startup ecosystems and compound interest - australia

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Building Technology Ecosystems and the

Importance of Compound Interest

Mick Liubinskasmuru-D, Pollenizer, Startmate

2014

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“The most powerful force in the universe is compound interest.”

Albert Einstein

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What is compound interest?

Where the returns increases the size of the base, which then increases the size of returns, which increases the size of

the base, and so on

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What happens when a company gets capital outside Australia or moves overseas?

Founders

Company started in Australia

Founders

Capital & Help

Australia

They need capital and help, but can’t find it in Australia

Founders

Capital & Help

Australia

They find it overseas and often move near the capital

Overseas Investors

Founders

Capital & Help

They find it overseas and often move near the capital

Overseas InvestorsAustralia

Founders

Capital & Help

Grow & Succeed

With the help, they grow and succeed

Overseas InvestorsAustralia

Founders

Capital & Help

Grow & Succeed

Cash Out

Through dividends or trade sale, they get cash out

Overseas InvestorsAustralia

They play golf, go to Mexico, get bored, get back in the

game

https://flic.kr/p/5Re1Bo

Founders

Capital & Help

Grow & Succeed

Cash Out

Because of connections and experience, they are often likely to become overseas investors, more than Australian investors

Overseas InvestorsAustralia

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What happens when a company gets capital

from Australia and stays here?

Founders

Australia

Company Started In Australia

Founders

Capital & Help

Australia

The start growing and need help and capital

Founders

Capital & Help

Smart Investors

Australia

They find an experienced, local investor

Founders

Capital & Help

Grow & Succeed

Smart Investors

Australia

With help, they grow and succeed

Founders

Capital & Help

Grow & Succeed

Cash Out

Smart Investors

Australia

Through dividends or trade sale, they get cash out

Play golf, go to Croatia, get bored, want the thrill again

https://flic.kr/p/6YLTkE Creative Commons

Founders

Capital & Help

Grow & Succeed

Cash Out

Smart Investors

Australia

Then they become experienced investors. The ecosystem grows at a

faster rate

Triple Compound Interest

1. Local investors get returns and base grows

2. Founders become local investors and base grows

3. Share options give employees returns and base grows

So what is the priority?

Startups are hard.

The priority of the founders is to succeed.

The priority of the industry is to help them succeed by staying here.

What can you do?

Invest in an Australian Startup. Even $5,000 and one day per month will make a massive difference.

Help connect Australian startups to Australian investors.

Lobby government to change ESVCLP to apply to all startup investing.

If you’re a co-founder, try extra hard to find the right investor in Australia. But, do what you need to do.

How’s my driving?

Email me with feedback at mick@liubinskas.com

Mick LiubinskasEntrepreneur in Residence at muru-D

Co-Founder of PollenizerInvestor at Startmate

http://liubinskas.com