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Emily Rich explains why taking “smart money” is often a better path

Emily Rich is a co-founder and partner at M8 Ventures, a venture fund that focuses on investing in tech startups during their “pre-seed” stage. Emily is also Director of Startups for APAC, where she has been tasked with helping to drive startup growth in the Asia-Pacific region. This is a special episode featuring guest host Alan Jones, an investor and veteran of Australia’s startup ecosystem who has supported Australian startups independently and through BlueChilli, Blackbird Ventures, Pollenizer Ventures and Startmate. In the conversation, Emily discusses how she got her start co-founding a machine learning startup, and her belief that while bootstrapping a business may be an appealing prospect for early founders, that seeking investment early and taking what she calls “smart money” is often a better path for fast and sustainable growth.

Resources

M8 Ventures: https://m8.ventures/ 

Emily on Twitter: https://twitter.com/emilylrich

Transcript

Alan Jones: Hi, I’m Alan Jones, and I’m the guest host for today’s episode of Welcome to Day One, the podcast for Aussie founders, startups, and the organizations that support Australian entrepreneurship. And I’m here today talking to my good friend and close colleague, Emily Rich. Emily, can you please introduce yourself?

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Emily Rich: Hey, I’m Emily Rich. I’m a former founder of an AI company, I am the general partner at M8 Ventures, a VC fund that vets the remarkable founders from pre-C to series B. And I’m also the Director of Startups for Microsoft in Asia-Pacific.

Alan Jones: And full disclosure to listeners, Emily and I are both partners in M8 Ventures, the pre-C to series A fund that Emily mentioned. And we’ve been friends a long time, so just, if it seems like we already know each other, we do. But my job here today is to help you get to know Emily better, and to help Emily share her stories of the beginnings of the startup industry the way she remembers it. Thanks for joining us, Emily.

Emily Rich: No worries, thanks for having me, yeah. It feels very unusual, because usually when I’m doing these I’m not talking to such a good friend. But, this is awesome.

Alan Jones: It is, it is really fun. I want to go back to the beginning, and I think the beginning for you begins with your first memories of your interest in technology. Where did your interest in technology begin, and what was going on for you at that time?

Emily Rich: Yeah, so I think for me, I jumped around a bit in terms of what did I want to actually do with my life after school, and I was never very… Well, I was terrible at math, I wasn’t good at… I didn’t do science, but then I sort of had this… I had a few ideas. At one point I thought about going into medicine, and I think I landed on tech because I’d always been really interested in the latest gadget. And back then it was like, “Oh, well what’s the new iPod nano,” or something like that. But it was always so fascinating to me how technology was growing so quickly, and at such a rapid rate. And we always had a computer in our house, because my dad was actually in the field. So, he did a lot in the IT space.

Emily Rich: And I would say that I was definitely not encouraged by him, because it was not a space that women were in in those days, taking into account that he’s of a much different generation. But I think that from actually having a computer in the house, having worked with MS-DOS, and loading up games, and seeing all of that stuff, and just being fascinated by it, just thinking it was so cool. And then I always wanted to have the latest console, or the latest whatever it was that was happening technically at the time just so I could understand it. And also, was just so fascinated by how technology actually advanced everything. And so, I think that’s where it really started, and that’s when I decided like, “Hey, I’m actually going to… I’m going to do computer science, I’m going to go down that route.”

Alan Jones: Yeah, cool. I think I remember a similar sort of introduction to computers, a computer at home, it being my dad’s work computer, and me loading games up onto it. And I think one of the things that’s different today was that the standard of games in programming and software development terms, it was quite a bit lower, and games were much more hackable back then. And I think some of my early coding experiences were mucking around with my friends, trying to hack some of our games and do things that we shouldn’t have done. Was that some of your early programming?

Emily Rich: Yeah, I’ve definitely done some things like that, definitely have tried my hand at a number of those things. I think my first coding experience was honestly when we had MySpace, and you could create your own… You would do all your own CSS, and that was my first real introduction to coding. And then as I progressed, I did start sort of trying to… Yeah, as you say, sort of this white hacking sort of experience that I think you go through when you’re really interested in computers and technology. I would definitely try my hand at those, and then as I sort of went further down, and as I got older I was really interested in cybersecurity and digital forensics. So, started trying to do some things around…

Emily Rich: Everything around cybersecurity was so fascinating to me, and so wild, the things that they could actually dissect out of USBs, out of things that you would just never even think you’d be able to recover things from that they were recovering. And so that was another form of hacking. Also, again, white hat.

