Leslie Delaforce highlights the unique challenges facing Indigenous founders
Leslie is the Indigenous Entrepreneurship Director at Minderoo Foundation, an Australian not-for-profit organisation seeking effective, scalable solutions to persistent problems. Leslie’s role at Minderoo is part of their Generation One initiative, with the goal of creating employment parity with and for Indigenous Australians. Leslie also founded DreamSpark, a tech, investment and Web 3.0 enterprise, and co-founded Covocate, a HR Tech platform that helps companies identify their best job candidates. In his conversation with Adam, Leslie discusses some of the unique challenges facing Indigenous founders, as well as what he sees as the role of government in the startup ecosystem.
Generation One: https://www.minderoo.org/generation-one/
Leslie on Twitter: https://twitter.com/lesdelaforce
Adam Spencer: Hi. I’m Adam Spencer, and welcome to Day One, the podcast that spotlight’s Australian startups, founders and the organizations that empower Australian entrepreneurship. We go back to the beginning to tell a story of Australia’s most inspiring founders and how they built their companies. You’re listening to a special interview series as part of a documentary W2D1 is producing about the history of the Australian startup ecosystem. On the episode today, we have-
Les Delaforce: Hi, I’m Les Delaforce. I’m a Gumbaynggirr man from the mid north coast of New South Wales originally. I’m the indigenous entrepreneurship director at Minderoo Foundation Generation One and been involved in the startup ecosystem for the last six to eight years. So from raising capital with startups to scaling, exiting and everything in between.
Adam Spencer: Can you tell me a bit about the work that Minderoo does?
Les Delaforce: Yeah, sure. Minderoo Foundation was established by our co-chairs Andrew and Nicola Forrest, and there’s a range of initiatives that we try and tackle, global problems and challenges. That could be from Walk Free, which is eradicating modern slavery to removing plastics from the ocean. And in the area I work in is Generation One, and our mountain top effectively, our goal is to create employment parity with and for indigenous Australians within one generation. So from my startup background to wield transition into a big, not for profit like this and why, we, the team I lead, is purely around indigenous entrepreneurship, how we create the opportunities for indigenous startups to thrive and survive and be successful.
Adam Spencer: I’d love to go deeper on that, and we might a little bit in the interview down the road, but if we don’t, I’d love to do another interview with you outside of this innovation ecosystem series that I’m doing.
Les Delaforce: Yeah, for sure. Yeah, absolutely.
Adam Spencer: So, when did you first get involved in the startup ecosystem?
Les Delaforce: When I first got involved, it was around the 2015, 2014 mark thereabouts. And at the time I was working for the WA public sector. So I had moved across from New South Wales all the way to Perth, and Perth reminded me of my own hometown, Port Macquarie. And at that time I was a little bit disenfranchised and seeing some of the challenges that people experienced trying to gain employment within the public sector. And it was based purely on technical skills. So for us, a colleague and I, went, let’s just flip it on its head, let’s try and build a startup where we could recruit based on values. So Google at that stage just introduced their recruiting algorithms, and there was a lot of controversy around can algorithms recruit better than humans. So it was around that 2015 mark, we jumped in, built a set of algorithms, built a little startup, went through myriad of challenges and then eventually raised capital a couple of years later.
Adam Spencer: So, what were we, 2014, 2015? Is that what you said?
Les Delaforce: Yeah.
Adam Spencer: Western Australia. What is the ecosystem in terms of community size, organizations around support? What did the landscape look like around 2014, 2015?
Les Delaforce: The landscape was still evolving. It was a few years before that it was quite immature, really quite new, but it was really led by Space Cube over here. One of the major coworking spaces definitely led by that, and that created a lot of buzz in the town. At that time, we had a really big lull in mining. And so the is obviously a massive mining state, but right at the time it was HR tech was booming. So we were in the right place, right time with our startup. But it was a period of time where post GFC, iron ore price crashed and obviously as did mining royalties, but there’s a lot of investors in WA, a lot of high net worth investors. So they were looking at placing their funds elsewhere. And at the time, interestingly, you saw a lot of backdoor listings.
