Still a fight for funds

20/08/2008 - 22:00

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Western Australia might be home to the nation's richest man and awash with riches amassed from property and mining booms, but that doesn't necessarily translate into funding for online businesses.

Still a fight for funds

Western Australia might be home to the nation's richest man and awash with riches amassed from property and mining booms, but that doesn't necessarily translate into funding for online businesses.

Around the world, success often breeds success, because those who have made it in their field have the knowledge needed to reinvest in those that follow.

In WA that means mining and, increasingly, oil and gas. Digging and drilling are, regrettably, a long way from online business - especially in a market burned badly by the tech wreck experience of 2000 when so many resources companies suddenly promoted themselves as web experts.

Most panellists at the forum believed that capital for online business, beyond a small circle of known or close associates, was a tough ask.

Vibe Capital co-founder and CFO Matthew Macfarlane acknowledges that Australia's west coast is very entrepreneurial, but not necessarily across the spectrum.

Mr Macfarlane started Vibe with ineedhits founders Rachel and Clay Cook and is the holding company for parenting focused online business Minti.com.

"Unfortunately we don't have that generation of guys who have made massive money out of IT," he said.

"When we went around pitching our business to investors they said, 'It is not property, it is not mining; we are not interested'.

"There is a lot of wealth in WA. Only a small portion needs to be set aside for risky, early-stage, start-up businesses."

Rent.com founder Mark Woschnak thinks getting start-up capital is relatively simple but the fund raising task gets harder when funding is required for expansion, such as his interstate move.

"The VC sector is largely focused on resources, not on media," he said of Perth capital markets.

"As soon as you are looking for $5 million-plus for a media business based in Perth, there are very limited capital partners; that is certainly a market you have to go to Sydney or Melbourne for.''

And in what is a regular refrain from all types of WA businesses, that issue also raises its head in reverse in interstate markets where the capital is more readily available but there is wariness about companies from across the Nullarbor.

"You are still seen to be a Perth company," Mr Woschnak said.

Of course, this experience is not limited to online business but its exacerbated by the lack of capital for this sector from a state that managed to list more than 200 companies in the past two and half years, mostly at the minnow end of the spectrum and almost exclusively in resources.

Maybe those in the online space ought to take heart from the recent growth in private equity funds based in WA, most of which are avoiding the highly competitive resources sector and giving their attention to the much overlooked industrial and services sectors.

While this may still be a long way from investing in technology, many of the fund managers in local private equity have international experience that offers a broader view of investment options and greater understanding of what routes are available to non-mining businesses.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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