Alan Jones: Did you study cybersecurity at university?

Emily Rich: I did, I did.

Alan Jones: Okay. And roughly when did you graduate?

Emily Rich: I did not graduate.

Alan Jones: Again, a not uncommon story.

Emily Rich: I feel like that was a loaded question.

Alan Jones: Sorry listeners, I knew the answer to that one. But, it establishes street cred in a particular generation of startup founder, doesn’t it? Particularly in cybersecurity. Where did you graduate from?

Emily Rich: Where did I not graduate from?

Alan Jones: Sorry. Where did you not graduate from?

Emily Rich: The University of South Australia.

Alan Jones: Oh, cool. Tell us about the cybersecurity, or the startup community in South Australia in those days. Where was it located, how big or small was it?

Emily Rich: Yeah. I’ll talk about the startup community, and I’ll talk about… Because when I was at uni and I was studying, that’s when I actually started my startup. And so, I never have actually worked in cybersecurity, and I’ve never actually… I’m not keeping up with the trends at the moment. I do things, little things here and there, read things that I’m really interested in. But I’ve never worked in the space. But how, in terms of when everything’s sort of… For me, I sort of started and dove into startups in 2013, and that was in Adelaide. And for those of you who don’t know, Adelaide is quite small in population. The startup community was very small. I was just reminiscing, and I was thinking, I spent my days at Majoran Distillery, which is now…

Emily Rich: They dropped the Distillery at some point, it’s now just called Majoran Adelaide. It still exists today. I believe it had around 30 desks at that time, I can’t exactly recall, but it was not significant. And it was established the year before I started my startup in 2012, and it was the first coworking space in Adelaide. And the longest-standing one, so…

Alan Jones: Still standing today, yeah. So, 30 desks in that room, did you start your startup in Majoran?

Emily Rich: Started at home. So, did the whole started in the lounge room thing, and then eventually was going to meetups, getting into the community a little bit more, albeit very small. But actually having access to a community that existed, rather than just going it alone with my co-founder. And yeah, from there it was pretty, pretty soon after that we actually moved into Majoran. And then a little while after that, we spent time at the Innovation and Collaboration Center, which is in Adelaide as well as part of the University of South Australia. So, part of that deal was, we actually won a grant of $50,000, and the space we were… We were also given space as part of that prize. So, we moved there, we hung out there for a couple of years.

Emily Rich: And again, quite small, a few desks, there were a few companies in there, even less than at Majoran. Because you had to have been a grant recipient, or be affiliated in some way to the University. So yeah, it was all just a very small, quaint existence I suppose, where you knew everyone. Everyone knew everyone.

Alan Jones: For good or for bad. And what was that first startup, what was it called and what did it do?

Emily Rich: The startup was called Gemsoft, and basically… We actually started in security, so we actually incorporated as Gemsoft Security, and we later dropped the security. So, the initial product itself was actually built upon computer vision, machine learning. And we were essentially looking at the problem of holdups, or shrinkage, or robberies, or… Then we started looking at war zone attacks, army base at airports, all these sorts of things where the initial product was basically an identification product that would look for faces, it would look for weapons, it would look for… If your face is covered it would look for… You basically had all these different end points in which you would just be looking to see, “Hey, is this a threatening situation?” So, we built up that. And that turned into… And that didn’t work, so of course as you know in good startup form, we pivoted. And so-

Alan Jones: Did that not work because you were a little bit early, and the technology wasn’t quite capable of delivering on that promise? Or was it a market thing, a customer demand thing, you were solving the wrong problem?

Emily Rich: It was definitely a market thing, it was definitely… We had done a lot of market research in this space before we actually started… Well, we had started developing, but we actually hadn’t gone really strictly into this product until we’d done a lot of market research, and paid market research as well. And a lot of the feedback we got was really, really positive. I think there’s a couple of things, so A, we were targeting retail. And there is significant… Basically, the bottom line for retail is very… It’s not a wealthy, wealthy, wealthy business, right? So it’s not like they’re just going to be spending tons of money on security. Whereas, we thought they would. And so that was the first thing. And then I think the technology was definitely ready for it, even…

Emily Rich: Oh gosh, even more so now because it would be so much quicker. But back then, it was already at a point where you could definitely… That could definitely be in a commercial setting, we’d proved that it could. But I think that the market wasn’t ready for it, and also it ended up… We tried to go down the route of going, “Okay, so your insurance covers a lot of shrinkage, so that’s not of interest to you, okay. How about we do what we’ve seen before, in terms of what you do with house insurance? Where if you have additional security on your house, your insurance premium goes down.” So, we started to work with insurance companies, and tried to go at it that way. And that was a hard slog, and that didn’t work either.

