Danny Maher

Visiting Entrepreneurs Program
Danny Maher
November 2015

Danny Maher Background
A summary of companies that I have joined in business building/
commercialisation roles over the last 15 years:
UK focused– acquired once
USA focused – acquired twice
Asia/Asia Pacific focus – acquired three times
Global focus – acquired twice
All focused - 1 at a time©
Acquisition on average every 22 months
Highest ROI: 250X (=25,000%)
© Danny Maher dannym@dannymaher.com2

Current Project: Opmantek Ltd (ASSOB:OMK)
Global commercial open source software company
80,000 organisations around the world use Opmantek products
Founded in 2011 at the Gold Coast
All R&D at the Gold Coast
Australian Exporter of the year, American business awards winner, iAwards
winner, Stevie Awards winner, top 20 Open Source companies globally – CIO
magazine.
High growth

Something To Think About
Startup One
Great Business Plan
Successful capital raise
Build quality and innovative product
Hire the best people including an experienced startup management team
Undertake a good marketing strategy
Startup Two
No business plan
Less capital
Buggy product
No money to hire experienced people
No money for marketing

Commercialising Innovation

Commercialising Innovation
Sell the technology to someone else - work for them
Sell a share in the technology to someone else - work with them
Maintain full ownership and partner
Maintain full ownership and go it alone

Being on Safari

On Safari
Spend time thinking
Become self actualised
Protect yourself from the downs
Celebrate the ups

On Safari
Anything that you plan as simple will become complex and anything that you
plan as complex you will never achieve
Network with people you want to become
When networking have a goal of giving – what can you do to help people.

On Safari
Watch your diet, rest etc – just as if training for physical achievement. It’s
an intense race
Recognise it’s not the movies – there are not multiple sessions
There is no ready, set, go – just GO and keep going
Enjoy the journey – some people climb Everestsome go in “fun runs” some
people have kidsno one says it’s easy, but it is enjoyable

Business Goals

Be Clear On The Goal For Your Business
To produce the highest performing drill
To produce the most fuel efficient engine in the world
To attract 100 customers within 5 years
These are not true business goals, these are methods, tools and sub goals to
assist in reaching your business goal

VeryfewEntrepreneursstartabusinesstomakemoney,theystartbusinesses
because they:
• are passionate about their innovation or service
• want to challenge the status quo
• want to live in a particular place
• want to do something which will be great for their family
• want to do something that aligns with their social values
• want to work less hours…

Like it or not the ultimate goal of your business almost certainly will be:
To make X amount of money in X amount of time.
at a minimum enough to live the way you want to and operate the business
Keep your “Entrepreneurial motivations” but never lose sight of the true
goal or you will lose everything you are passionate about that relates to the
business

The Evolution Of A Business

Evolution Of A Business -Maher
• The Dreaming
• Existing
• Validation of your existence
• Living
• Mastery
• Re-invention

The Dreaming And Discovery
You will look back on this early stage and realise how different things actually
turned out
You will also realise that this was the creation and while different, everything
stemmed from here
During this stage you will:
• Overestimate your market size
• Overestimate the value of your IP
• Underestimate the timeframes involved
• Underestimate the resources involved
• Overestimate the demand for your innovation

During this stage you will encounter:
• People who don’t understand what you are doing (this is your problem –
fix your message)
• Investors who doubt you/reject you as too early stage (you probably are)
• Friends and family who question what you are doing
• People that don’t return your calls
• Professional friends and colleagues who have “parked you” till
further notice

During this stage you will need to:
• Develop your business plan (at least business model)
• Work our what will be your Minimum Viable Product (MVP)
• Great if you can engage a customer at this stage

Existing
During this stage you will need to:
• Release your Minimum Viable Product
• React fast to fix customer bugs/problems
• Focus your development on what your customers want
– even if you only have one
• Value paying customers above all else, no matter
what they pay

Existing
During this stage you will:
• Struggle
• No one will believe you are “real”
Value paying customers above all else, no matter what they pay

Validation of Existence
During this stage:
• (Some) phone calls get returned
• People think you are more real than you do
• People think you are doing better than you are
• Friends ring you complaining you undersold the business to
them and they would have invested
• Value paying customers above all else, no matter what they pay – build
out our products
• Don’t panic – do realign your story/plan

