Join Australia's most dynamic and respected property investment community

Investing in APP's development start-up's..

Discussion in 'Living Room' started by willair, 15th Dec, 2015.

  1. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,716
    Location:
    Brisbane..
    I had a letter come in the other day from a small unlisted qld based company that works on future ideas in development in that area,simple letter with my name on the start,they need several investors
    with 20k,to take their idea which they already have contracts within the qld government to a different level only 40 investors needed,i know nothing about programming or algorithms,but what got me was the youth tech savvy three people that have worked on this new idea ,and just the way the start up speech went.,,.quote ..i'm not here to sell you anything,nor too entertain you,but what i'm about to tell you and the five year plan from our small company may scare you..

    So the question is has anyone looked into something like this ,invested and how did it go?..
     
  2. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra
    If they are soliciting funds through cold snail mail letters then they probably aren't worth investing in. It may well mean that they haven't been able to raise money through more traditional means- and there are ways to invest and to receive investment. The earlier in the development cycle you get, the higher the stake in the company you are investing in.

    There may be a few companies seeking funds for the next six months. Last week's announcement about tax incentives for startups may mean that people will be waiting until July to invest. Investing in the appropriate way will get the investor a 20% tax rebate (not deduction).

    I've been working for six months in a promising startup. You will do much better to invest in my company haha.
     
  3. Bullion Baron

    Bullion Baron Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    593
    Location:
    Adelaide, Australia
    Did they provide detailed information about the contracts and revenue they will bring in? Ongoing costs or other financials?

    I am in the process of having a webapp (web based, responsive for mobile devices) developed, but by the sounds of it will be quite a bit simpler/smaller (cost to develop ours will run circa $15k).

    How did it go? Ask me in around 8 months :)

    If I received a letter like that willair I would take a closer look as tech/apps interests me.

    Something to consider though is that governments will be looking to reign in budgets in future years, especially those affected by the mining downturn and revenues, how critical is this app to their operation? Is it a money saver for them or a luxury?
     
  4. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,716
    Location:
    Brisbane..
    Thanks Geoff,as i said i know nothing about this type of investment,and i don,t even know about how they got my home street number,but i just found it interesting if as we go into a cash less world what they were talking about was something that may work,thanks Geoff..
     
  5. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,716
    Location:
    Brisbane..
    Yes they did but not too detailed just basic overlays and most i don't understand,told the wife and she just looked and said how did your last investment in BHP work out,thanks for the help..
     
    Bran likes this.
  6. Be Developer

    Be Developer Property Developer Business Member

    Joined:
    19th Jun, 2015
    Posts:
    1,078
    Location:
    Australia
    Investing in Start up App venture is long shot IMHO!

    May be ask for their track record, check owners skills and past experiences!
     
  7. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra
    Failure rate is 90-95%.

    When I was in Colombia I was working in a coworking space sponsored by a US invesment group. They nurtured as well as invested in startups, and there were quite a few working in the same space.

    Although the failure rate is high, and a majority of those who succeed don't make a huge profit, there are a very small minority which make a huge profit.

    The track record for the group is about $3 return for every $1 invested.
     
    willair and Be Developer like this.
  8. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,716
    Location:
    Brisbane..
    Thanks for that,no one on the night talked about those numbers 90-95% that's a very high range to be on the wrong side of the fence and the wrong ideas,which they think may work
    and i'm told there is a lot of this going on in the Gold Coast area also..
     
  9. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,222
    Location:
    At work
    Can you flick me through the letter if you aren't interested? I have no knowledge, but I know people that might be able to look at it critically
    Cashless is coming (although its already here isn't it? I never see real money anymore. All just numbers on screens).
     
  10. willair

    willair Well-Known Member Premium Member

    Joined:
    19th Jun, 2015
    Posts:
    1,716
    Location:
    Brisbane..
    Still having a think about it,if they think as the world becomes more complicated and younger people want more simplification in there life ,then the simple ideas they have may work,but after looking at the numbers Geoff put up ,and looking at Einstein's quote on my wall..
    What sounds intelligent in a conservation or a meeting,or,particular y,in the media,is suspicious.
     
