Phil Ireland discusses how he sees mission-driven companies as fitting into Australia’s startup ecosystem
Phil Ireland is Co-Founder and CEO of Hone Carbon, a mission-driven business with the objective of unlocking the potential for carbon storage in Australia’s agricultural environments. Prior to starting Hone Carbon in 2020, Phil’s work largely focused on climate change advocacy and policy. In his conversation with guest host Will Tjo, Phil discusses how he sees mission-driven companies as fitting into Australia’s startup ecosystem, as well as his belief that there are positive trends within Australia’s investment space towards investing in mission-driven companies.
Hone Carbon: https://www.honecarbon.com/
Phil on LinkedIn: https://www.linkedin.com/in/philireland1/
Adam Spencer: Hi, I’m Adam Spencer, and Welcome to Day One, the podcast that spotlights 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. This episode was conducted by guest host, Will Tjo.
Will Tjo: Hi, everyone, and welcome back to the Australian startup series interviews. Our guest today is Phil Ireland. Phil, it’s a pleasure to have you on the show today. Thank you.
Phil Ireland: Thank you.
Will Tjo: To start us off, could you please introduce yourself, and tell us what you’re working on?
Phil Ireland: Great. Yeah, so my name’s Phil Ireland. I am the CEO and founder of a company based in Newcastle called Hone Carbon. Our mission is to reduce the cost and complexity of soil organic carbon measurement to accelerate drawdown of greenhouse gases, and our goals towards net zero. My background is actually not in startups or entrepreneurialism, it’s in climate change advocacy and policy. And that’s what I spent most of my previous career doing before starting this about two years ago.
Will Tjo: I guess, to start us off, I’d like to go right back to the beginning. What drew you into impact work, Phil?
Phil Ireland: It’s a good question. I think it probably goes back to a story when I was freezing cold and in Copenhagen. I was at the ill-fated COP Copenhagen Climate Conference. At the time, I was working in the not-for-profit sector with Oxfam International, working as a climate policy and advocacy specialist. Obviously, the outcomes we got from Copenhagen weren’t what we wanted. And from that and over the following couple of years, I began to develop a deeper appreciation of the role the private sector and startups can play in addressing our climate challenges.
Will Tjo: Yeah, it’s interesting because why did you choose startups as the vehicle to drive the impacts instead of following along the non-for-profit route?
Phil Ireland: Yeah, it’s a great question. I didn’t initially. So I was in the not-for-profit sector for quite some time. I also tried my hat at academia and did a PhD in climate change policy. I got a lot of respect for academics, but the pace of change was a bit too slow for me. I think the thing that really moved me over the line actually was seeing the role of renewable energy companies, particularly solar, and how they have really driven an uptake in renewables. And just recognizing that renewable energy companies have played a really critical way, alongside government, to help us to start to achieve our mitigation goals.
Will Tjo: Yeah. So in essence, would you say it’s pretty much pace of change and actually being able to see tangible results when you are in the field with the business?
Phil Ireland: I think that’s part of the answer. I think governments have a really key role in setting policy and creating initiatives and creating the container for other things. But I think the private sector has a particular ability to move quickly, and nimbly, and experiment, and adapt, and fail fast in a way that government can’t. And I think that’s one of the contributions that the private sector makes to addressing global problems at this point in history.
Will Tjo: Yeah. What was your first impression when you first delved into the startup land two years ago?
Phil Ireland: Very positive, actually. I was surprised to find such robust ecosystem. I’m based in Newcastle, north of Sydney. And even here there’s a fairly robust startup community with, I would say, tens of startups, a couple of larger ones. There’s a supportive network called the Integration Innovation Network, abbreviated to I2N Hub. That’s spun out of the Newcastle University and they serve as a real supportive organization for founders and organizations. I think it’s similar to the Sydney Startup Hub, so that’s been really good. And also learning about the Sydney Startup Hub and similar things in Melbourne. I didn’t actually know any of that existed prior to entering into this space.
Will Tjo: Yeah. And how did you end up finding them? Did you get referred or was it friends and family?
Phil Ireland: So I actually joined… I spun off a subsidiary of an existing business. So it was through the existing business really, and their connections that I was made aware of it. And it’s safe to say that the existing business had got a whole lot of support from those organizations and communities, as well.
Will Tjo: I see. I noticed from your profile, perusing LinkedIn and also the website for Hone, that the word social entrepreneurship isn’t mentioned. Was that deliberate?
Phil Ireland: No, it wasn’t actually. It’s a good point. I think we talk about impact and mission, but we don’t talk about social or environmental entrepreneurship at all. It’s a good flag.
Will Tjo: Yeah. I suppose the reason that I asked that is because one of the recent interviews that we did on this podcast was interviewing the founders of Thankyou. And they noted a distinction between the traditional startup environment, as well as social entrepreneurship. And I wanted to know if you felt that separation or do you feel it’s just one and the same?