Living
During this stage:
• You are real
• You can consider appropriate market pricing
• You can finally ditch that painful unprofitable customer
• Some people return your calls
• Investors are more interested

Example Focus Areas By Stage
Customer
Growth
MVP Market fit Hiring/HR Funding
The Dreaming 1 2 3 5 4
Existence 1 2 3 4 (?) 5 (?)
Validation of
Existence
1 2 4 5 3
Living 1 5 4 3 2
Mastery 1 5 4 2 3

Market Estimation By Phase

Product Development
Product development within a startup is not a one dimensional or circular flow –
even ideas should be tested internally and released to a customer for feedback
Develop
and
Produce
INTERACT TestIdeas
Release/
Customers

MVP (Minimum Viable Product)
No - MVE!

MVP (Minimum Viable Product)
Release your Minimum Viable Product ASAV
• Early adopters of your product wont be surprised by issues
• Fix your customer impacting bugs/faults rapidly
• Early adopters of your product are expecting rapid feature
enhancement – supply a roadmap and get their feedback
• Getting your product to customers as early as possible is incredibly useful
NOT incredibly risky
• NEVER build out any part of a business expecting success – build in line
with revenues

Why Would Any Organisation Buy First?
• You are allowing a small number of organisations with appropriate
skills to engage directly with your product development team
• Assuming their requests can be reused/marketed, you will adapt
the product for them (for free)
• You will oversee the implementation and ensure success directly
• You will co-fund if they will be a reference

Competitive Advantage
• Your product and IP
• Your personnel
Also
• Market intelligence
• Partners
But most importantly
• YOURPRICE
YOUR CUSTOMERS

Developing Your Business Plan
For you:
• Ensure it is a working document not a “write and execute” document
• Check back to it at regular intervals, update forecasts
For others:
• If seeking investment your business plan will be the key document – make
sure it is easy to understand and absorb including an exit strategy

Developing your ‘Canned’ Product Pitch
The concept of a single elevator pitch is nonsense
You should never have a single canned pitch, you must target it by management
level at a minimum – you must be aware of who you will/should pitch to
Always reference an appropriate use case/customer in your pitch – customers
follow customers
Example:
• Executive Management – we have a technology your competitor is using to
reduce their OPEX by 8% over the next 3 years Middle Management – we
have a technology that managers like you use for better reporting and
oversight of your team
• Operational Management – we have tools to make your team’s day to day
jobs easier and your day to day life better, I can put you in touch with P&O
Cruises who implemented this last month – they love it

Developing Your Business Plan
• Sales and Marketing Plan
• Communication Plan
• Product Roadmap
• Operational plan/hiring plan
• Operational Forecast (including hires)
• Sales Forecast
• Peel back OPEX and have a lower forecast to de-risk the business

Exit Strategy
• Do you want to exit??
• When?
• Trade sale? IPO? LBO? Partial exit?
• What industries might converge with yours?
• Is there consolidation within your industry?
• Who will help with your exit - investors are often handy during an exit
• Competitors and partners are often acquirers

Mentoring
• Mentor’s are very useful
• Don’t be afraid to ask someone to mentor you
• You may want to work in another organisation where you have a
good mentor/good learning prospects
• No one goes to university to become a student, think the same of taking a
“learning job”

Capital Raising

Attracting Investment
• Government, VC, Angel, Bank, Stock market
• Ideas do not get funded (unless linked to the funder)
• No one invests in something they can’t understand
• No one spends a lot of time trying to understand, they’ll move on
to something in their comfort zone
• Selling equity for early stage funding is not easy and will prove very expensive
if you are successful
• The best place to get money is from customers
• YES THERE IS SHITLOADS MORE MONEY IN THE USA – YES WE KNOW
ABOUT SANDHILL ROAD
• It is changing

Attracting Investment
pre revenue/validation
• FFF (Friends Family and Fools)
Structure to keep at arms length, Shareholders agreement, TechFundr,
ASSOB etc
• Indigogo / crowd funding
• Invested customer
• Work for equity
- What is the purpose you are raising money for can you pay for those
purposes with equity?

