AirTree Ventures

Millions more needed for start-ups: McClure

SOURCE: Rose Powell, The Australian Financial Review

Investors in Australian tech start-ups are missing out on the chance of backing the next Facebook and are holding back local entrepreneurial talent by being too afraid to take risks, says legendary Silicon Valley angel investor Dave McClure.

Mr McClure has invested in more than 930 early stage tech companies through his incubator program 500startups, and attracts talent from all over the world in the belief that he can set them on the way to riches.

“Everywhere that investors complain about a lack of options in the little guys, I’ve found talent. In Australia, if early funders want to be part of the big returns, they’re going to have to take risks with their companies,” Mr McClure told The Australian Financial Review.

He is visiting Australia for the first time to meet with hundreds of local investors and entrepreneurs as a guest of investor network Investors Org.

Mr McClure said Australia was being well served by so-called growth stage investors, who take on companies as they start to show promise. SEEK co-founder Paul Bassat’s Square Peg Capital and ­AirTree Ventures, run by veteran tech investors Craig Blair and Daniel Petre are two good examples.

However, it is the smaller end of the scale, the early seed stage capital investors, that Mr McClure said needs to shed their timidity and take more risks, for the sake of the ecosystem and their own wallets.

Mr McClure said there should be less investments in the hundreds of ­thousands range, and more of millions of dollars. He warned that in a global game less daring players would soon be left behind. “Our biggest winners weren’t winners for years, it’s never obvious someone is going to be amazing,” Mr McClure said. “That’s always the case. No one thought Dropbox, AirBnB and Uber were as excellent as everyone does now when they were two or three.”

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