When WA startups leave the state they take their brainpower and money with them. Credit:Jamie Brown

A WAtoday investigation has revealed a startup scene desperate for the investment dollars usually poured into mining, and what will happen if we don't start taking risks.

Normal text size Larger text size Very large text size Western Australia is really good at digging minerals out of the ground and hawking them around the globe for buckets of money. But despite rhetoric about the need to ‘diversify the economy’ the state’s addiction to digging and drilling has largely blinded it to the ways smart people are coming up with world-changing ideas that eventually arrive on our shores in the form of highly disruptive and low tax-paying multinationals. Perth entrepreneur Amir Farhand said all of his next funding options require him to move the company HQ to the US. These tech companies have made our lives easier and work more efficient but that is where the economic benefits have stopped. There are some gutsy WA investors willing to part with some serious money if it means getting a slice of a potentially girthy ore body, but when it comes to a 20-something with a big idea and a few lines of code, wallets remain tightly shut. Of the estimated $6.5 billion investment raised by WA businesses in 2019, startup data compiler Techboard estimated just 0.6 per cent, or $41 million, went into early-stage tech companies. Now, the state’s startup scene is calling for investors to step out of their mining, construction or property comfort zones and turn their gaze toward new ideas to ensure WA truly diversifies and future-proofs job opportunities for the next generation.


The ones that got away ‘Startup’ has loosely become the recognised term for an early-stage venture, generally in the technology space. Google, Facebook and Uber were all considered startups. Advocacy group StartupWA estimated in its 2019 ecosystem report there were more than 500 established startups operating in WA and over the years a few of those have made it big. Perhaps the most famous example is Canva, an online graphic design tool founded as Fusion Books in Perth in the late 2000s that eventually moved to Sydney. On its latest valuation, the company is worth $4.7 billion, which would put it firmly in the top 100 ASX companies. The same thing is happening right now with other promising companies. Amir Farhand mortgaged his Perth house to create Takor, a mapping technology company.


The company has expanded to about 15 staff, most working at its Belmont headquarters. But with growing interest from Silicon Valley the pressure to move overseas is growing, despite Mr Farhand being a proud and parochial West Australian. Mr Farhand said the company was reviewing terms for its next $10 million-plus round of funding, and all require the company to relocate to the US. “It doesn’t mean we’re going to upend all the staff in Perth but most of the hires from that point onwards won’t be here, they will be over there,” he said. Takor has garnered funding from high net worth individuals in WA, many of whom made their money in mining, but Mr Farhand said most of the interest came from Asia and North America. Notable WA startups that have left the state Canva: Started by Melanie Perkins and Cliff Obrecht as Fusion Books but was relaunched as Canva in Sydney in 2013. Now worth $4.7 billion.

Kanopy: Founded by Perth woman Olivia Humphrey in 2008 as a DVD distribution company. Morphed into a streaming service for universities and public libraries. Moved to California and now streams 26,000 titles to more than 3000 campuses globally.

Humm: Developing a wearable patch that improves memory and brain function. Moved from Perth to Berkley, California in 2018. He lamented the necessity for people to mortgage their homes just to pay for a proof of concept and said investors in WA needed to change their attitude toward risk. “When it comes to capital people have to take risks. They have to lose like the guys in Venture Capital funds do in California,” Mr Farhand said.


Software vs ore Innovation does happen here; mining companies invest heavily in automation and safety technology but most people WAtoday interviewed agreed much of it gets locked up within those businesses, leaving little benefit for local startups. Matt Macfarlane is one of the most recognisable faces in the Perth startup scene, having founded one of WA’s most famous venture capital funds, Yuuwa. He still has his finger on the pulse as chief executive of iCetana, an ASX-listed WA company that uses artificial intelligence to identify security anomalies in CCTV footage. Mr Macfarlane said it was common to see a company hit a roof in Perth and look elsewhere to scale up. “Canva couldn’t possibly have gotten to the scale they got to without being based in a place like Sydney,” he said. “You do have this talent drain and company drain happening.”


Mr Macfarlane said tech and software were lucrative ventures and gave the comparison that $100 of iron ore revenue brought in 15 per cent profit depending on the market, while $100 of software could bring in anywhere from 60 to 80 per cent profit. “The best thing you can sell is brainpower. Human capital is extraordinarily valuable,” he said. Good ideas going unfunded Peter van Bruchem has lived and breathed the Perth startup scene for more than 15 years, even founding his business Techboard around unearthing investment data about the industry. His stats show a concerning decline in funding for WA startups both privately and publicly, from $353.3 million in 2018 to $255.1 million last year. Both figures were dwarfed by New South Wales, which recorded $914 million in the December quarter alone.

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