Post Revenue – Angels
• Typically achieve higher returns than VC funds
• Typically have more domain knowledge in the business they are investing
• Claim a closer business relationship and that their domain knowledge will
assist the business
• Pitch or build relationship
• Update over time

Post Revenue - Venture Capital
• VC funds have specific rules relating to how they invest
• Find the right VC for you
• Make sure your pitch is right
• Update over time/build relationship

Some ASSOB stats
Here is a look at the past 5 years:
• Total number of individual investments in ASSOB
listed companies 2328
• Total number of individual Investors 2005
• Average investment per investor $38,023
• 176 Companies received investment
• 152 are still operational
• Average invested per Company $503,305
• Highest individual company raise $3,540,000
• 2054 Australian investments and 274 International
investments have been made
• 179 invested in 2 companies
• 10 invested in 5 or more companies
• On average 11 investors per company
Main investment segments of companies receiving funding
• IT & T 11%
• Food & Beverage 8%
• Mining / Oil 8%
• Technology 6%
• Software 6%
• Green technology 5%
• Health & Beauty 5%
• Media / Entertainment 5%
• Health 5%
• Web Based 5%
• Biotechnology 4%
• Environmental 3%

Tech FundR (www.techfundr.com.au)
• New Australian based equity crowd funding platform
• Linked to a VC fund also!
• Six focused platforms:
Health, Agriculture, Energy, Aviation/Defence, Social Enterprise
and Mobile/Gaming.
Heathfundr.com.au
Agrifundr.com.au
Flightfundr.com.au
Energyfundr.com.au
Socialfundr.com.au
Gamefundr.com.au

Post Revenue - Venture Capital
• Create a short pitch – 3 or 4 minutes (this is tough!)
• Often the organisation you are pitching to has a recommended structure
• Company history and milestones
• Current revenues and customers
• Funding requirements – how much and to fund what activities
• Proposed equity in exchange for funding
• Management team
• Market and competitor analysis
• Products/IP
• Revenue
• Method to market
• Risks /SWOT analysis
• Exit strategy

Pitch Demo – Opmantek

The Best Ways To Spend Early Investment $
• It is a common mistake to spend early stage $ to “finalise”, “complete”,
“enhance” the product
• It is a common mistake to spend early stage $ on the wrong type of executive
• It is a common mistake to overspend early stage $ on marketing – especially
conferences
• It is even a common mistake to spend early stage $ executing the business
plan

The Best Ways To Spend Early Investment $
1. Customers
2. Customers
3. Customers
• Funding a customer to use your product
• Getting your MVP to a customer
• Adapting your product for a customer
• Keeping your customer happy
• Funding more customers
Increasingyourcustomerbaseaddsmorevaluetoyourbusinessthanfurthering
your product or any other activity.

Business Partnerships
• Partnershaveahabitoftellingyouwhatcustomerswant(incorrectlyassuming
they know) and will not fully understand your product
• If an organisation wants to resell your product be wary of how
much time you put in and make sure you have a direct relationship
with end customers
• Don’t confuse who is your partner and who is your customer

Startup One
Great Business Plan
Successful capital raise
Build quality and innovative product
Hire the best people including an experienced startup management team
Undertake a good marketing strategy
Startup Two
No business plan
Less capital
Buggy product
No money to hire experienced people
No money for marketing

Startup Two will out of necessity
• Get their product to a customer as soon as possible
• As the product is buggy they will have to take customer feedback and fix it
• They will scale their business as revenue ramps
• Readdress their plan and continue to evolve the plan

Startup One:
is highly unlikely to undertake ANY of the activities mentioned for Startup Two
It is VERY common for companies well funded early on to:
• Perceive the funding as their success
• Develop the product according to their specification, not the customer’s
• Executetoorigidlyontheir(funded)businessplanwithoutadaptingsufficiently
• Hire the wrong executives for their stage of development (safari)
• Utilise their funds in their business not their customers
Startup two is far more likely to succeed under this scenario