Les Delaforce: So rather than raising capital through angels or even VC, startups were going straight to backdoor listings, which is unbelievable. They go to West Perth and meet with an investor or a firm that would provide them with a mandate about listing on the ASX. And it was the point in time where I think startups, I wouldn’t say ruled it, but it made it a lot more challenging. We had seen startups like One Page back in the day, Refined another one, but also the talk of the town back then was definitely Therenos. Right now, looking at Therenos, the challenges that they’re going through legally, the buzz was everywhere. Everywhere you’d see, you’d read, it was about Therenos. So the trends were definitely backdoor listings for startups and going straight to IPO to listing on the stock exchange, which was an interesting time, then the ASX changed their listing mandate.
Adam Spencer: Outside of Space Cube, were there any other big support or coworking spaces or other support organizations or they were the main game in town?
Les Delaforce: Yeah, predominantly they were the main players in town and they started around the 2011 mark, and really just a couple of desks in an old bank, say from Westpac. So they were certainly one of the leaders over here. There were a few smaller coworking spaces, but look, as of today, you look around today, there’s from WeWork to Tank Stream Labs, and then all the very smaller coworking spaces all spread out because WA is the largest or most spread out capital city in the world. So there’s a lot of land mass over here, and we’re seeing a lot of other coworking spaces in the likes of Geraldton or the Southwest and Busselton and locations like that, but Space Cube were definitely the pioneers.
Adam Spencer: This is a bit of a side question, so if you don’t want to answer it, that’s fine, but you’ve mentioned Space Cube, 2011. We’ve got Fishburners on the east coast, in Sydney, 2012, River City Labs, 2012, 2013 in Brisbane. Is it a coincidence or not that all of these big coworking spaces popped up at around the same time, and do you think they were a catalyst to help things move along or was there a thing that prompted them and what was that thing that prompted all these coworking spaces to pop up, do you think?
Les Delaforce: Yeah, that’s a really good question. And certainly I did a bit of work for Tank Stream Labs over here in Perth and established that business in Perth a few years ago. And obviously new market entrants, then you have WeWork entering the space. But around that time, it was really popularized by The 4-Hour Work Week and everywhere you’d see, everyone was reading that book back then. And I was probably, I wouldn’t say one of the last, but the title didn’t grab me. And then I read it on a flight heading back home to New South Wales, and that drew me in.
Les Delaforce: And it felt like around the time where Tim Ferriss podcast was then starting to blow up, 4-Hour Work Week was out there then, and all these coworking spaces were all just starting to pop up. And I guess based on a lot of podcasts from Silicon Valley. And I think it was really driven across the country really around the same time, whether it’s Fishburners and York Butter Factory and Space Cube and Tank Stream Labs, it was almost at this point in time, this natural transition into coworking spaces, and it’s really grown rapidly. Obviously COVID has impacted that sector massively, but seeing some of those really transition out and looking at other different business models as well.
Adam Spencer: So jumping ahead to present day, I’d love to go back a bit more and talk about what happened between 2015 to present and how you’ve observed things change over that time. But for the moment, what are some of the gaps present day that you observe in the ecosystem?
Les Delaforce: Some of the gaps, I think talent is widely distributed, but opportunity is not. So the talent gap is a significant challenge for a lot of startups. So where you’ve got some incredible capital raises from the likes of Canberra most recently, was it 50% of their staff were employed last year and predominantly developers. It’s really hard to find devs. Like it’s one of the Australia’s most amazing successes them and Atlassian and in the startup sector. But the talent piece is really hard. So in WA in particular, trying to find developers and quality developers with experience is really quite hard, particularly in the crypto blockchain space as well, and been in that area since 2017, early 2017, end of 2016, seeing that even more so now with another resurgence of crypto. So where you’ve got talent across the country is really widely distributed opportunity is not necessarily, so for a lot of different diverse groups.