    Bran likes this.
  11. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,148
    Location:
    Perth
    I dont know if the failure rate is as high as 90% but it's definitely significant. I've invested in 2, one public unlisted and one listed. The latter went very well but has now tanked. The former is going great guns, theyre going public on asx in March and in the last 18 months revenue has gone from usd 2/5k a day to 75-105k a day. When you add in the AUD depreciation youre talking an even bigger figure.

    It has it's risks for sure but when it pays off boy can it pay off. Eg, there's every chance that by the time the company lists it's run rate (annualised turnover) will be greater than the last valuation we bought in on just recently, if anyone is familiar with listed tech companies even looking at it conservatively that's a pretty significant gain.

    Ultimately though until the shares are listed, profit taken and money is in my pocket it's all theory.
     
    Bran likes this.
  12. Bran

    Bran Well-Known Member

    Joined:
    20th Jun, 2015
    Posts:
    3,222
    Location:
    At work
    How do you find them Sanj?
     
  13. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra
    My quoted failure rate includes a whole heap of startups which never get to the first stage. Companies which Willair and Sanj are talking about have already undertaken quite a few hurdles, probably including that most difficult stage, fundraising. Many have collapsed before getting to that stage, or have not been able to get enough funds from astute investors to grow further. I don't know the failure or success rate at various stages along the way- Sanj has found a 50% success rate, although a sample of two is obviously not statistically significant.
     
  14. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,148
    Location:
    Perth
    definitely not saying my results are indicative of anything, far too small an example. also, with the other one a fair few people made 10-20x their money so not a failure if people exited.

    if youre including investing right from early foundation/seed level then i agree, would be higher
     
  15. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,148
    Location:
    Perth
    networks/contacts. this is why im constantly saying i disagree strongly with the approach so many seem to advocate of never talking about investing or what youre up to with friends or family, i wouldnt have those opportunities and they wouldnt have had some of the opportunities/successes ive presented if we all had that insular approach.

    actually forgot another 2. 1 was a biotech company IX biopharma. they IPO'd in singapore earlier this year. We invested about 2/3 years ago when there had been some progress and a bit more of a clear direction. those who took the big risks right at the start invested at an even lower level, some have made really high returns. so far we've done really well from this and im expecting some big things from here.

    2. stupidly invested in a resources idea based on the person involved being pretty well connected and someone i knew. didnt do the appropriate DD, lost 100% of investment. i now am a fair bit more thorough in the DD. In all the 3 companies listed above i met with senior management (all the CEOs) and some key personnel and only after believing in not just the idea but in the fact that they had the potential to execute did i say yes.


    a great idea even combined with great personnel can still go south, it really does require a lot to go right for it to work.
     
    Last edited: 16th Dec, 2015
  16. geoffw

    geoffw Moderator Staff Member

    Joined:
    15th Jun, 2015
    Posts:
    2,151
    Location:
    Canberra
    But Sanj- you have to have friends and family who are interested in investing, not just people who want to take you down.

    OK, you can choose friends but ...
     
  17. sanj

    sanj Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    2,148
    Location:
    Perth

    exactly.

    also, im not saying u speak to absolutely all your friends and i would never pick friends based on $$.

    it could just be an acquaintance you meet at a party, if appropriate just be open about what u do or your interests, you never know where it might go. i did that once with someone, we clicked and now we're working on 2 new ideas together that i think have legs. he was the friend of a friend of a friend when we first met.

    someone i know caught up with another friend of his while on holiday in asia, that friend has his cousin or something with him. they ended up both being interested in similar fields, i think that cousin's boss invested 500k or so in something my friend was involved in and they've both done really well from it. again, not possible by taking the approach so many advocate. there is no need to shout anything from the rooftops or be brash or anything like that and certainly choose your time and place but i strongly disagree with so many people insisting on closing themselves off.

    the whole "im keeping my mouth shut" thing costs people a hell of a lot imo.