Emily Rich: That was really, really tough, it’s really tough to sell into insurance and to become a security provider that would get on the books to then say, “Hey, you get a discount in your premium.” So, that was tough. And then yeah, we completely pivoted the… So we said, “Hey, we have all the technology. We have facial recognition, we have facial detection, we have object detection, we have tons of machine learning. We have so much stuff we’ve built over the last 18 months, let’s turn it into an API.” And so that’s what we did, we turned it into an enterprise-grade API. Then we started actually gaining traction.

Alan Jones: Cool, you started tilling the shovels.

Emily Rich: Yeah, we started selling. And also the first product was also a hardware with embedded software, which for any of those hardware companies out there know how hard it is to sell hardware.

Alan Jones: Yeah, definitely, until you can do over there updates.

Emily Rich: Yeah. And then we decided, “Okay, software business for us thanks, that’s good.”

Alan Jones: Cool. So, how long did Gemsoft last? And in broad terms, why are you no longer at Gemsoft today?

Emily Rich: Oh my goodness, it’s… What is it? 2022. Yeah, I guess it’s [crosstalk] –

Alan Jones: It’s all lost in the mists of time, listeners.

Emily Rich: Yeah, no, no, no. It’s just like, “Why aren’t you there today?” I’m like, “Oh wow, it’s been so long, it’s been almost 10 years.” Well, yeah, almost 10 years. So, 2013 we started, and then we… As I said, pivoted out of security, created the API, won our first big enterprise contract. That then allowed us to gain that sort of real trust in a lot of the other bigger companies. And so from there, we won a few more contracts, we established our own office, we grew our team, we did the whole thing where we were like, “Yes, we’re hitting a million manual rev.” That was all of these sort of milestones that we were hitting. We had a contract with a company where we were working on… They were using our API, and at that point in time also we were running bespoke services.

Emily Rich: So, if you didn’t have an in-house dev team, we could provide you with one. And a lot of people at that point in time didn’t have the capacity that they do now to deploy AI solutions, and people with that expertise. So, that was a service that we offered as part of the services side of the business, and then there was obviously a product side of the business. So with that, the last contract that we were working on, they wanted to acquire us. We were at a point where we wanted to sell. We were either going to sell, or raise more money. And we worked through that acquisition, and exited in 2017. So, but we’d been working on it for about five years I think, yeah.

Alan Jones: Yeah, that’s great, that’s a great story. Thinking back to that period, like 2012 to 2017 sort of time, back to the 2012 days and Majoran and so on, back then who were the… Which were the Australian startups that you remember most admiring? Who were the archetypes, who were the heroes of the industry back then? Did we have any in Australia, or were they all offshore?

Emily Rich: Oh my goodness. I only remember a few, I think because I was so busy with my company I was sort of head down for so many years. But I do remember that I got to speak with companies that had done really well, and through sessions that Majoran would run we would have people come and speak to us from the ecosystem. So, people like Steve Baxter, we had Jindo from Happy Co., we had a conversation with him around the US market when we were looking… We did go into the US market. So when we were actually looking to get into the US market, spoke to him. There were a few people that I remember in that time, but it was honestly a lot of the people that I was around. I mean, I remember at [inaudible] , because everyone was talking about them. And I don’t know if…

Emily Rich: I just think no-one had done anything that big at that point in Australia, but that’s just my recollection of it. And yeah, there was some really cool people that I… I got to work with some other startups as well, so when we went to New York and we were selling in New York, we got to hang out with some really cool data companies. I can’t remember the names of any of these people, which is so bad. But they were just amazing, amazing data companies, digital companies in New York, really cool. So yeah, had a really great experience. But yeah, that’s what I can sort of remember from that time.

Alan Jones: Yeah, cool. Some international travel, and some overseas customers, and dealing with time zones and foreign currency support.

