The following is a summary of activities and outcomes directly correlated to our stakeholders’ support of ANZ Innovyz START.
Without innovation communities stagnate. Without entrepreneurs communities die.
Entrepreneurs are the lifeblood of communities. They create companies and when companies grow, they create jobs. Innovation, entrepreneurs, companies and jobs are essential elements of economic development.
Entrepreneurs are wired to see a need or an opportunity in the market. They find or create new or better ways to meet that need – an innovation - and then they build a company that commercialises that innovation.
Our accelerator program, ANZ Innovyz START was modeled after the highly successful TechStars accelerator program in the USA. However, we have made some significant additions that have enhanced the program and caused Chris Bernard Start-up Director and Advisor at Microsoft USA to comment:
Accelerators are tough programs no matter where they are located but some regions and cities have bigger challenges than others… some of the unique things they are doing in Adelaide just might be emerging best practices that we should be doing everywhere in the world.
The accelerator program model is as follows:
- 10 companies co-locate for 3 months,
- Founders are paid (approximately $6,000 for up to three founders) to work on their companies while they are in the accelerator.
- They receive intense mentoring by successful CEOs and entrepreneurs,
- Their “graduation” ceremony is a pitch to investors.
When it first started, about half of the TechStars companies got funded. After five years, nine out of ten graduates get funded. The investments tend to be $100K (sometimes a bit less if it’s a strategic investor) to $1M. So far about 10% of the TechStars companies have been acquired, 10% have gone out of business, and 80% are still growing. Some have received several million dollars of investment. This model is a proven, successful way to grow companies in a community.
In May 2011 Innovyz applied for and was granted membership in the TechStars Network (renamed the Global Accelerator Network). In July 2011, Stuart Douglas, Philip Vafiadis, and Brett Jackson, the partners in Innovyz, and Dr. Jana Matthews began the process of introducing this “innovation” to individuals, the business community, and government in South Australia.
Raymond Spencer understood the potential of the program and told other members of the Economic Development Board (EDB) that the program Innovyz was proposing to launch was aligned with the strategy the EDB was recommending for South Australia.
ITEK saw the potential of the program for teaching more entrepreneurs to commercialise innovation and made the first financial commitment to the program.
Mick O’Neill, Program Manager of Economic Development, the Lord Mayor and the Adelaide City Council understood the role the program could play in attracting energetic growth companies to the CBD. They offered the next money and support for the program.
Nick Reade, General Manager at ANZ for South Australia Corporate and Commercial Banking AND General Manager Small Business Banking for all of Australia made the case to his colleagues in the ANZ bank that supporting this program would be a powerful statement about the bank’s commitment to small and medium enterprises in Australia. ANZ stepped up in a major way when they decided to provide the majority of the funding needed for the inaugural ANZ Innovyz START program. They became active supporters – almost like partners.
The Government of South Australia, Department for Manufacturing, Innovation, Trade, Resources, and Energy provided two years of support, which is equivalent to the cost of the facility on Level 9 of 80 King William Street.
Our four Service Sponsors were Minter Ellison (legal services), BDO (financial and accounting services), Australian Small Scales Offering Board, and xero (accounting software). Each provided a set of services, at no cost, to our companies.
We announced the program Feb. 24, 2012 in the Queen Adelaide Room of the Adelaide Town Hall. Two months later, we had 134 applicants from 17 countries. Nearly 10,000 copies of the brochure had been circulated, 3500 people visited our website, and there were more than 500 references to ANZ Innovyz START on Google, some in languages we didn’t even recognize.
We narrowed the list to 50 applicants, had Skype calls or personal interviews with them all, selected 20, then 15, then 12 (10 and 2 alternates). We made our final choices and began notifying the winners in mid-May. We selected companies that are in the web 2.0, software and mobile space so they would have common issues, markets and problems and solutions - and be able to learn from each other, from the Program Director, and from our mentors.
Demographics and Economic Impact
Five (50%) of the companies selected were Adelaide companies, and the other five moved to Adelaide for the three months of the program. The teams arrived the weekend of May 26, 2012 from Sydney, Brisbane, Auckland, Poland, India, London, Boulder, Chicago, and Beijing - and joined the five teams from Adelaide. Our class of 10 companies included 5 women founders plus 2 women co-founders. The ages ranged from 20 to 50 something.