Les Delaforce: And that’s the, I think the exciting thing we’re seeing now, around AirTree, their Explorer program, or Startmate with First Believers. Some of the programs that we’re trying to run is leveling the playing field for diverse groups, where they can access startups. For me, being born in Kempsey, raising capital with an indigenous background, the challenges that we face, lack of intergenerational wealth, access to networks, access to capital. And then there I was in 2017 raising capital and in Sydney, in Martin Place with VC firms and having not done this before, and certainly an understanding of how to go through this. I think now we’re seeing a lot of programs in place to support that. And particularly people with diverse backgrounds, whether women, Aboriginal people, people [inaudible] backgrounds and people with disabilities, but then still trying to access the right talent in a massive geographical land mass across the country as well. So COVID has certainly, I think helped with that as well, where when we were raising capital, we would have to fly every second or third day Sydney, Melbourne, Singapore, just to raise capital. Now we can just take video conferencing.
Adam Spencer: Again, speaking about challenges, you listed off a couple there, but what are some unique, just out of curiosity, I’ve got Aboriginal ancestry and I’m curious to understand what are some of the unique challenges that you’re seeing the people that you’re helping face.
Les Delaforce: Yeah, that’s a really good question. That’s pretty much my entire role to help overcome some of those pretty significant challenges. Starting off, for Aboriginal people, those three key factors were probably the most critical. So we in Minderoo Foundation Gen One, we launched a report early this year and we went out to hundreds of Aboriginal entrepreneurs across the country. We had focus groups across the country. We commissioned a report into indigenous entrepreneurship. And interestingly, what came out of that was the lack of networks or the access to networks, access to capital, financial literacy and lack of intergenerational wealth. So for example, for a lot of Aboriginal people that have come from nothing, growing up in Kempsey, you didn’t necessarily have much, but once you got a job, you’d hold onto it because you don’t know what’s going to happen next.
Les Delaforce: And that lack of intergenerational wealth, then to take a risk and throw it all in for a startup, for a lot of Aboriginal people is very unlikely. So for me over here, and I’m fortunate with the background of my family, that took risks and had a solid foundation for us, flying across to WA and then throwing in a full time public sector job, at the time when we were raising capital and my wife was six months pregnant, there was no salary for 12 months at that stage. But the team, we believed in what we were building and we were two weeks away from losing everything. And we eventually raised capital and we made it, but it was just through hard work and perseverance, through really those three key things. If we had those networks, and we see this quite a lot where non-indigenous starts, not all, but some would have some networks and typically access family and friends around, but we don’t necessarily have.
Les Delaforce: So there’s a number of barriers. And that’s why there’s a big focus, not just for us. There’s a lot of different programs out there supporting Aboriginal entrepreneurs, how to become investor ready or ready to invest. And certainly, that’s what I experienced, especially looking around, going, I’m raising capital with all these VCs. I’ve never done this before, back in the day, but who can I talk to? What other Aboriginal person has raised venture capital? And couldn’t find anyone. So we didn’t realize at the time, we were one of the first indigenous startups to raise venture capital and then eventually it’s imparting our knowledge onto the next generation.
Adam Spencer: Another quick side question. Talking about support out there for Aboriginal founders or indigenous founders, apart from Minderoo, can you lift off a few? What places can people go to?
Les Delaforce: Yeah, absolutely. There’s some amazing groups out there. It’s really driven by three levels, one at a grassroots level. So from the likes of Indigitek over in Sydney, definitely focus on tech-based and stem roles within the startup ecosystem. They do an amazing job in Sydney, but also moving to Melbourne. Then you’ve also got the coworking spaces that are shifting in [inaudible] . You’ve got with the Wirra Hub over here in WA. You’ve got Yarpa Hub, New South Wales Indigenous Chamber of Commerce, also Kinaway do an amazing job. Then at the university sector, you’ve got a number of programs. RMIT have Ngamai. Melbourne Business School have MURRA Master Class. And I was an alumni of MURRA Master Class. We’re seeing definitely three levels, but it’s been driven predominantly by this grassroots approach for indigenous entrepreneurship.
Adam Spencer: What are some of the areas that you think we’re doing as a community really well in, and maybe also, if you can comment on this, what makes our ecosystem unique compared to other ecosystems that maybe you’ve observed?