Phil Ireland: I think there’s some separation, but I think it’s very gray. I think a lot of companies and startups now are driving towards impact and doing things that make the world better. So I actually think a lot of entrepreneurs are socially entrepreneurial, and I think even for companies and startups that aren’t doing that, they try and sell themselves as doing that. So I think it’s a big gray area, actually.
Will Tjo: A big gray area and the lines just seem to get more and more blurred over time is it?
Phil Ireland: Yeah, absolutely. I’m sure Uber would describe itself as a social impact entrepreneurial startup, but I certainly wouldn’t describe it that way.
Will Tjo: Yeah. I know what you mean. After being in the ecosystem for about two years, what are your opinions on gaps or improvement opportunities?
Phil Ireland: Yeah, so there’s a few. I think, in Australia, there’s a gap in the funding between seed rounds into series A’s and Bs, and there’s a bit of a valley of death before companies have really proved significant revenue or profit. And I’m not sure the risk appetite of BC firms and others in Australia is optimized to really support good ideas, get through to that series A and B. That would be my first reflection. My second would be the timely and predictable government grant. I think the government thinks they’re really good at granting because they look at the total number that they grant, either at state or federal levels, but the system is mired in complexity. You have no idea how many people are applying to a grant. If someone’s already been picked for it, which is fine, but people should just know before they pour weeks of their precious time into applying. Timelines are unpredictable in terms of when you hear back and when money can be granted. From when you submit an application, it can be over a year before you actually receive money, which for a startup is just not viable at all.
Phil Ireland: So it’s not for lack of money or lack of will from the government, but I would say there’s great inconsistency across grant programs. And they could be far more optimized to really support robust Australian startups that can grow to being highly profitable Australian and international businesses.
Will Tjo: Yeah. Just in essence, greater engagement with the stakeholders, with the startups, making sure that they are in on the journey and transparency into how many people are applying, so that no time is wasted.
Phil Ireland: Yeah, there’s simple fixes. One is, if you have a grant getting people to put in a letter an expression of interest, which would be a two or three page form. And then from that, the government narrows it down to 20 applicants going for a couple of grants. Whereas now, there’s a whole bunch of grants where you have to do the full application. And I know some instances where there have been thousands of applications for a couple of grants, in which case your likelihood of success is close to zero.
Will Tjo: When you mentioned before about VCs, optimized to getting from series A to B. It’s interesting. Could you elaborate a little bit more on what you meant there?
Phil Ireland: Yeah. I meant more from seed rounds to series As and series Bs, so in that bridging finance. So I think there’s a lot of support for small amounts of money to back an initial idea and a founder for a year or two. And then I think once there are viable companies, there’s lots of capital around that’s willing to go into an equity investment. But getting between those two places is complex, and there aren’t many VC firms that do it at this point.
Will Tjo: Yeah. Do you find that applying for VC funding is difficult as a social enterprise? Given that the primary focus isn’t just profits, it’s obviously impacts, but it’s not really what VCs are looking for because they look for metrics and are numbers based. Do you find that’s a struggle?
Phil Ireland: In my space, which is the climate space and the drawdown space, I’ve actually found the opposite. And there is so much capital at the moment floating around to support good climate ideas. A case in point is obviously Mike Cannon-Brookes and their foundation. There’s a lot of capital there. The only feedback we’ve ever had, or I’ve ever had, is that I need to be more impact focused and more climate impact focused, because people want to see really tangible longterm impact and outcomes for their investment. I think it might be different for other types of impact, but at this point in time, in the climate space, there are people throwing money behind ideas just to reduce emissions and to drawdown greenhouse gases out of the atmosphere, regardless of longterm profitability.
Will Tjo: I know this next question can be a huge can of worms. It’s just about measuring impact. Do you think Australia has done a good job about how it wants to see impact being measured, within the startup ecosystem that is?
Phil Ireland: From what I’ve seen, there’s only one answer to that question and that’s no. There are definitely not clear consistent metrics across individuals, organizations, or government for impact. Sometimes governments make their own metrics. Others refer to the SDGs. I don’t think there’s a clear enough rubric or measurement, at all.
Will Tjo: Yeah. And do you see the startup ecosystem as playing a role in, perhaps, defining something like that?
Phil Ireland: I haven’t thought about it before, but yes, I think it absolutely should, but I’m not sure. For any startup founder and any startup staff member time is obviously incredibly scarce, so putting time into something like that, you would want to see and you’d want to believe that it is going to actually result in a tangible change or impact ironically. That would be my reflection.
Will Tjo: Yeah. On the flip side of all of this, what do you think, as a community, that we’ve done pretty well?
