Incubator Gets Young Started
Sydney Morning Herald
Tuesday April 4, 2000
The grounds of Redfern's Australian Technology Park are bleak and often deserted not at all the sort of environment in which one expects to find the brightest young minds in the Australian Internet industry.
Inside, however, this four-year-old Internet incubator is abuzz. Stan Jeffery, general manager of the park's business incubator program, guides me down a series of long corridors with doors off to each side. Behind each door is a thriving business.
In one room there's The Spot, which runs online toy retailer ToySpot, and behind another door, konstrukt, a design outfit whose sleek ``Quantum" stadium chair has recently been selected to fill Melbourne's Docklands and Sydney's Superdome.
In another office, e-commerce player Pure Commerce is developing a multi-currency Internet payment gateway; in yet another is Law of the Jungle, which aims to make the law more accessible by offering basic legal information online.
Down the hall, two boys who look barely old enough to shave are working on SydneyWorldwide, an entertainment and information portal dedicated to Sydney.
It's a little surreal to think I could be looking at Australia's next e-business multi-millionaires.
The incubators here were established four years ago to allow entrepreneurs with a good idea to commercialise their technology, build a business, and ultimately, take the resulting company to an IPO or exit via a trade sale.
Currently 40 high-tech start-ups call this their home and Jeffery estimates he gets about 10 inquiries a week from hopefuls wanting to join the program.
At first, Jeffery said, most of the start-ups came not from the universities the Technology Park has ties with the University of Sydney, the University of NSW and the University of Technology, Sydney but from people who had decided to quit the rat race and foster their high-tech start-up dream.
To tip the balance, he has instigated prizes and incentives to try to mine the $40 billion worth of research produced by universities each year which can be commercialised.
``We did some research and it turned out that the department heads in universities thought it was disloyal to commercialise research for their own benefit.
``So there's a culture there that still says `this doesn't belong to me, even though I've created it'."
Even with the prizes, however, entering the Park's incubator is not cheap. Businesses need between $10,000 and $20,000 in their pocket to cover expenses associated with entering the program. They also need a proper business plan and a commercially viable idea or product.
Program benefits include all the tangible ones such as office space, faxes, telephones and computers, as well as professional services such as business planning and advice, accounting services and R&D partner searches.
Intangible benefits include the ability to network with other tenants on a daily basis and receive encouragement from others facing the same challenges and obstacles.
But once you're in, the success rate is high. To date Jeffery has had only three businesses fail. Two fell by the wayside when disputes erupted between founders as to how the booty would be divided, and one collapsed after its cash flow dried up.
While most businesses graduate from the program well on their way to fame and fortune, at the beginning it's a case of sink or swim, with many young entrepreneurs having to learn the ins and outs of business very quickly in order to survive.
``I think some people underestimate how much it costs to `commercial' things," Jeffery said.
``They think they need $100,000 to make a few prototypes and they don't realise that the cost to get those prototypes to market is probably $1 million.
``Sometimes it's good they don't know that, because it might scare them off, but on the other hand that naivety can go on a bit too long."
Not wanting to share the business is another common problem.
``Some entrepreneurs think they can be a sole trader turning over $20 million," Jeffery said.
``The reason people do this is because they want to make their own rules and be independent, but you can only be independent up to a point. It's better to have 1 per cent of $100 million than 100 per cent of nothing."
Being able to talk the talk also helps, with start-ups referred to as UCMs up-and-coming multinationals.
``You might think it's corny but when we talk about SMEs [small to medium-sized enterprises], the entrepreneurs slouch down in their seats, but you say `UCM' and they straighten up.
``A lot of what we do here has to do with positioning people's minds in a higher role. That's why we call this place the International Business Centre it's a good address and people want to be here."
That may be true, but not everyone initially wants the entrepreneurs to be there.
Before I go, Jeffery relates the numerous times young entrepreneurs' mothers and fathers have come to him begging him to not let their son or daughter venture out on such a precarious limb.
``They come to me and say `please don't let my child do this'. But of course that attitude changes when the kid starts making millions."
© 2000 Sydney Morning Herald
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