Les Delaforce: I think community. The focus on community at a macro level, at that Australian level, the community that we have, we really stick together. Finding the corporate space, it’s extremely competitive. Whereas in the startup ecosystem, you see a lot of complimentary support between startups and founders. The other thing I think we’re doing really well, and it’s only been the last 12, probably 18 months, it’s been really incredible to see these new venture funds that are popping up. So typically, to get into venture capital, you’ve got to have a large exit or have networks in the sector. However, seeing the rise of like Alphaworks, Tractor Ventures or Flying Fox, there’s this unique growth that’s occurring across the country, and forming those syndicates and venture capital funds where people with that experience can get into investing into startups.
Les Delaforce: Obviously, a challenge is being the sophisticated investor. The asset test is a massive challenge and it’s been widely publicized, but even over here, the programs we ran with the prospective, indigenous angels, the group, the 12 of those angels went, “Let’s form the Black Angels. Let’s form our own angel group and let’s invest in the next generation of indigenous startups coming through.” So I think that’s really quite unique and it’s really amazing to see where a lot of young people, not just younger, people want to get into venture capital, but then there’s those barriers. And then you’re starting to see the likes of Tractor Ventures and Flying Fox breaking down those barriers. It’s really incredible to see.
Adam Spencer: Why do you think young people are attracted to that? Why would they want to get involved in venture capital?
Les Delaforce: I think a big reason is, and it might sound silly and just completely left field, is house prices. There’s an amazing article recently in Sydney Morning Herald about young people, particularly in Sydney or in Melbourne, but in particular Sydney, trying to enter the housing market and the average price of a house. So young people were then forming together syndicates and then investing in startups as that asset to move forward. So where they could be priced out of Sydney in the housing market, they can move to a regional location, work on the startup, but also pool their money together and invest in startups to have that asset where a house might be out of reach.
Adam Spencer: Ah, okay. Yeah. That makes sense. So this question, it’s written down, I don’t know if you have an answer for this, but do you have an unpopular opinion about anything in the startup ecosystem that people just aren’t on the same page?
Les Delaforce: Yeah, certainly. I think it’s all state by state. So the unpopular opinion is definitely raising capital in WA is hard. It’s really split down the line in Western Australia around if you’re a decent startup, you will raise capital, but I think it’s still extremely hard to raise capital in WA. And obviously there’s a variety of reasons, but Sydney, Melbourne is still far easier to raise capital. We lose a lot of founders that are moving over east and part of my other role with the board of StartupWA, is then how do we retain the talent in WA and without all the founders moving to either Sydney or Melbourne and Brisbane including?
Les Delaforce: But while WA has significant capital available for early stage businesses, they’re not startups, they’re predominantly junior mining exploration companies and asking other companies like some of the big four, why? Why is this? WA likes to take risks, but it’s predominantly in mining and mining is a hundred year old sector and people really know. Some feedback is that you can price a ton of iron ore, but it’s hard to price an early stage startup. It’s also tangible. Iron ore is tangible, whereas a SaaS startup is quite intangible. And so, that’s probably an unpopular opinion about raising capital in WA. I still think it is hard. It is getting a little bit better, but we can certainly learn from New South Wales, the Sydney Startup Hub, and also LaunchVic in Victoria, that the role of government plays as an enabler.
Adam Spencer: What do you think about the role of government in the startup ecosystem? Are you for it or against it, or in the middle somewhere?
Les Delaforce: I’m definitely in the middle. Having worked in the public sector and worked for government for eight years, I can certainly see how government can stifle innovation, and innovation certainly happens outside of government without a doubt. And even with my startup, had to leave the public sector, but government plays a role as an enabler. So you look at the funding New South Wales state government’s provided Sydney Startup Hub or Victoria, the state government has provided LaunchVic is massive, and that could create significant change. And you’re seeing some incredible progress and programs and projects and outcomes in Victoria and obviously in New South Wales. We are getting a little bit better, but because this state has focused predominantly on mining, tech and innovation has dwindled a little bit in terms of startups. Not in the mining industry, you’ve got automation technology is massive. But particularly in WA we’re certainly seeing a lot more support.