Emily Rich: Oh, yeah.

Alan Jones: Probably at a time when it was a little bit difficult to manage all of that in cloud accounting software. And what sort of… You mentioned before that you won a $50,000 grant in the early days, or 50,000 in value. Where there other government programs that were useful to Gemsoft and to other startups at that time? Or, was it all a bit of a wasteland of no government support?

Emily Rich: Honestly, there wasn’t a lot. The one thing that I will call out is… There’s a few things that I would call out. Definitely the grant that we received from the University of South Australia from their Commercialization Department changed our world. And you think it’s such a small amount of money, but it’s so meaningful to us to be able to develop. And it was so much money to us at that point in time, we didn’t have any revenue. But we had this great technology, and still to this day we did some things with that technology that were first in world, as far as we know, for a couple of those things. So, that support meant so much. And then secondly, Majoran actually hosted us for free. So we were actually in there for free, which was just, again, made the biggest difference to everything that we did.

Emily Rich: It was established by a guy called Michael Reed, and he’s someone that I’m so thankful for. Because he actually basically gave us free space and said, “I know you can’t afford it, but we want you here, and we know you’re doing something amazing.” And so-

Alan Jones: And what was the… Sorry, what was Michael doing when he wasn’t giving free space to startup founders?

Emily Rich: He was running Majoran, making money off the other founders that could afford it I guess.

Alan Jones: I remember, I think he was an accountant.

Emily Rich: He was, at one stage he was I believe. But yeah, that was… But not while he was at Majoran.

Alan Jones: There’s been a few people in each capital city that are kind of necessary for the beginnings of the startup community, and often a lawyer and an accountant who are prepared to give some of their advice for free to the startups they know, just because they find startups more interesting than their own regular business customers I think is the main motivation.

Emily Rich: Yeah, I agree. And I think also the same goes for people who are in the actual coworking spaces themselves. You see a lot of… They might be a former lawyer, or a former accountant, or yeah, I had one of the other companies that sat in there with us. I was like, “Hey, can you help us do our accounting for free?” Because he was an accountant. Well, former accountant, and I was like, “Can you just help us with leveling out some of these things?” Because at that point in time I was doing all of the finances, so that was really helpful too. So, there were quite a few things like that that happened. And then obviously with the Innovation and Collaboration Center, they gave us free space, they introduced us to our first customer.

Emily Rich: They obviously provided us this $50,000, which as I said meant so much. And the other government support in terms of what was happening at that time was the Commercialization Australia grant, so we did also receive that much later down the track. But that was the only other thing happening.

Alan Jones: After you did the Gemsoft startup experience, was your first impulse to go back and found, or co-found another startup? OR what was going on in your head, what did you learn from that experience and what did you decide to do next?

Emily Rich: As soon as we sold the company, I knew that I wanted to stay in startup land, it’s so infectious. And I knew that I wanted to assist other startups. When I was doing Gemsoft, I’d already started mentoring in programs like Tech Stars, and a few other, smaller ones that popped up here and there. And I loved it, and I loved being able to share my knowledge, and that was my passion, that was what I knew I wanted to do with my life, was invest in amazing companies, mentor amazing companies. So as soon as that happened, I knew that I wanted to start investing as an angel, which I started doing. And then I knew I wanted to be a VC, and I knew that I wanted to also mentor startups in whatever capacity I could, and share all of my mistakes.

Emily Rich: Anything that worked, all of those things, all of that knowledge that I had picked up that I loved the journey. I wasn’t ready to jump into another startup, or start another startup, and I still haven’t since. I think about it every now and again, and maybe further down the track I will. But at the moment, yeah, I really just enjoy that aspect of it, is the investing and the mentoring.

Alan Jones: Tell us a bit about… You get a big emotional reward, and hopefully sometimes some financial rewards from being an angel investor, because you’re helping founders of multiple companies rather than helping the 10 that you’ve employed in your own startup I guess. Is the decision to step up from angel investing to venture capital partly about being able to do that for even more companies, what’s that about? Because obviously there are bigger pressures, there’s more at risk when you step up into VC. Why is that important to you?

