Charting a course for commercial success

20/08/2009 - 00:00

Local executives joined a WA Business News forum to discuss ways to take innovative products into a competitive global market.

Charting a course for commercial success

SO, you think you've got an innovative product that is so groundbreaking it is bound to be a winner in global markets.

It's such a good idea that it couldn't possibly fail. Well, what now?

It's a dilemma facing dozens of emerging technology companies in Western Australia.

No matter how revolutionary a concept is, no matter how massive the potential benefits may be, it will never get off the ground unless the correct pathway is followed, chief executives and company directors told the recent WA Business News innovation forum.

Sensear chief executive Justin Miller spoke for many at the forum when he said the most critical step was ensuring that all people working on the project were fully aligned.

"When we formed the business we had some inventors, we had universities, we had capital, and we had management. Around the table on the same day, everyone decided what their piece was going to be," Mr Miller said.

"From the day dot, everyone was committed, and nobody felt screwed.

"That was the basis of it; everyone moved forward from that point, everyone felt as though they were investing something that they got a fair deal on."

Scanalyse chief executive Peter Clarke agreed that managing expectations was a key step in the process.

"A really important part of managing people's expectations is education, so that they actually know what's going on, they know what the process is, they know what a venture capital company would be looking for, and what they expect," Mr Clarke said.

"(You must also) inform and educate the inventors so that they know what they are in for and they know they are in for a hell of a ride; or at least if they aren't prepared for that they can pull out of it straight away."

Finding the right people with an appropriate motivation and skill set is also crucial.

"People are critical and you have to get people to buy into what you are trying to do on the bigger scale," Mr Miller said.

"So as good as the technology is, it's only as good as our people's ability.

"One to develop it and two to push it into a broader market, which is a whole other set of skills you need to introduce to your business."

One of the big challenges for Perth technology companies has been recruiting the right people in the local market, especially during the resources boom when mining and energy companies offered enticing salaries.

This prompted many companies to look overseas for skilled employees, which in some cases turned into a benefit, according to Mobilarm chief executive Lindsay Lyon.

"The good thing about hiring people from overseas and getting people in is you get a bit of diversity in the company," Mr Lyon said.

"You get an American and you get an Indian and they both bring different perspectives to the business and different experience, so it actually is better to get those."

Ipernica managing director Graham Griffiths said employing senior international executives enhanced the potential for international exposure.

"If you've got senior people who you have sourced internationally then you've got the networks and the ability to tap into some of those markets," Mr Griffiths told the roundtable.

"If you don't, then getting on a plane, going over there, meeting and greeting and getting into the culture is a lot harder."

Raising capital remains one of the biggest challenges for technology companies.

Nearly every participant in the forum has obtained government funding, but this makes only a small contribution.

CustomVis chief executive Paul van Saarloos said government grants normally only represented a small percentage of the funds required.

"As an entrepreneur it's a resource that you should tap, but in the end it's about 10 per cent of our total funding needs to get the product established," he said.

"It helped attract investors so I think that it's important that there's something there, but it shouldn't ever be enough so that it's the only thing you need to get."

Live Technologies director Roger Plumb said it was difficult finding the right investors beyond the initial phase.

He said a lot of businesses started with family and friends, and secured their first round of funding there.

"Then later on, venture capitalists are there," Mr Plumb said.

"But there's that gap in the middle, of wanting an angel investor who can not only put some funding in but also add value to your business and there is no real mechanism for matching businesses to those sources of funding.

"Angel investors understandably keep themselves fairly private; they have gatekeepers and so on, but you can waste an awful lot of time trying to get around and understand who is in the local market and there isn't a marketplace that helps that.

"There have been various initiatives to try and solve that, in forums and so forth, but I think that kind of thing is much more mature in places like the UK and it just doesn't exist here."

Dr van Saarloos said finding the right investors came down to being familiar with and understanding the market for each product.

"I have gone overseas looking for investors, people that already know the (optical) industry," he said.

"They're an easier group to sell to because they understand the upside very well, and they're all over the world so there's a lot more of them; so don't just think local."

Mr Miller believes a useful step for technology companies wanting to lift their profile is to nominate for an industry award.

"If you're not making money, get an award, and if that's not here, if that's international, it will get you exposure," Mr Miller said.

"It's pretty simple, it's cost effective and it gets you the exposure that you're after.

"Some of those investors do find you. You get a lot of tyre kickers as well, but scan the world for those awards.

"You'll find one that will suit your business and it will lift your profile."

Another low-cost marketing idea is to present at industry specific conventions and conferences.

"It gives you great exposure to the top people, if you've got a great idea and you present it as a paper at a conference sometimes you'll get people coming up afterwards asking how they can invest," Dr van Saarloos said.

Antaria chairman Bruce Cameron said aligning with a distribution partner provided an effective entry to new markets.

"If you get the right distribution partner, they're already selling to the customers that you want to talk to," he said.

Having enough resources to cope with demand when the orders start flowing was another fundamental, according to Mr Griffiths.

"You need the resources to see that process through," he said.

"You can't get excited in the first engagement; you have to understand that it's a campaign."

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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