Les Delaforce: And at Startup WA, thanks to the state government, we’re running a number of programs for our regional founders, female founders and indigenous founders as well, trying to keep this talent here and grow that ecosystem. But it should be an enabler, but not getting in the way of innovation. And if we look at an example, cryptocurrency, back in 2016-17, three Commonwealth government regulatory bodies, couldn’t agree on what crypto was. Was it property? Was it a security, for example? So it’s certainly an enabler and a decent enabler.
Adam Spencer: What attracts you to this startup ecosystem, to founders?
Les Delaforce: That’s a really good question. And particularly we’ve just closed a massive program with a hundred founders going through our Dream Venture Master Classes. What attracts me? For me, it’s the camaraderie. I was always interested in getting into politics when I was in government, but you don’t have to play politics in startups. Like in government, obviously, that’s what it is. It’s politics. It’s getting involved in the politics and that wasn’t me. My values didn’t really align there. My values align more in the startup ecosystem where it’s all about collaboration and having exited my startup a few years ago, and then building the Tank Stream Labs business over here in WA, and seeing all of these new startups coming on board, helping each other out, learning from each other, how they can scale.
Les Delaforce: A lot of these startups were just working on the sniff of an oily rag. Some made it some and a lot failed, obviously. But seeing that camaraderie and people sticking together as a team, it sounds weird, but it felt like the indigenous community, it felt like being a part of a mob. It felt like you’re a part of something, you’re a part of this movement, and it was really quite powerful to be part of that movement.
Adam Spencer: Did you want to get involved in politics to affect change?
Les Delaforce: Absolutely. Yeah. Coming from Kempsey, my parents made some big choices to provide a stable environment for us as kids, my sister and I, it was always taught about giving back, giving back to community. And it was just getting involved, working in government, and then looking at getting involved with politics is how do we create change for everyone and really level that playing field? But what I found working in the public sector was really driven by the government of the day, understandably. And so to come up with new ideas could be quite challenging and would take time. Whereas what I’ve found in leaving the public sector, if you’ve got an idea, you’ve got now the tools, the technology. You don’t need a $15,000 server in a back room. You’ve got AWS now. You can really scale ideas and execute on ideas. So seeing that from the startup sector to Minderoo, you’ve got an idea, lets let’s go for it. Let’s try it. And not being afraid of failure as well.
Adam Spencer: Yeah. I interviewed Steve Baxter last week and he said, he thinks that being a founder, being an entrepreneur is one of the highest callings in life because you can really affect change. You can really have a direct effect on the world with your business. And I agree with that.
Les Delaforce: Yeah, absolutely. I see some of the participants coming through. It sounds like it’s the Dream Venture Master Classes, indigenous entrepreneurs going through one side, prospective indigenous angels going through the other side and then there’s a live simulation pitch at the end and with amazing support, the Googles and Microsoft Blackbird, AirTree Startmate, et cetera. But in the process though, you’re listening to people’s stories, these Aboriginal founders stories. I think it was the Melbourne pitch night, there were three out of the nine pitches, all burst into tears. And then everyone on the call, what these founders went through and then the perseverance, the resilience and the building a business and that business, then that startup was that catalyst then to show all their family and all other mob out there that you can do this. Look at the help that guys have gone through, and they come out the other side to have a successful business. And that was their calling.
Les Delaforce: It was just to see 20, 30 other, and blokes as well, burst into tears on the call. It gives you tingles down your spine. This is the change that we’re creating. It is really powerful to be a part of just not the startup movement, but to see some of the change that we’re creating.
Adam Spencer: Given all the founders you’ve seen and helped and seen at these pitch events, what advice would you give them?
Les Delaforce: Certainly perseverance, not being afraid to go full time into your startup. I’ve found that there’s a lot of founders that sit on the sidelines and understandably, you need some income coming in, but taking that risk and jumping straight into it. And it’s the hours. The only way you’re going to go into do that is put in the hours and obviously getting out there, networks, building your networks. You’ve got the Sydney Startup Hub, obviously with the Tank Stream Labs and Fishburners and Stone & Chalk in there to build relationships and networks, getting up, getting amongst, joining up, whether it’s going to LaunchVic programs, StartupWA for example, but taking that risk. If you’ve got that idea, you’ve got an opportunity right now where technology can play a significant role is then jumping full time into it, once you’ve got some traction and then absolutely going for it.
