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1
Building our FutureBuilding our Future
Nurturing the InnovatorsNurturing the Innovators
Ivan
BSI
““Oxygen”Oxygen”
2
 The money is not going into innovation & it’s NOT the fault of the
Government
The Government is coming to the party w...
3
Adding Value vs DestroyingAdding Value vs Destroying
ValueValue
•Needs to be nurtured
• Needs oxygen to survive
• Needs ...
4
Who is looking after our babies?
Who is looking after the innovators?
Who is investing in the future of our country?
Whe...
5
Government InitiativesGovernment Initiatives
Alignment withAlignment with
IndustryIndustry
COMET– Gr8 program – but no g...
6
THE PROBLEM
INVESTORS AND
GATEKEEPERS OF FUNDS
UNDER MANAGEMENT ARE
NOT INVESTING IN
“THE BABIES”
They were burned in th...
7
In order to survive, grow and add value, one needs oxygen,
manure and innovation.
Small Companies/Innovators: In the pas...
8
The Internet “Boom Bust”
How many times in the past year have I heard:
“ tell me when you need $3m to roll
out and we’re...
9
You are not taking advantageYou are not taking advantage
of a fantastic opportunityof a fantastic opportunity
•pull your...
10
The funds who start investing in the seeds
Will be applauded and rewarded *
 Where no one is going, they should tread...
11
 Super Funds are playing in equities - Mainly off shore
 Their perception is that they will earn better returns
 How...
12
THE SOLUTION
13
Identify the conflict and the common GoalsIdentify the conflict and the common Goals
Make more
money now &
in the futur...
14
–MANAGEMENT
There are basic core “things” necessary for ANY company to survive & thrive.
This is what is lacking by our...
15
Making the gatekeeper feel warm and fuzzy to investMaking the gatekeeper feel warm and fuzzy to invest
““small amounts”...
16
BSI – An Oxygen TankBSI – An Oxygen Tank
For BSI to to be an effective supplier of Oxygen, it has to provide a full ran...
17
BSI’s ConflictBSI’s Conflict
Make more
money now &
in the future
The Conflict
Provide service to mid sized
companies, b...
18
 Business Planning standard is low
 Few global type opportunities – generally
local focus
 Business models usually v...
19
Where is BSI Focusing?Where is BSI Focusing?
TCFTCF
IT&TIT&T
BiotechBiotech
NanotechNanotech
BY IndustryBY Industry
INV...
20
The Export OpportunityThe Export Opportunity
1992 2002
$20 million $2 billion
WINEWINE
$20 million $???
ITT and BIOITT ...
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Our call for Investment in Startups in 2002.... 13 years on... the time has come!!

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We look forward to Innovation being a priority on the Australian Agenda. THis bodes well for Australia twards 2025!

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Our call for Investment in Startups in 2002.... 13 years on... the time has come!!

  1. 1. 1 Building our FutureBuilding our Future Nurturing the InnovatorsNurturing the Innovators Ivan BSI ““Oxygen”Oxygen”
  2. 2. 2  The money is not going into innovation & it’s NOT the fault of the Government The Government is coming to the party with a range of excellent programmes supporting innovation. The bottleneck is with the Gatekeepers of Investment Moneys  There are VC companies, Superannuation Funds and people with money to invest  There is money out there… LOTS OF IT Where is the money?????Where is the money?????
  3. 3. 3 Adding Value vs DestroyingAdding Value vs Destroying ValueValue •Needs to be nurtured • Needs oxygen to survive • Needs +++ TLC •By definition – has opprtunity for exponential growth •The heart of innovation SEED The Babies There are 3 types of Businesses Seed, Early Stage And Mature Early Stage Companies “The Teenager” •This is where Funds are looking to put their money •They have started generating money •Apparently the model has been proved •There is perceived less risk •Feeding the teenagers with large chunks of money who become overweight. •The investor invariably puts more money in than the business needs, because there criteria is not to invest less than $xm •Joe Public puts his money here; •Funds put their moneys here • In “sound investments” like ‘Onetel’, ‘HIH’, ‘Microsoft’, ‘Oracle’, ‘Worldcom’, and ‘Telstra’ - Destroying value • Much of the funds are going offshore to find best returns • Not allocating any funds to feeding the babies •Does investment in mature companies riding out the harvest “add value or destroy value?” Mature Companies “The ADULT”
  4. 4. 4 Who is looking after our babies? Who is looking after the innovators? Who is investing in the future of our country? Where is the moneyWhere is the money Federal Government is supporting them  State Government is supporting them  Where is the Industry?  Where are the Super funds?  Where are the big 4? Are the gatekeepers Adding Value or Destroying value???
