Startup tips: Separating speculators from investors

Some investors are not in it for the right reasons, says Talent International CEO Richard Earl

Startups lose when investors treat them like bets in a casino, says Talent International CEO Richard Earl.

Startups lose when investors treat them like bets in a casino, says Talent International CEO Richard Earl.

Too many investors think of the Australian startup scene as a “casino” in which they can place a number of bets and get rich quick, according to Talent International CEO Richard Earl.

Earl is the founder of Talent International, a technology recruitment firm that supplies thousands of contractors to companies around the Asia Pacific.

Recently, his company launched the Talent Unleashed Awards to uncover entrepreneurs with exceptional ideas for startups.

Contest judges Richard Branson and Steve Wozniak awarded Australian entrepreneurs Amber Blumanis, creator of the Stopover app, and Philip Andrews, cofounder of Liquid State, with trips to a five-day business mentoring workshop at the Branson Centre for Entrepreneurship in South Africa.

“The startup scene is a bit overhyped,” Earl told Techworld Australia. "It’s become a bit fashionable and a bit confused as well.”

While Earl said there are many bright entrepreneurs with good ideas in Australia, he complained of startup investors who are just in it for a quick buck.

“Too many people in that space are simply speculators. I don’t think they’re in there for the right reasons," Earl said.

“It’s people saying, ‘Here’s a working area, here’s an Internet connection. You can have 10 minutes of my time once a week and I’ll take 10 per cent of your business … and we’ll all get rich quick.’”

Startups need more than that to succeed, he said. In addition to writing cheques, good investors provide advice and encouragement, and show genuine passion for a startup’s ideas, he said.

Many startups do not have background in running companies and require executive guidance to help turn their ideas into a working business, he said, adding that a common failing among startups is not having an adequate business plan.

“Mentoring covers a number of areas. It’s not just about the educational part of business management, but an emotional element as well in terms of bolstering people’s dreams and making them believe in themselves.”

Adam Bender covers startup and business tech issues for Techworld and is the author of dystopian sci-fi novels We, The Watched and Divided We Fall. Follow him on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

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