- BRW Lists
Published 18 September 2013 12:24, Updated 19 September 2013 08:19
“If your government would go forward with National Broadband Network (NBN) that would be great initiative for start-ups to build on,” he told BRW while visiting Australia to promote the annual OzAPP awards and hunt for new Aussie start-ups.
Tai is a partner at well-known US venture capital firm Charles River Ventures and has backed some of America’s most successful technology companies including Tweetdeck (by Twitter).
“It’s very controversial but if you have bandwidth - a lot of bandwidth at a low cost- things happen. Energy will flow to create more start-ups.”
Under the Coalition’s current NBN policy, Australians may have to wait three years before getting a broadband upgrade. The government is undertaking a “forensic audit” but is unlikely to make changes Labor’s NBN policy until the middle of next year. These changes are likely to include a new NBN management team and board, as well as new cost structures and regulations.
Tai says in America, companies like Napster were started off the back off fast broadband, and delaying this will be detrimental to the start-up eco-system in Australia.
In the US Tai’s known as Silicon Valley’s “kite guy” - Tai is a keen kiteboarder and was part of the campaign that earned kiteboarding a spot in the 2016 Olympics in Rio de Janeiro - but in Australia he’s recognised as backing some of the nation’s most successful start-ups at angel investment stage.
These include being part of a $3 million funding round for design website Canva, early investments in online shoe retailer Shoes of Prey, tech entrepreneur Rebekah Campbell’s social app Posse, social payments app Pygg and game maker Bubblegum Interactive.
Australia can have its own VC network
Tai says while Australian start-ups need Silicon Valley VCs to scale globally, Australians are highly savvy and need to have faith in their own talent.
“I’ve been amazed at the talent and energy in the Aussie start up community,” he says. “I’m certainly very open to backing more Aussie start-ups. The angel investments I make are a bit ad-hoc. But I do have a following and if I invest in something others will invest around me. That’s what happened with the third round of Canva - where I invested about $100,000 and then they got $3million in total.”
Tai says he looks for founders with “a product in an emerging new market that could be very big”.
He says while Australians still have to go to Silicon Valley VCs to get funding above $10 million, Australia will eventually have its own network of VCs.
“The VCs will be there, if there are companies delivering large value,” he says. “Once it’s proven that you can have world class leader in the tech space emerging from Australia, it will validate the opportunity for VC institutionally.”
Examples of highly successful Aussie companies include Atlassian, Freelancer and 99designs. “There’s a bunch of them that are arguably leaders on a worldwide basis,” he says. “Yeah, you do need to touch Silicon Valley to scale, but you can start companies anywhere now. In Australia you have entrepreneurs with talent and capability - they just have to have the confidence to give it a try.”
Tax incentives needed for start-ups
Tai says the government can also help by matching angel investments dollar for dollar. The previous Liberal Howard Government started such a program.
“Companies are very attractive to an early stage investor if the assumption is the talent is there and the matching funds are very strong,” he says. “It gives a start-up twice the funds they need to get going. The government can help fuel the fire.”
Tai also believes the United States government offers start-ups much more favourable tax treatment, compared to Australia with its current employee share schemes policy.
Shadow Treasurer Joe Hockey told BRW in an interview in July that the Coalition would consider changing the laws around employee share schemes to make it easier to attract talent.
“In the US the tax rate is almost twice as high on income form salary, than it is from long term capital gains, which provides incentives for people to invest and make money on stock,” he says.