From Qld to the World

Why Qld?
• Because you want to live here?
• Because you will find it easier to operate within your own culture/
environment/with your support?
• It’s not a natural choice for a startup, nor is Australia – you need
to leverage external ecosystems
• If you’re going to be small, you may as well be a startup

To Leverage in Australia/Qld
• Research and Development Grant (“tax concession”)*
- 45 cents per $1 spent when in loss making – cash payment.
• Export Market Development Grant*
- Approx 50 cents in the dollar up to a maximum of $150k.
*these grants are not competitive – they are yours
• Entrepreneurs scheme
• Advance Queensland
- includes investment matching of $125k - $2.5M
• Some assistance from local Council
• Commercialisation Australia
• Quality staff and people

• Small Market
- Get established/proven here then grow – less competition
• Developed Country
- While we are adverse to failure, we do take up new innovations
• Wealthy Country
- Especially in certain industries – mining, gambling, boat building…
• Asian business
- Cultural bridge for USA etc, time zone
Use tools such as compass.co

They are all behind you:
• Incubators and Accelerators
• Govt Departments
• Trade Investment Queensland
• Austrade

Structuring for growth
Tools to assist

When to establish overseas
• Never if possible
• When the law requires it
• When a customer requires it
- If you can’t transact through a partner
• When a funder or accelerator requires it
- Flip - US lawyers commonly do this
• “Partners” – employees as contractors to Australia
• Direct employees of the Australian Entity
• Partners–Donotconfuseapartnerwithacustomer,Partnersaresometimes
necessarybutcanbreakyou–theydonotgobankruptifyoudon’tsucceed.

Some of my favourite supporting tools
• Western Union
- Payments system, multi currency, low cost and the best
- Not a bank, can only keep funds in there for 90 days
• Suncorp Bank - foreign currency accounts
- Lowest cost – couple with Western Union
• Silicon Valley Bank
- I believe the only bank that can open a US account (in the US)
for an Australian company.
• Specialist startup accountants
- Who understand EMDG, R&D and startups
(I use Altezza partners in Brisbane but there are others)
• Startup Compass - www.compass.co
- Automated business advice and benchmarking/measuring the path of
your startup vs other similar startups.

Tools and outside of Australia
• Google Apps
- Email, Calendar and more
- All mobile devices, desktops/laptops etc pay as you grow
• Hosting/website
- Host your website near your clients not near you
• Use adwords tools when considering your SEO
- Even if you never buy an adword, great tools
• Google Analytics
- Excellent insight in to activity - free
• Claim your place of business on Google Maps
- Helps search and we do live in a great place
• Virtual Offices - REGUS
- Can use ad-hoc or can pay a small monthly fee

• ASSOB, Techfundr etc
- Not for everyone, I enjoy the benchmarking of the companies valuation
• Internet marketing experts
- Opmantek does in-house, I haven’t found the perfect firm yet
• Firms to assist in raising funds
- Opmantek uses Bluemount Capital primarily due to ASSOB “listing”
• Lawyers
- Consider linking early with a good law FIRM (not just a lawyer)

• Domains
- If you are going to operate outside of Australia you need the .com
• Supporting Domains
- Community site, review sites
• Video Content, Wiki’s blogs, social media, review sites,
podcasts, advetorials
- But especially video and review sites
• Mobilesite/Responsivesite

Summary
• Enjoy the journey
 Reward yourself when things go well
 Your passions are your motivations and you are lucky to pursue them
• Don’t get lost in your enjoyment and creation/product
 Recognise and track your revenue goals in particular
 Always develop your product for real customers
• Get started and be agile
- if you do nothing: nothing happens and there’s nothing to adapt
• Getting fundedisagreateventbutisnotasuccessinitself
• Youwontnecessarilyknowyourgooddecisions
• RecogniseyourbaddecisionsFAST

Summary
• Leverage local tax and grant schemes
• Focus on speed to market and MVE
• Be ready to deviate from the business plan
• Leverage local resources including coworking spaces
• Leverage the internet, especially to create external linkages
• Find good mentors/people/groups or take a “learning job”
• Much more !

The Beginning
Current Project:
www.opmantek.com
www.assob.com.au/OMK
Danny Maher
dannym@dannymaher.com

Danny Maher

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Danny Maher