Emily Rich: Yeah, I think I always wanted to go into… I knew that I wanted to be able to help out at scale, so I knew I wanted to do VC. But angel investing was that sort of leap frog for me, that would at least give me some sort of a portfolio, and some sort of credibility in market. And yeah, for me it’s the same reason that I also took the role at Microsoft, is I helped hundreds of thousands of founders. And that’s powerful, and I am able to do that because I have a large company behind me who… Which means I’m able to actually achieve a lot of the things that I want to achieve at scale, rather than to your point, yeah, helping one or two companies. It is really meaningful, but it’s also, how do we as people who have been former founders, as people who have lived through it, as people who have the experience, how do we, I don’t know, impart some wisdom?

Emily Rich: I don’t know what you would even call it. But basically just our knowledge that we actually have learned, and things that seem so obvious to me. And I don’t obviously know everything about this space at all, but things that seem obvious to me would not be obvious to someone who’s day one in their startup.

Alan Jones: Yep. And so, does that kind of encapsulate what Microsoft for Startups does, and what you and your teams do? You were there to provide that knowledge which is second nature to you, which just seems obvious to you because you’ve deployed that knowledge so many times, to people that have yet to be exposed to that?

Emily Rich: Yeah. I mean, sometimes people get me on really tough questions that are like, “Oh, no.”

Alan Jones: What does Microsoft for Startups do, what do you do?

Emily Rich: No, no, no. Microsoft for Startups is exactly that. It’s, we support companies to access up to $350,000 US in benefits through access to technical and business resources. So everything from cloud, mentoring, we’ve got subject matter experts in pretty much every area you can think of. So we’ve got executives, we’ve got sales, we’ve got everything. And then when you speak to someone like myself, or one of my colleagues, we all have startup experience. So, we can come on that journey with you, and actually feel that empathy. And when I’m doing deep dives with companies, and I’m looking at their business, or I’m looking at their deck, and I think we’re in this unique position where we can say, “Hey, we see…” And I know you do too, Alan.

Emily Rich: “We see 500 of these a year,” I have a pretty good idea of what’s going on in terms of, “Hey, who’s got a really good deck, what made it really nice?” A lot of the things that I’m doing with companies around their growth, and how do they grow, how do they scale sustainably, all of those sorts of things. And then we do the exact same thing on the technical side, so how do you scale securely, stably, everything? So, that’s what we’re all about, is… And as I’ve said, I can… Because of the machine that is Microsoft, because it’s such a large company, I have so many founders that I… Not just myself, that my whole team can actually influence and assist.

Alan Jones: Emily, I want to ask you now about the ecosystem that we have today. You sit in an influential position, the branches of your tree go a long way out of the ecosystem, go down deep and far across. Can you tell us about some of the gaps you think our ecosystem has today?

Emily Rich: I think the biggest gap is talent, massively. Just being able to procure talent, I’m constantly being hit up for recommendations for technical talent specifically. The irony is that they’re going to the biggest startups who can pay more, or they’ll go to a Microsoft, Amazon, Google, who can also pay much more. So, the technical talent shortage that we have is no secret. We are all facing that same thing, even the largest companies are facing technical talent shortages. But when it comes down to it, people are graduating, and they’re going, “Oh, am I going to take this job in a startup for $50,000, or am I going to take this job over a big X scale up, or big company for $150, $200,000?” And they’ve just graduated, it’s tough.

Alan Jones: Yep, yep. And I think if you go right back to the root cause of that problem, when you think about how many other kids were interested in a career in technology in your graduating class in high school, or if I think about how many kids in my graduating class in 1982 were interested in a career in technology-

Emily Rich: Now you’re showing your age, Alan.

Alan Jones: But you know, I don’t think that ratio has really changed much. There’s more kids graduating from Year 12 than there were back then, but I still think the ratio is pretty unchanged, right? And the number of kids who go to university, the percentage of them who… Maybe the percentage that now study a… Now are interested in a STEM career might have increased a little bit. But I don’t think when it comes to people that want to study software engineering… I don’t feel like we’re graduating any more software engineers that are remaining in Australia than we were 10, 20, 30 years ago. Do you?

Emily Rich: No, I don’t think it’s significant at all. I mean, if we can start telling people, “Hey, we have too many lawyers, stop being a lawyer,” maybe. And that’s a really good point as well, is that you… I do think that we’re keeping more talent, because we do have a lot of technical teams here. And because we are seeing the Canvas, the Atlassians, the Culture Amps, all of these large scale ups, if you will, who are able to pay significant… At a market level for talent, they are able to compete with the Microsofts, the Amazons, the Googles. They’re absolutely able to compete with them now. And so, we are retaining talent in Australia. But for me, for example, my technical team that was with me at Gemsoft, the majority of them are overseas now, working at Facebook.

