Fear of failure vs failure to start (part 2)

My apologies on announcing the winners of last week's Peter Farrell Cup. Official press release or announcement coming soon. In the meanwhile, I couldn't help building on the earlier blog post about fear of failure vs failure to start. It was nagging me to create this bubble chart based on the same GEM data with a few changes:

• Fear of failure and entrepreneurial intentions in the same chart as different axes
• Bubble area according to additional population data (since the GEM data is based at the individual level, not firm level) 
• Color coded by GEM's classification (Factor-driven economy: RED, Efficiency-driven economy: BLUE, Innovation-driven economy: YELLOW)

So, if one were to draw a linear regression line through the whole data set, then Australia would probably be middle of the road for the overall data. If you look at only the yellow bubbles (innovation-driven economies), then Australia tends to be towards the upper right, i.e., greater intentions to start (not bad), but higher fear of failure (not good). Does that mean that relative to the other innovation-driven economies, Australia is a country of "intentrepreneurs" or "wantrepreneurs"?

Blog posts coming up:

• Winners of the Peter Farrell Cup
• UNSW vs Australia in graduate exit surveys: Who is creating jobs (not just filling them)?

Don't forget, tonight (Wed 2 Nov) is our semi-annual Meet the Entrepreneur event, co-sponsored by E&Y. This event's theme will be State of Play - What are the myths and realities about the VC industry in Australia, how does it compare to the rest of the world, and does the quality of entrepreneurship and innovation in Australia "stack up"?

We are pleased to confirm Ernst & Young and RosesOnly as sponsors of the CIE. We would like to thank the Farrell Family Foundation and Gary Zamel for their generous donations. We also acknowlege the continuing support of the Australian School of Business. All of our sponsors help provide the means to host networking events, award prizes, and reimburse our suppliers and service providers. In exchange, these donors receive good karma and public recognition as supporters of innovation and entrepreneurship. To become a sponsor of CIE and support our community engagement activity, please contact us at cie@unsw.edu.au.

 

Fear of failure or failure to start?

There have been recent critiques about What's Killing Australian Innovation (see our commentary on a recent talk by ASB Dean Alec Cameron, and related ABC radio interview). At this week's TiECon Australia, TiE Sydney chapter president Dilip Rao commented that Australia is ranked 18th globally for having a 'fear of failure' (first being worst). Based on the GEM Global Report 2010, Australia actually shows up worse, ranked 16th out of 59 countries.While that sounds quite bad, the spread of the scores shows that Australia is nonetheless close to the average, and not that much different to, say, Germany (see figure below). The classic benchmark is the US, which is ranked 47, and still not close to being statistically significantly away from average (assuming a normal distribution).

Fear of Failure: Percentage of 18–64 age group with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business

Wait a second, but what's this other variable, called "Entrepreneurial Intention"? Well, it's defined as the "percentage of 18–64 age group (individuals involved in any stage of entrepreneurial activity excluded) who intend to start a business within three years" (p. 63 in the 2010 GEM report). Australia ranks poorly on this one as well (39/59) if you take the rankings at face value. Interestingly, the US ranks even lower than Australia here (44/59).

What the heck is going on?

My best guess, is that in some countries, entrepreneurship is not a choice, but a way of life. Almost everyone there has to hustle and bustle to feed their family. Meanwhile in the "Innovation-Driven Economies" it's an optional career choice. So, focusing on the latter, what do we see?

Well, Australia ranks 6/23 on the fear of failure measure, but still very close to average for the group (US ranks 20/23 in this group). Australia also ranks 7/23 on the entrepreneurial intention measure, again still very close to average for the group (US ranks 11 in this group, worse than Australia!).

=> Claims that Australia has a fear of failure are NOT supported by THIS data

So, what IS killing Australian Innovation? Come join the debate at the next Meet the Entrepreneur to find out!

Meet the Entrepreneur is our semi-annual speaker series which is co-sponsored and hosted by Ernst & Young at their Sydney CBD office. This professional networking event features a moderated panel discussion between industry experts on a chosen topic.  After the discussion, a Q&A session winds up the formal part of the evening. Hosted networking occurs both before and after the discussion.

This event's theme will be State of Play - What are the myths and realities about the VC industry in Australia, how does it compare to the rest of the world, and does the quality of entrepreneurship and innovation in Australia "stack up"? 

