Bringing something new to the Australian VC scene

Despite the rapid and impressive growth of the Australian and New Zealand VC market and innovation accelerators, both private and University led, there remain significant gaps in the Australian market.

As part of the 2022 State of Australian Startup Funding Report (Folklore Ventures and Cut Through Ventures), both founders and Investors were surveyed across several matters. The observations below summarise the key challenges founders face when raising domestic venture capital.

1. 59% of founders “don’t believe there are many funding options available”
2. 58% “don’t feel supported by the wider community and startup ecosystem”
3. 62% “don’t believe investors have lived up to the promises of ‘non-capital’ value add”

Further our own research shows founders have good reason to feel this way, as discussed below.

Insufficient funding options

Though Australia ranks 8th for start-up attractiveness in the Global Startup Ecosystem Index, by developed country standards our VC capital pool lags OECD peers – ranking a lowly 23rd in the OECD for early stage capital deployment as a share of GDP in 2021.

Lacking in non-capital value add

Contemporary surveys demonstrate that founders seek a partner who is aligned with their core purpose, brings reliable funding and can create value through their networks and expertise. Remarkably, apart from follow-on funding, none of these are in the Top 5 for what investors believe drives deal-flow (see Figure below - source: 2022 State of Australian Startup Funding Report).

?Given this mismatch, it is wholly unsurprising that founders feel the VC industry doesn’t provide the value sought from investors.

The Dreamoro Group Opportunity

The Australian VC industry is young by international standards. Barely a decade old vs 40 years, for example, in the US. Innovation Bay, Airtree and Blackbird trailblazed the early years and, together with others that have joined the market since have established a strong foundation for continued growth and development of the industry, supporting and growing the number of Australian entrepreneurs.

Without these groups and their inspiring VC founders, things would be quite different in our ecosystem today.

Australian founders have and will continue to build great companies.

What they appear to seek is a VC partner with demonstrable sector expertise aligned with core values and bringing the skills and networks required to build great companies. ?

This is why we created Dreamoro Group and developed the Dreamoro Founder Model.? A venture capital model that combines deep HealthTech industry and Online Media & Entertainment expertise (the combination playing an increasingly critical role in HealthTech innovations), supported by a technology and commercialisation studio together with a structured and proven founder leadership support and selection process.

We are witnessing a generation of genuinely transformative Australian and New Zealand startups emerge with the potential to impact and improve almost every facet of the global health system - providing better care to more people at less cost?to individuals and governments. We need significant change in the healthcare industry as the current system is unsustainable, increasingly burdening our communities and governments globally.

Founder led VC experience

In 2018 I had the pleasure of joining an Australian Israel Chamber of Commerce Technology Trade Mission led by both Andrew Whitten and Cliff Rosenberg . For those familiar, Israel has an extraordinary early stage ecosystem! That trip planted a seed and stirred my own disappointments when engaging with the broader investor and founder support community.

As experienced founders at Dreamoro, we have experienced both value and disappointment from our own engagement within the industry. Over the years, I have personally pitched to hundreds of investors, including institutional investors and VCs and experienced a number of accelerators. I have spoken with literally hundreds of founders, both in Australia and internationally.

What has struck me about these experiences is the significant gap that continues to exist that could help improve the prospects of founders succeeding and the poor advice I see from time to time being proffered to founders like “find your co-founder CTO” which I think of as akin to an arranged marriage. I wrote a blog about the perils of this in a blog I titled “Hiring a software developer and/or co-founder CTO to build your MVP ” on the Dreamoro website.

As if a founder's journey isn’t precarious enough. Surely, we can do better.

That is at the core of why Dreamoro Group was created. To identify, fund and grow transformative HealthTech and Online Media & Entertainment startups whose success underpins better experiences and outcomes for people, patients, healthcare workers and our community, while helping founders avoid the many challenges they may face. We are solving social problems, profitably.

By delivering what founders demonstrably want (enhanced with the addition of Dreamoro Studio where selected and needed by founders), Dreamoro will continue to attract the best founders with transformative innovations.

Although under-developed by international comparisons, the Australian ecosystem is a rapidly maturing market given its strong jurisdiction, ecosystem, public incentives, major market access, human capital intellectual property (IP) protection, risk appetite and recent ‘unicorn’ results, with more participants and exit routes available to investors than ever before. We believe there has never been a better time to invest in local start-ups at the early stage, and Dreamoro Ventures intends to move quickly and decisively to secure investments in the most promising start-ups within these sectors.?

We are supported in this view by the founders of potential portfolio companies with whom we already engage and who find our knowledge in these markets invaluable.