Emily Rich: Because they all wanted to go into artificial intelligence, and so for them it’s, “Okay, go work at Meta under the AI program, go work at world-class institutions.” And I mean, I’m so happy for them, but we don’t retain that talent.

Alan Jones: Yeah, yeah, yeah. That’s a really important gap. And so to balance that out, where do you think we in Australia are doing well?

Emily Rich: All right, what are we doing well? I think that as a community, I think that we come together really well. I think that’s the thing that I notice the most, is that we collaborate really well, we co-invest in a way that I haven’t seen in other markets, it’s really friendly. And I know you and I, we do a lot of co-investing with funds, and other angels, and all sorts of things. And it’s never a… I’m sure people have bad experience, but it’s never… It’s very unique to this ecosystem from what I’ve seen working now all across Asia as I have been for the last few years with Microsoft, is it’s a real standout for me, is how close that ecosystem actually is. And how we’re able to come together, and not necessarily be competing against each other as well.

Alan Jones: Yeah, it doesn’t seem-

Emily Rich: I think we do that really well.

Alan Jones: Yeah, it doesn’t seem like it’s everywhere a battle to the death, it’s more like a battle for space, light and nutrients. We feel like the opportunity for everybody to succeed is much, much bigger than the opportunity for us to crush our competitor.

Emily Rich: Yeah, which is very different in certain markets. And I mean, definitely if you’re talking about Silicon Valley. I mean, it’s crush or be crushed as a VC there. So, it’s very different, it’s a very… It’s very friendly, and it’s a… Really very unique actually, from anywhere I’ve seen, even in any other parts of Asia, that they’re not co-investing the same way we are, they’re not collaborating the same way we are.

Alan Jones: Yep. And do you think that the last couple of years of lockdown, has that made any difference in what you see around that challenge that we’ve always had around the distance between us and Silicon Valley?

Emily Rich: I think that from what I’ve heard from people who have taken investment from the US for example, for founders that I’ve worked with, they’re seeing that gap close a lot because it used to be okay to have to travel there, you have to be there, you have to see someone. Okay, not possible, how do we get around it? And it’s become okay, it’s just become normal to pitch on a Zoom call to investors, to actually write checks based on not seeing someone face-to-face. And that’s been really normal, that’s just been the way that it’s been having to work. I mean, people couldn’t just stop deploying capital, so they had to work their way around it, and they did that. And I think that because of that, we’re going to see a change.

Emily Rich: I mean, I’m not sure that we’ve seen it entirely yet, but I think that we’ll see a change in just being able to actually take investment from all sorts of places, and not have to necessarily be in that country physically.

Alan Jones: Cool, I look forward to seeing more of that. When I ask other guests this question it’s always a bit of a challenge, because Australians often prefer to share our unpopular opinions in private and our popular opinions in public. But do you hold an unpopular opinion about the Australian startup ecosystem? It can be a positive one or a negative. What do you think that most other people will disagree with you?

Emily Rich: I don’t know if people would disagree, but I suppose it’s more of a observation, and it could be slightly unpopular in some circles. But I think to caveat, I think we have great government support, but I just think we could do even better. I think we could do even more in this space. I’ve seen some amazing things in places like Singapore for example, they have done investing dollar for dollar in private capital with guidelines that are not… You’re not jumping hoops for that money. Sure, you absolutely have to apply for it, but they’re making it really easy for you to start a startup there.

Alan Jones: So just to be clear, dollar for dollar investing means that there are Singapore government venture funds that will invest alongside other venture funds to the same degree. So, an AirTree or a Blackbird Ventures puts in a dollar, the government puts in a dollar too. Is that right?

Emily Rich: Correct, yes, that’s right. So they have, and I’m not sure of the exact dollar amount that they have allocated. But, the majority of the companies that I work with in Singapore have received that dollar for dollar investment. And it means obviously they can grow significantly, and it also keeps them in Singapore, which is what the Singaporean government wants obviously. And the private capital firms are very happy about that, because they’re essentially doubling their investments straight away, so it’s a nice incentive for them to get involved in. There’s other places that… I don’t do a lot of work there, but Germany, they have a really great system where it’s so easy, and it’s like 10 minutes to set up a… Basically set up everything you need to start a company there.