Phil Ireland: I think, in Australia, obviously I’m relatively new to the ecosystem and most of my experience has been in Newcastle. But I should say what I think we do well here is that it’s well-networked and there are lots of opportunities to meet other people and connect. I’ve been very… And I think the Sydney Startup Hub, and it’s similar in Melbourne, are really good examples of state governments backing spaces for entrepreneurs.
Phil Ireland: There’s no lack of desks to work from, or free Zoom subscriptions, or whatever else it is. But obviously then getting to the amount of money that you require to run a business is more challenging. I think in Australia, what we do well is you have to be leaner than in, perhaps, North American or European markets. There’s not as much capital floating around, and the capital that is does hold you to a higher standard of accountability. So I actually think Australian startups, I’m obviously biased, but I think we are broadly better run and you don’t have, like you do in the US, with millions and billions being thrown behind organizations that have no profit or revenue. So I think that’s a strength and a weakness.
Will Tjo: Yeah. I see what you mean. We don’t have the luxury of throwing money at problems just because of availability of capital.
Phil Ireland: Correct. But that makes us, I think it makes us, stronger and have more robust startups.
Will Tjo: Yeah. Do you have any unpopular opinions about our ecosystem, either positive or negative?
Phil Ireland: I think that the VC community is too small. And too often organizations have to go overseas to find investors with an aligned risk appetite. And I think there’s a lot more space in Australia for capital to be investing in good ideas here, because we don’t lack capital. I think there’s over a trillion dollars in superannuation funds. We have some very big successful international banks, but they’re not really releasing very much, if any, capital for new risky ideas. And I think there’s space for big banks with superannuation funds to be even peeling off a small amount of their funds to make some higher risk investments in startups and scale up organizations.
Will Tjo: Are you speaking from experience there with Hone? You’re having to go internationally to get funding?
Phil Ireland: Yes. Yeah, we have gone international. We’ve gone international for the networks and the markets, and we’ll probably go internationally again. I would’ve liked to go international less than we have, I think.
Will Tjo: If a new entrepreneurial founder came to you, Phil, and given all your experience, your wins and mistakes, what would you tell them to increase their chances of success?
Phil Ireland: I think the key thing I would say is, when you’re running a business in the first couple of years, first focus on your people, including yourself, then your product, and then your profit, in that order. Everything will come from having the right people and the right team, and then a product that customers want and love, and then profit really is third. I think if you chase profit first and even revenue, you can lay traps for yourself in the future.
Will Tjo: Couple final questions. Is there any recent developments in the startup world that you think is interesting or a big deal?
Phil Ireland: Absolutely. The capital markets have obviously changed incredibly quickly. Valuations have companies have been very volatile, interest rates are going up. I think it’s positive. I think it can be positive internationally that capital’s being a little more discerning and millions and billions aren’t being thrown behind companies without revenue, let alone profit. But I think the risk is it’s going to flip too much the other way, and that new good ideas and scale up opportunities might be missed. And I don’t think Australian investors should be more risk averse in the Australian startup community. So I worry about contagions coming from investor activity in the EU and North America into Australia, when we’re actually very different markets with very different cultures and very different trends.
Will Tjo: And lastly, what we’re trying to do on this series, I feel, is to basically document, as historically and as accurately as possible, the history of our ecosystem. And we’re aiming to reach all corners from government, academics, investors, as well as founders. Is there anything we haven’t talked about today that is top of mind for you that either one or all of those categories need to hear?
Phil Ireland: I would go back to the grants question. I would say there is a lot of money available for grants at the federal and state level, but it is poorly and inconsistently administered. And there are examples of very small organizations receiving the very large buckets of money and not knowing how to spend it. And then very worthy organization going to great length to receive very small amounts of money. And it actually being inefficient for the organization, inefficient for the government, and ultimately inefficient for our country’s economy.
Will Tjo: Yeah. Phil, it’s been an absolute pleasure chatting with you today. Thank you so much for your time. Lastly, are there any heroes in the startup space or your story that you’d like to shout up?
Phil Ireland: That’s a great question. I think the first that comes to mind would be Nigel Sharp. He’s a tenacious impact-driven investor from Victoria, who’s building several incredible organizations impact-based, but he’s also backing new entrants. He backed me a few years ago and I’ll be forever grateful of that. Secondly, I have to call out my partner in the Hone Carbon, Dr. Simon Wheeler, without whom the business would not exist. He’s an incredible mission and impact-driven, super smart superstar, but I’m just… Yeah, he’s amazing. But more broadly, I think, given what we’ve talked about today, I think impact investors are a group of heroes that I think need calling out, because the nature of investment is shifting and the way people want to use their capital is shifting, and I think those are some really positive trends. And I think some investors are being more courageous than they would’ve been in the past and values driven, and I think that’s wonderful.
Will Tjo: What’s next for you and your journey?
Phil Ireland: Just continuing to build a product that delights our customers and contributing to the global challenge of drawing carbon dioxide out of the atmosphere. That’s squarely my focus.
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.