…New Rules”. Lynne is a very well regarded thought leader amongst the international social media community, so it was a real privilege to hear her speak.

It was an interesting talk focusing on print media and its future, but unfortunately it was kind of preaching to the choir. I think Lynne figured this out about half way through, so the focus changed from one of educating us about “new” technologies like twitter to speaking more freely about her experiences and treating us as peers rather than students.

An interesting take-away from her talk – Print won’t die, it will become an elitist medium for people who have the money to pay for limited edition high quality print runs. I couldn’t help but think of Visionaire magazine being a forerunner of this future.

Interestingly, at the end of the presentation, John Allsopp gave a real-world example of different distribution strategies based on different media that the Web Directions crew are trialling for their new magazine, Scroll. You pay a premium for the high-quality limited print run today, the print on demand version released in a little while is slightly cheaper, the downloadable PDF which comes out a while after that  is even cheaper then in 3 months everything goes up on the web for free.

Moving back to Lynne’s keynote, you can get the vibe of her talk by checking out a presentation she has uploaded at SlideShare. She mentioned she’d be uploading today’s actual presentation some time soon, so keep an eye out for it under her SlideShare username – lynneluvah…i know…apparently she used to be a rapper.

For those interested in keeping abreast of the day’s activities you can keep up to date via the Twitter backchannel using the #wds08 tag

Other than that, there are 2 full days of great talks ahead, including some side activities like WebJam 8 (I’ll be presenting uTag there tonight, so wish me luck)

Member of the TechNation Australia team will be visiting sessions over the next couple of days, so we’ll keep you updated on some of the cooler things we encounter.

Global Social Media agency Headshift has recently set up shop here in Australia.  I interviewed the Managing Director Anne Bartlett Bragg to find out more about Headshift and why they have decided to open an Office in Australia.

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What is Headshift’s core business and what scope have you got in Australia currently?

“Headshift specialises in Social Software Development and Social Media Consultancy.”

With a move into the Australian Market, you are obviously anticipating significant growth in the social media and web 2.0 sectors.  What indications or observations lead headshift to setup in Australia now?

“The UK and Europe experience has taught us to identify key indicators that point to a rise in popularity of Social Media.  i) The interest in Social Media and Social Technologies has started to hit the mainstream media.  When the mainstream media starts covering a once unfamiliar technology or way of thinking, suddenly that technology begins becomes justified and less scary in the mass market, leading to larger companies to begin testing the technology. ii) The language is out there.  The market is beginning to talk about Social Media Technology in ways that can help their business reach new markets and new customers.  Talking is the first step, implementing and using the technology is the next step. iii) Early adopters are seeing results from using Social Media.  The few companies that are already using Social Media effectively are talking up the positive aspects of it, which gives other companies the confidence they need to step into this market.”

How does the social media/web 2.0 scene in Australia compare to that of the UK and Europe?

“Currently Australia is 2-3 years behind on a corporate basis, namely in implementation.  As I mentioned before, alot of companies are now talking about it, but few are actually ‘doing’ it.”

What companies do you target and why?

We target three types of companies.

1. Companies that have a high focus on internal communications – as they benefit greatly from internal social networks.  These companies are largely knowledge workers that have a dispersed audience and need to share information with one another on a constant basis.
2. Companies that want to reach their target market by leveraging off social media externally.  This may involve building their brand through the larger social networks like facebook or building a network about their brand with platforms like Ning.
3. Community projects are becoming more popular with us, as more people begin to realise the power of social media and how it can expand the reach and awareness of their cause very rapidly with little financial sacrifice.”

Where do you see the Australian web 2.0 and social media scenes in 2 years time?

“In 2 years I believe Australia would have caught up with the rest of the world.  Being slow to adopt is not necessarily a bad thing, as the early adopters lay the groundwork for the rest of the market to springboard off.  The result is that Australia will grow faster than the UK and Europe and has a real chance of possibly getting ahead of them in 2.5-3 years time.  Australia is also far more dispersed, literally, in terms of landmass than that of the UK and Europe which will mean once Social Media Technologies become mainstream and the infrastructure is there to support them, people will use the technology as a primary source of communication as it is cheaper and far more effective than what they have currently.”

Headshift employs 2 people in Australia, one in Sydney and one in Melbourne, however the company is looking to expand its employee base in the coming months.

These are all promising signs for the Social Media and Web 2.0 sector in Australia, as big players are starting to plant roots here in the expectation that the market is growing and will keep growing significantly in the near future.