Does Australia have enough critical mass to be a world leader in innovation? Are we creative enough, do we have a big enough appetite for risk, or are we just gamblers? Come hear our panel of venture capitalists, innovators, and entrepreneurs discuss this topic guided by the expert moderation of noted journalist Valerie Khoo.

Yours truly,
The Centre for Innovation & Entrepreneurship


We are pleased to confirm Ernst & Young and RosesOnly as sponsors of the CIE. We would like to thank the Farrell Family Foundation and Gary Zamel for their generous donations. We also acknowlege the continuing support of the Australian School of Business. Their continued support helps provide the means to host networking events, award prizes, and reimburse our suppliers and service providers. In exchange, our sponsors receive good karma and public recognition as supporters of innovation and entrepreneurship. To become a sponsor of CIE and support our community engagement activity, please contact us at cie@unsw.edu.au.

Australian Angel data

Reposted from http://naoangelinvestor.wordpress.com/2010/06/17/australian-angel-investors-release-2009-data
(Link to original source not provided.)


"For the second year running, the Australian Association of Angel Investors have conducted their National Angel Survey, with the following results:

• Angels nationally invested $1.4 billion in more than 5,000 entrepreneurial companies.
• These investments fuelled 26,500 Australian jobs.
• Angel groups invested $1,166,700 in 6 new deals.
• In these Angel group deals, groups leveraged a same-round co-investment in excess of $887,800 on a collective pre-money valuation of $8,393,000.
• 54% of Angel investors in Australia are investing between $100,000 and over $500,000 a year.
• The most popular sectors for individual Angels were Biotechnology and Information Technology.
• Most Angel investors spend over 40 hours per month on their Angel investment activities.
• Formal appointments occurred in over 80% of investments with 50% being non-executive directors.
• The number of Angel investor groups in Australia has grown from three in 2006 to 12 by the end of 2009."

So what do these number mean?

It looks like individual angel investment outstrips angel group investment by 1,000:1. What this means for entrepreneurs is that pitching to a group of angels and following up one on one (and asking for referrals) is probably better than pitching to an angel group.

The other stats indicate that these angels aren't just friends and family willing to pitch in, but real high net worth individuals for whom angel investing is a serious occupation; not just sprinkling their cash around. Most of the investment appears to be from active or controlling angels, according to Bob's classification scheme (see bottom of http://www.angelforum.org/main.cfm?cid=77&nid=5858 for details).

I'd still like to know how many angels were invited to the survey, and what is their percent of population in comparison to other geographies?

NSW Government Launches 2010 Australian Innovation Festival

Reposted from an email earlier last week. Sorry about the delay. The festival has already begun!!

The 2010 Australian Innovation Festival will feature over 600 events promoting innovation across the nation, Minister for State and Regional Development Ian Macdonald said today.

Mr Macdonald said the ninth annual festival, which was launched in Sydney today, runs 26 April to 30 May and will feature more than 200 events in NSW.

For more info, see:
http://www.ausinnovation.org/articles/nsw-government-launches-2010-australain-innovation-festival.html

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Also advertised on their site are the Dupont Innovation Awards, officially opening in August 2010:
http://www.dupontinnovationawards.com

Early stage commercialization in Oz

Don't ask me why, but it seems the National Angel Capital Association (NACO) has been blogging about Australia lately. Two things they recently blogged about are:

NACO President W. Daniel Mothersill speaking at Australian Angel Summit: Feb 17-19, 2010, NACO President W. Daniel Mothersill has been invited to make a presentation at the Australian Association of Angel Investors 2010 Conference in Adelaide.

Commercialization Australia is announced: While many have bemoaned the 2008 announcement that the Commercial Ready program was going to be shut down, the Australian government has announced a new program that "assists researchers, entrepreneurs and innovative companies to convert ideas into successful commercial ventures." Looks like they've got three levels of support:

1. Skills and Knowledge: Support of up to $50,000 for specialist advice and services to help commercialise an idea. Support of up to $200,000 over two years to engage experienced executives.
2. Proof of Concept: Grants from $50,000 to $250,000 to test the commercial viability of a new product, process or service.
3. Early Stage Commercialization: Repayable grants from $250,000 to $2 million to undertake activities that enable a new product, process or service to be taken to market.

Unfortunately I don't have the time to poke around and see what the terms and conditions are on the grants, but the fact that they explicitly mention the Early Stage Commercialization ones are repayable, suggests the other ones are not (or else they would have added "repayable" to their descriptions).