  5. 5. 5 Government InitiativesGovernment Initiatives Alignment withAlignment with IndustryIndustry COMET– Gr8 program – but no group interested in investing. There needs to be commitment from industry to take advantage of opportunities BITS– Gr8 program – but no group interested in investing. There needs to be commitment from industry to take adavantage of opportunities Problem – Gatekeepers are not interested in investing in the babies
  6. 6. 6 THE PROBLEM INVESTORS AND GATEKEEPERS OF FUNDS UNDER MANAGEMENT ARE NOT INVESTING IN “THE BABIES” They were burned in the internet frenzy
  7. 7. 7 In order to survive, grow and add value, one needs oxygen, manure and innovation. Small Companies/Innovators: In the past 3 years have had it tough  The little funding that was available from R&D Start Grants have dried up. Banks are not interested  The high profile VC’s and Investors/VCs are not coming to the party The ProblemThe Problem Nanyang – 3 investments in 3 months Allen & Buckeridge – 1 investment in 12 months – looking after a “huge” portfolio of 26 investments with a team of 13. Superfunds and fund managers are not interested in start ups and innovators. JB Were raised $150m to invest in young companies – Gave ½ backto shareholders and have invested in 6 companies Etc etc etc
  8. 8. 8 The Internet “Boom Bust” How many times in the past year have I heard: “ tell me when you need $3m to roll out and we’re there!!” My view is that the internet boom bust was fueled by this paradigm. These “babies” who only needed a “little oxygen” say “$1m” , were given $10m. This money was largely squandered because: •Only a small portion of the money was needed •The “babies” were not ready to receive the money YET •The valuations (if there were any) did not make sense It was, and is easy for the fund managers to invest $10m for a $12m return in 1 investment than make 3 investments for between $500k to $1.5m. The logic is that even if these investment doubled, it will not make a huge impact on the value of the portfolio. Based on this logic, fund managers invested $10m in companies that only really needed $1m……”floored logic”
  9. 9. 9 You are not taking advantageYou are not taking advantage of a fantastic opportunityof a fantastic opportunity •pull yourselves towards yourselves •Feel good about yourselves •If you have not got confidence in the babies – neither will the public.They will follow your lead. •What you are doing is creating a self perpetuating gloom and despondency on investing in innovation and our future. •Investments and behaviour are cyclical. We are currently in an environment where funds are licking their wounds from the mistakes of the last boom bust. •There are excellent technologies, seeds and babies that you can invest in at realistic values and realistic amounts. • Many of these “babies” will become “teenagers” by the time perceptions change, and will be sought after by the investment $$. Investors, Gatekeepers of funds and VCs Its been said: “ give an innovator too much money and you will destroy him/her.” There is a fine balance between giving too much and not giving at all. The investors who find this balance will be the winners.
  10. 10. 10 The funds who start investing in the seeds Will be applauded and rewarded *  Where no one is going, they should tread. The $ invested in these companies, will provide oxygen to the “babies”, some of which will eventually one day line the pockets, and maybe be the cornerstone of the fund,  These investments worth let us say $10m  What are they?  What are these opportunities? Could some of them be worth more than $10m?  I know of 10 that have awesome potential!!  What % of HIH was spent on investments into the babies verses mature/fat cat stuff  Where did the $5 billion of HIH go? The money is sitting some where!! ControversyControversy
  11. 11. 11  Super Funds are playing in equities - Mainly off shore  Their perception is that they will earn better returns  How much money was invested in “Worldcom”, “Tyco” and others off shore?  What would have happened if a small percentage of that money was invested in our Australian Babies (seed companies)?  These who have made money out of technology stocks over the year, and there are a few sitting on 100m  that money is not going back into the babies  that money is going into properties and lifestyle, money made from the internet boom is now out of the system The paradigm has got to change How can we get some of the money fromHow can we get some of the money from the gatekeepers??the gatekeepers??