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Thanks to Anne for the time taken for the interview. To find out more about Headshift visit the Headshift Australia website.

Leading Australian news aggregation and analytics site, Plugger, will officially rename itself to Wotnews tomorrow. The Wotnews.com.au site is already up, so its a fair guess that tomorrow plugger.com.au will redirect to the new domain.

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The change comes after Wotif announced to the ASX today that they had entered into a licensing agreement with Plugger.

I asked Plugger co-founder, Stephen Phillips what was going on and he explained the high level reason for the name change:

Graeme Wood (founder of Wotif.com) has acquired a majority ownership of the company. We have licensed the ‘Wot’ brand from Wotif and are now part of their family.

In consideration for the licence to use the “Wotnews” name (which is held by and has not been previously used by the Wotif), Wotif will receive: -

• a licence fee calculated on gross revenues generated by Plugger.These fees do not become payable until and unless certain revenue thresholds are reached by Plugger. Given the start-up nature of this vehicle, it is not expected that any fees will be received in the 2009 financial year;
• advertising exposure across the Wotnews site;
• a pre-emptive right to purchase the Plugger business which will trigger if the existing shareholders seek to dispose of their interest in Plugger;
• and an option to purchase a 50% interest in Plugger. (which was sold to it by “interests associated with” Graeme Wood)

The exercise of this option is entirely at the Wotif’s discretion. The right to exercise commences two years from today and expires on 31 December 2012.

If Wotif seeks to exercise the option over the 50% shareholding in Plugger, it will be required to pay a total amount calculated as 5 times the EBITDA achieved by Plugger in the financial year prior to option exercise (provided this calculated total amount exceeds $1.5M).

Plugger has not generated EBITDA at this time and, as such, it is not currently possible to quantify the exercise price of the option.

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To be honest, I’m not sure if 5x EBITDA is high or low for an Aussie tech startup, but in the context of international tech startups its definitely in the low range. That makes me think that either: -

• The Plugger boys were made a very attractive offer by Graeme Wood to acquire a majority holding in the company.
• They see great value in being associated with the Wotif family.

There could be other reasons, but without any additional detail, the above 2 seem to make the most sense.

There’s no clear information on what Plugger gets out of the deal besides the license to use the Wotnews name, but hopefully more details will reveal themselves over the coming days

One last thing…it should be noted that besides the name, nothing will change from an end-user perspective. All functionality and features will still be as they are now.

In Part 1 of this series we were introduced to Mike Zimmerman, General Partner of TVP and got a brief understanding of the local Venture Capital industry.

We also established that VCs are probably not the right answer for most tech/web startups and that Angels are, which is where we pick things up here…

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“Angels” come in a couple of species – High Net Worth individuals who like to make their own investments and Angel Networks, which are groups of individual Angels that either co-invest or advise each other on investments.

The problem, from a VC perspective, is that Australia doesn’t have the right kind of angel community just yet.

Mike explains:

In the US there are lots of angels who got rich from tech companies and hundreds who have been executives at tech companies. That combination of domain expertise and cash isn’t really available here. For instance, there’s no local equivalent of a Marc Andreesen (Netscape, Opsware and  Ning founder), an Angel who is held up as a technical expert as well as one who has created several massively successful companies.

Instead, he went on to explain, what we generally get in Australia are people who have created wealth in other fields and who are interested, sometimes, in tech. It’s the classic dilemma of what value does an Angel add i.e. do you just need Angels with money or are Angels with less money but expertise, networks and relationships, more important?

In most cases, it’s the latter.

An example of this dilemma in action are some ex-Investment Bank Angels with a lot of money who, when they advise, do so from an investment bankers perspective. This is not always friendly to VC capital structure and can result in a limited  potential for future funding rounds and the associated ability to leverage the VCs networks and relationships.

The lesson? As a startup entrepreneur, if you’re keen to eventually get VC funded, you need to be careful when sourcing an Angel – you may get funded but at what cost?

So, are there any good local tech Angels?

Mike did cite a few local tech Angels that do have the knowledge and experience tech startups need. These include Mike Cannon-Brookes, Roger Allen  and Ramin Marzbani.  In addition there are the HitWise guys and also people like Rand Leeb-du Toit. On a smaller scale you have people like Clay and Rebecca Cook from Vibe Capital. I’m sure there are more out there (feel free to add more people you know of in the comments) but as a percentage of the Angels out there they are a small minority.

