Local venture capitalists still wary about the Net

Australian venture capitalists dispensing cash at record rates to startup companies are still wary about giving Internet companies a group hug.

Sentiments among delegates to the recent Australian Venture Capital Association's 1999 conference in Melbourne stopped well short of unreserved enthusiasm for dot-com investments.

The burst-bubble syndrome is one cause for wariness. Questions abound about the validity and longevity of today's high market valuations for Internet companies. The smaller Australian market and the me-too nature of some startups is seen to limit returns. It is also taken for granted the hottest young prospects will head overseas where they can generate fair higher returns from a listing. Noticeably well-attended was a conference session on how best to migrate a company to the US.

One conference award was reserved for a venture finance deal involving Internet directory portal LookSmart whose market cap has zoomed past $5 billion since it listed on Nasdaq last August. Playing a vital role in LookSmart's development was its venture partner Amwin, one of five or six Australian venture capital fund managers who focus on technology companies in general and Net companies in particular. Others include Technology Venture Partners, Allen and Buckeridge, Macquarie Technology Fund and Momentum Funds Management.

John Murray, executive director of Technology Venture Partners, says Australian technology companies have absorbed about $500 million in venture funds to date. He predicts that will double in size in just two years, which means a rate of about $250 million annually. Much more of that will end up with Internet companies than in previous years. For example, Allen and Buckeridge, another specialist technology fund manager, estimates Internet-related companies historically made up about 25 per cent of its investments so far. In the past 12 months that ratio has shot up to 80 per cent, according to co-founder Roger Allen.

Australia's venture capital industry raised a record $845 million in fresh funds in the past year of which Internet-related companies probably snared less than a quarter.

By comparison, of the $US9 billion in US technology investments made in 1999's third quarter alone, 50 per cent to 60 per cent went to Internet companies.

On anecdotal evidence, dot-com companies looking for capital injections are already finding their search easier. An example is e.Com Global, a two-year-old company with a unified messaging product, which went looking for seed capital this year. It took MD Alex Koszo only four days to find an investor after appointing a Sydney corporate advisory firm as a go-between. Mining company turned investment firm Min-Tech 8 put up $1 million in seed money and e.Global is now on track for a $4-million Australian Stock Exchange launch on 17 December.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection
Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Peter Young

PC World
Show Comments





Back To Business Guide

Click for more ›

Brand Post

Most Popular Reviews

Latest Articles


PCW Evaluation Team

Louise Coady

Brother MFC-L9570CDW Multifunction Printer

The printer was convenient, produced clear and vibrant images and was very easy to use

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?