  12. 12. 12 THE SOLUTION
  13. 13. 13 Identify the conflict and the common GoalsIdentify the conflict and the common Goals Make more money now & in the future The Conflict Only invest in “well established” businesses with security behind them and established revenue streams. Funds and Banks Innovators Need capital for R&D to develop their innovation, commercialise it and to build up a team The Common Goal Invest in secure organisations with track records to get good returns Invest in innovation so they can get good returns The Methodology The babies only needs a small % of the money out there: High chance of failure, but Exponential returns if they work
  14. 14. 14 –MANAGEMENT There are basic core “things” necessary for ANY company to survive & thrive. This is what is lacking by our babies These things can take much risk out of the seed companies:- Identify the CORE THINGS NECESSARY IN ANY BUSINESSIdentify the CORE THINGS NECESSARY IN ANY BUSINESS VISION People Set of Values Plan Systems Walk the talk
  15. 15. 15 Making the gatekeeper feel warm and fuzzy to investMaking the gatekeeper feel warm and fuzzy to invest ““small amounts” into our babiessmall amounts” into our babies •Ensure as a bear minimum the Core “things” are addressed •Have a % of every fund go to provide “oxygen to our babies •Identify and nurture the “Oxygen Tanks” – Incubators, and ensure that they do not run dry •These “Oxygen Tanks” need to be able to provide small quantities of Oxygen to nurture the babies. Large quantities can smother them
  16. 16. 16 BSI – An Oxygen TankBSI – An Oxygen Tank For BSI to to be an effective supplier of Oxygen, it has to provide a full range of services that are delivered by the “brightest and the best”. The Problem!! To do this BSI needs to afford to pay the team with a regular cash flow. BSI cannot burn cash. The “babies” cannot afford to fund the team The Solution BSI splits its services between SME’s, Large Companies and Start Ups. It has the ability to earn money for services from all areas through various models. From fee for service to success fees. BSI is well placed to be an “Oxygen Tank” for the “babies”. It has the resources, critical mass and experience to provide this facility to make them successful.
  17. 17. 17 BSI’s ConflictBSI’s Conflict Make more money now & in the future The Conflict Provide service to mid sized companies, because they can afford to pay, and can easily implement our “value add” solutions. Service Mid Sized Companies Innovators Provide services to innovators, to ensure that they have the core necessities and management to run an effective business The Common Goal Provide service for fees Provide service for equity stakes, success fees and gov’t assistance The Methodology BSI is to split services between SME’s , Mid Sized Companies and fledglings.
  18. 18. 18  Business Planning standard is low  Few global type opportunities – generally local focus  Business models usually vague or complex  Start up business system not developed  Result : Too much time spent on too few opportunities Typical problems faced by Australian VC funds  Getting capital Then  Recruiting suitable people  Making the business profitable  Keeping on track  Developing systems  Managing growth Typical problems faced by small business/ entrepreneurs • Expertise driven business planning • Assist with Government grants • Capital raising and getting proposals investor ready • Broad ranging business services • Recruitment and soft skills training • Implement business monitoring systems/ technology support BSI value proposition can assist in exploiting growth opportunities Integrating Small/Medium Business, Australian Venture Funds And BSI Value Proposition
  19. 19. 19 Where is BSI Focusing?Where is BSI Focusing? TCFTCF IT&TIT&T BiotechBiotech NanotechNanotech BY IndustryBY Industry INVESTMENTSINVESTMENTS By ServiceBy Service LineLine HR Network Sol’ns Fin Mgmt R&D EMDG B Dev GloballyGlobally FocusedFocused The exportThe export opportunityopportunity
  20. 20. 20 The Export OpportunityThe Export Opportunity 1992 2002 $20 million $2 billion WINEWINE $20 million $??? ITT and BIOITT and BIO If an industry is going to grow, it will have to look at a model in which its products or services have got global opportunity. BSI is focusing on industries and organisations that can realise exponential returns from providing a product or service to the export market

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