Because of that TVP, and many other tech VCs, really like to be the first outside investor simply because there can be added complexity and not much value add from Angels who don’t truly understand the industry and funding process.

So, looking back over the first part of this interview with Mike, and today’s installment, the problem for tech startups seeking funding becomes quite clear. Not enough relevant angels and too big a gap between where most startups are and where they need to be to be interesting to VCs. The result is limited early-stage web/tech startup funding.

To summarise..

The issue? We need more successful tech entrepreneurs to become tech Angels.

The solution? Unfortunately, time.

It’s a problem, no doubt, but one we, as tech entrepreneurs, and VCs, in Australia must work around.

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Stay tuned for Part 3 where we discusss the current state of the VC industry and Government Policy that could help it

Clivir is a recently launched tutorial based learning community that allows users to teach or be taught.

The Perth based startup focuses on giving users the tools and platform to actively teach other users about anything that interest’s them.  Users can create lessons or classrooms, depending on the extent of knowledge or popularity of their teaching.

Example – John has extensive knowledge on photography.  He sets up a lesson on basic photographic principle’s and has 3 clivir users attend his first lesson.  The lesson goes well, the lessons attract more users and John is asked to expand on the topic further, so he sets up a classroom on Photography where users can share information and dissect the topic together in one space with John being the teacher.

After taking a few lessons myself, credit is due to Clivir for the clean, easy to use interface that beats most other competitors hands down.

It is also interesting to note that the site has no visible advertising to distract teachers or students.  This suggests that the Clivir team really do want to help people learn rather than make a quick dollar, which is very noble indeed.  However, as the site grows, a revenue model will have to be implemented and how they do that without disrupting the classroom will be interesting.

So far Clivir has been fun and I will continue to use it as the grows, both in a teacher and student capacity.

If you have an interest or hobby that you would like to share with, learn from or teach to others, give Clivir a try.

Over the past 3 months, Pitch 08 has been making its way across certain states of Australia trying to help entrepreneurs get practice pitching as well as putting them in front of potential investors

In their words: -

Pitch ’08 is a competition for entrepreneurs and business owners to “pitch” their idea, project or businesses to investors and receive feedback from a panel drawn from a variety of financial and business backgrounds.

We often think that we, as tech/web startups, have a monopoly on trying to perfect the investor pitch, but it’s not the case at all. In fact tech startups are under-represented in terms of the type of businesses that are seeking  and receiving actual investment in Australia. A perfect example of this are the winners from WA and Victoria.

In WA, it was Cocky Smart Pty Ltd  “an organically derived agricultural product which eradicates flies, ticks and lice infestation on livestock with no known side effects” who won the event

In Victoria it was Humanitee, who “produce high quality clothing using organic fabrics and fair trade business principles”.

In NSW, however, SMS Poll pulled one back for the home team by beating out Evolution Tankers and the Invisible Clothes Line.

SMS Poll is “an innovative mobile voting and live audience polling application that rivals sophisticated Audience Response Systems at one-tenth of the price” We recently did a story on charities and tech, which highlighted how SMS Poll has been used by a wide range of organisations.

For their efforts, the SMS Poll team has won a listing on Australian Small Scale Offerings Board (ASSOB) and corporate multimedia package, valued at $40,000 (based on an average of $500,000 capital raising)

You can check out the winning SMS Poll pitch here.

Well done guys.

The dramas surrounding online storage startup Omnidrive, it’s association with TechCrunch boss Mike Arrington, it’s enigmatic founder Nik Cubrilovic and the many disgruntled early stage investors, would put a whole season of ‘The Bold and the Beautiful’ to shame.

Over the years, and more frequently recently, rumours of Omnidrive’s demise have flown around. More often than not though, they’ve been found to be exaggerated. This time, however, it might just be the end.

Clicking on both www.omnidrive.com and www.nik.com.au (the personal website of founder Nik Cubrilovic) now take you to an ‘Amnesty Finance’ landing page.

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This is not something that has just happened. It’s been that way for over a day and there has been no official comment from Nik, Mike Arrington, or anyone else officially associated with the company.

I’ve learnt my lesson in the past, so I held back on reporting this to give the team some time just in case it was another “mistake” caused by an intern of the company, or of their hosting company, or whatever.

But that’s it – I’m calling it…Omnidrive is deadpooled.

Even if they aren’t deadpooled, they’re deadpooled in my eyes.

Goodnight and good luck Omnidrive.

What a sad ending.