Alan Jones: Wow.

Emily Rich: And it’s just so easy. I personally haven’t seen the process, but my counterpart in Europe was telling me about it, and I was amazed, so I had to look it up. But yeah, really impressive stuff that some of those governments are doing that I think we could learn from and say, “Okay, why are they becoming startup hotbeds,” if you will. “Why are they doing so well?” It’s because as I mentioned previously in my story, what that 50,000 meant for me, what the Accelerating Commercialization Grant meant for me at that time was not a lot of money in the grand scheme of things, but was a huge amount of money to us. It meant we could start acquiring customers, and eventually we turned that 50,000 into a million sort of thing.

Emily Rich: So really, I think that private companies and private capitals have a large place to play. But, grants and zero interest loans go a long way at the start of the journey.

Alan Jones: Cool, very cool. What about as a community, what does the startup community itself… What could it be doing better in the future, what’s the most important thing that we need to improve?

Emily Rich: I really would like to see even more former founders investing in companies, investing in the next generation of founders. Because I believe that they not only have the money to provide, but as we spoke about they have the knowledge to share. And I think that’s really important, and I think that that means that couldn’t be the difference between you being able to scale and grow a lot faster with that. So, that’s what I believe we could really implement a lot better as a community.

Alan Jones: Yeah, cool. So, somewhere out there there’s a whole cohort, a whole generation of early employers, people who are in the first hundred employees, at Atlassian, Canvas-

Emily Rich: Exactly.

Alan Jones: … [crosstalk] , the list goes on. And yeah, where are they, huh?

Emily Rich: Yeah, they’ve got to be… They should be-

Alan Jones: There’s a handful, there’s some. But there’s more out there, right?

Emily Rich: There are, there are. And I know there’s a lot of… There’s already a number of people that are doing it. I’m just saying that it would be great to see that even increase, just to see what would happen I think. Some really cool things would happen. And you’re right, that experience of being first 100 employees of Canvas, or being the first 100 employed at Atlassian. I mean, that knowledge, that experience you have, that’s not something you learn overnight.

Alan Jones: Yeah, yeah. And some of the most useful people in the ecosystem now are that handful of people with hands-on operator experience, who’ve been part of building a successful startup.

Emily Rich: Absolutely.

Alan Jones: Is there a category outside investment? A startup founder at the beginning or partway through their startup journey right now, it’s probably best for them not to start angel investing while they’re still trying to build their first startup. But what’s an action [crosstalk] we can give them?

Emily Rich: Yes, please don’t do that.

Alan Jones: What do we need them to be doing better?

Emily Rich: What do we need our founders to be doing better?

Alan Jones: Mm-hmm [affirmative].

Emily Rich: That’s a good question.

Alan Jones: Thank you.

Emily Rich: I think that let’s have… Something that I’m really passionate about is our DENI efforts.

Alan Jones: Awesome.

Emily Rich: And I think we’ve made a… And I know a lot of other funds have, we’ve made particular caveats in who we invest in based on the representation of minorities within their company. And so that’s what we can do as investors, but what can you do as a startup? You can actually start thinking about, how do you have a better representation of the whole world, and I’m still not seeing that enough. I’m still seeing that we might be getting into this trap of, “Hey, we’re building product, we’re building great product.” But we’re building it with one way of thinking, or we’re building it with two ways of thinking. We’re not building it with all these… With everyone in mind, you know? Every community in mind. That’s when we get accessibility issues, that’s when we have all sorts of things. Like you’ll develop a product and say…

Emily Rich: And sorry white guys, but you’ll say, have a team of four white male founders, and you think, “Okay, fine. You need to know that you have limitations then on what you can understand about other people in the community, and how to build products for them.” And that’s where I’d like to see… And I encourage founders all the time to think about, how do you make the best product? You make the product for everyone, that’s how you make the best product.

Alan Jones: That’s awesome. When you look back at the history of the Australian startup ecosystem, it was founded by misfits and outsiders. And yes, those misfits and outsiders were largely male, and almost exclusively white. But, they were still misfits and outsiders. Now we have a viable, successful industry that the rest of the world recognizes as a huge opportunity. If you suddenly shut off the supply of misfits, outsiders, marginalized people, then you miss out on all that creativity, and all of that insight that they bring. And you end up building a product for a monoculture, and that just means you’re addressing a smaller market. Why would any startup want to do that?