In addition to the psychological benefit of having ten high growth companies in the CBD, the five companies who came to Adelaide for the three-month program spent money and had a positive financial impact on the economy. Table 1 is a conservative estimate of their expenditures. We have not included estimates of retail shopping or weekend excursions. The actual expenditures are probably closer to $100,000.
Table 1: Economic Impact of Five Companies Who Came To Adelaide for ANZ Innovyz START
|Non-Adelaide Team members||Airfare||Apartment or house rental||Transport (bus, car rentals)||Food and entertainment||Total|
Mentors and Economic Impact
Our program included mentoring from 37 experienced entrepreneurs and CEOs who’ve “been there and done that”. 1/3 of our mentors were international (US, UK, NZ, Malaysia), 1/3 were interstate, and 1/3 were from Adelaide. All together they provided 150 days or 1200 hours of mentoring – largely in person, on site at the accelerator in Adelaide. It was full immersion! The knowledge transfer, advice, counsel, mentoring, - and the connections to customers, investors, distributors, vendors – even potential employees - were unbelievable. As Table 2 illustrates, the economic development impact they had on Adelaide was also significant.
Table 2: Economic Impact of International and Interstate Mentors Involved in ANZ Innovyz START Program
|Group||Airfare||Hotel||Ground transport & Entertainment||Food/Drink||TOTAL|
|Int’l mentor||14flts*$2500 = $35,000||146 nts. X $150 = $21,900||14*$100 = $1,400 + $3700 = $5,100||259*$100 = $29,500||$91,500|
|Interstate mentor||13flts * $500 = $6,500||32 nts. X $150 = $4,800||13 * $100 = $1,300 + $30*30= $900 = $2,200||76*$100 = $7,600||$21,100|
On August 16, 2012 more than 350 people came to the Adelaide Town Hall to watch the companies pitch to investors. Based on the response to their pitches and the numbers of potential investors who were talking with companies several hours after their presentations, the event was a major success. If nothing else, it demonstrated that Adelaide has companies that are worth funding!
Investor Activity Since Program Completion
The program concluded August 17, 2012. As of September 1, every company was talking with at least one investor. One company has already received $150,000 in seed funding and is negotiating for $1.5M. Another company has received commitments of $350,000 with the potential of $100,000 in additional funding. Based on the companies’ first weekly report, investments are coming from Sydney, Melbourne, Perth, as well as Adelaide. We expect the fund raising process to take several months and are tracking their progress on a weekly basis.
We are in discussions with an investor from Victoria who may be interested in raising a seed fund for investing in the next set of ANZ Innovyz START companies.
ANZ has announced that it will fund ANZ Innovyz START again, in Adelaide. As of September 1, 2012, we have already received 25 applications for the second ANZ Innovyz START program that will commence 21 January 2013. Applications will close 30 November 2012, and we plan to announce the companies selected by 21 December 2012.
Two of the companies that just graduated are considering establishing an office in Adelaide, two team members liked Adelaide so much that they would like to return, and two mentors who are considering moving to Adelaide.
ANZ Innovyz START will be offering several ANZ Innovyz Leader Forums in several city locations around Australia, commencing in Sydney and Melbourne in November. These forums have been designed by Dr. Jana Matthews to be three-day, intense programs for CEOs of start-up and growth companies. In addition to providing useful information to entrepreneurs about how to grow companies, we expect some of the participants to be good candidates for the ANZ Innovyz START program in Adelaide in 2013.
ANZ Innovyz START, our companies, and Adelaide itself have received considerable positive press. ANZ Innovyz START has over 500 listings on Google, three of our companies were featured in the Advertiser, we’ve had two articles in the Australian, and there have been four web newsletter articles about ANZ Innovyz START - all of them positive press. Blog postings have been titled “15,000 miles, 10 Companies and 5 Days to Discover the Next New Thing “Down Under” and “Is Adelaide the Country’s Hottest Start-up Zone, or What?” Individuals have told us that our accelerator has given them hope, and that the company pitches were “inspirational”.
In closing, all of us associated with Innovyz and Innovyz START appreciate the financial and personal support our stakeholders have provided to our first accelerator program. We are counting on our stakeholders’ continued support as we launch our Leader Forums in November 2012 and our second ANZ Innovyz START accelerator program in January, 2013.