Adam Spencer: I’ve got a question here, which you’ll see on your sheet too. It’s, what has been a recent development in the startup world that you think has been a really big deal? But if we shift that question a bit to, because we didn’t really just talk much about, when did you say you moved over to Western Australia?
Les Delaforce: 12 years ago.
Adam Spencer: Yeah. So what’s maybe a big, broad sweeping change or set of smaller changes that have affected the ecosystem that you’ve observed over the last 12 years?
Les Delaforce: Oh, that’s a really good question. I wouldn’t say it’d be regulation or wouldn’t be driven by government. It’d be driven by more of a grassroots movement. It’d definitely be the development of these local venture capital funds. And a few of them have started Alphawork ventures have started over here in WA, local angel groups as well, building their syndicates to access some of these deals. Predominantly even when I started in 2015-16, it felt like, as a high net worth, you could just go to 708 or sophisticated investors to seek investment. Now there are really two things. Crowdfunding is really starting to level the playing field and particularly indigenous startups. There was one last week raised a million dollars for a non-alcoholic indigenous beer, the 10 million valuation. So crowdfunding has really leveled the playing field and shone a line on startups.
Adam Spencer: Sorry. They raised a million bucks through crowdfunding?
Les Delaforce: Yep. Yep.
Adam Spencer: Wow.
Les Delaforce: Yep. So, Sobah, an indigenous non-alcoholic beer, raised a million dollars just recently. I think it was on Birchal, on one of the crowdfunding platforms. But to see a lot of other Aboriginal business owners and entrepreneurs, then invest in Sobah was really quite refreshing. From an indigenous side, the indigenous procurement policy has been one massive thing. It’s been an injection of $4 billion into the indigenous business ecosystem. So you’ve got a lot of successful indigenous business owners, but the startup equity investment side is just really plateau. And it’s only recently become a a nascent sector, but now starting to rapidly grow. So from an indigenous side, it’s definitely the indigenous procurement policy, and now this rapid growth of indigenous startups coming through from high growth, emerging tech to more standard traditional businesses from fashion, retail, mining. And then from the point of view around access to funding, so predominantly where it’s just high networks. Now, these syndicates getting together and building like AfterWork Ventures or the Black Angels over here, and these angel groups that are really leveling the playing field for all to get involved in investing in startups.
Adam Spencer: The last question I have, not really a question. I want to give you a few minutes to just share something that’s important to you, that’s on the top of your head, keeping in mind that I’m trying to create a documentary here that will really tell the story of the Australian startup ecosystem. We want the policy makers, academics, founders, investors, people from all corners of the ecosystem to hear this story. What would you want to tell them, any one of those categories or all of them? What’s the message that they need to hear from Les?
Les Delaforce: The message I’d say is that talent is widely distributed, opportunity is not. So if we can help level that playing field to make it easier for all to access or access to become an entrepreneur, and government being that enabler to support that. But obviously access to capital. That’s one significant aspect. I think we look at Harlem Capital in the US, it’s the ecosystem of what’s being built right now. But it’s such an incredible important ecosystem where it started from $2 million and built a $200 million fund, just a bunch of African American founders. So the support that I think is needed right now, is then leveling the playing field for all to get into this space, predominantly was for high net worths from an investment point of view. And then this is an opportunity right now, and it’s really quite timely at leveling the playing field from being just a sophisticated investor exclusive to those high net worths to then for everyone to be a part of this change, startups then create significant change.
Les Delaforce: And we’re seeing the programs we’re running is impact, social impact. We know a lot of startups then create impact in the community and predominantly social impact. It’s not just for the profit. It’s not just for the dollar and it’s not just for ticking a box for a CSR target. It’s actually tangible change that the startup ecosystem is creating. And whether that’s in indigenous startups or female founder led startups, startups in general, across the entire country. It’s the makeup of this ecosystem that really needs in terms of leveling the playing field and accessing investment.
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.