Emily Rich: Exactly, why do you want to address a smaller market when you can have a whole market?

Alan Jones: That’s an awesome answer, thank you. The advice question, if a new entrepreneur came to you, give all of your experience, mistakes, the wins and the losses, what one piece of advice would you give them that might help increase their chances of success?

Emily Rich: Okay, I actually have sort of two answers to this.

Alan Jones: I don’t know if that’ll be okay. I’ll give you two.

Emily Rich: One’s really quick, one’s just, I think just start. And it’s really easy to incorporate a company now and get a low code, or a no code prototype going. So, technology has facilitated that for us, which I did not have that ability back when I started much further along. Now, that’s sort of one small thing that I think you can just start, and you can do, and you can prototype really easily. The biggest piece of advice that I actually have is… This is slightly controversial to people who are bootstrapping. But, this is from my experience, is raising money earlier, and raising smart money. And what I mean by that is, raise money that comes with knowledge attached to it, and comes with experience attached to it.

Emily Rich: So, raising from reputable angels, VCs, obviously government grants if you can get them of course, an excellent way of doing that. I thought that it was a really great, amazing feat that I could bootstrap. And I look back and I go, “I would never do that again,” because I could have grown… It’s so much bigger and so much quicker than what I was able to do by bootstrapping. It sort of ties into one of the biggest mistakes I ever made, was taking money from inexperienced angels. And so, I’m really passionate about people taking money, smart money from experienced, knowledgeable people in this area. It also deeply feeds into my passion of being a former founder who’s now a VC, and also running and implementing a really founder-friendly environment at Microsoft as well.

Alan Jones: Yeah, great answer. Thank you. Time to put your futurist hat on, your futurist skater cap. And what’s been a recent development in the startup world that you think’s going to be a really big deal?

Emily Rich: Well, I actually think that seeing more unicorns coming out of Australia means the world knows who we are. Which, we’re being seen now to be on a global scale thanks to our ecosystem that’s grown so much. And we have names, we have logos that people recognize. And I think that’s actually going to be really, really positive for investors investing here, bringing money into the country. Also for our funds, as we’re seeing our funds now are raising huge amounts of money, and having really, really large funds that they can deploy capital through. I think that we could… For instance, India for example produces a unicorn on average every nine days.

Alan Jones: Wow.

Emily Rich: Isn’t that crazy?

Alan Jones: That is.

Emily Rich: But I don’t think we’re going to be there, because we don’t have the population to support it. And it’s not just about producing unicorns, but I think it’s helped us put us on this global scale, which means that, oh, people are thinking of us as, “Oh wow, okay, you really are a startup ecosystem to watch.”

Alan Jones: What if we set the goal every 90 days? Can we do that, Australia? [crosstalk] –

Emily Rich: One unicorn every 90 days, we just add a zero on.

Alan Jones: But the ATO might explode. Emily, is there anything else that we should cover in today’s interview? Is there a question that you wish that I’d asked you that I haven’t?

Emily Rich: I think your questions were phenomenal.

Alan Jones: Thank you, I think your answers were incredible.

Emily Rich: Thank you.

Alan Jones: So Emily Rich, coding founder, angel investor, VC, head of startup stuff for Microsoft for Startups. I just want to thank you very much for your time today, it’s been a very informative and interesting interview.

Emily Rich: Thanks Alan, it’s been so great to be here.

Alan Jones: Folks at home, I’m Alan Jones, today’s guest host for this episode of Welcome to Day One, the podcast for Aussie founders, startups and organizations that support Australian entrepreneurship. Hit like and subscribe, and listen to us in all of the podcasting tools. You’ve been an awesome audience, and we love you. Thanks for listening.

Adam Spencer: I hope you enjoyed that interview. More interviews are on the way, follow the podcast wherever you’re listening right now. Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem. Thanks for listening, and see you next time.

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Credits

Production Credits

  • Andy Jones
  • Will Tjo
  • Alex Carpenter
  • Alan Jones
  • Oliver Gaywood
  • Aleshia Spencer

Special Thanks

  • Sorrel Osborne
  • Alan Jones
  • Murray Hurps
  • Maria MacNamara
  • Peter Davison
  • Pete Cooper

Music Credits

Music by Lee Rosevere

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