The Brag Media ▼
News October 27, 2015

Feature: Australian Tech Start-Ups

Feature: Australian Tech Start-Ups

Genero TV, Kicktone, Vocalizr, Muvli, Musio, Panda Crowd… welcome to Australia’s burgeoning start-up scene, where new music-focused firms are enjoying global recognition and the fruits of hard labour. Could the multi-million dollar Aussie music tech start-up be just around the corner? TMN investigates, and finds that most of them are basing themselves in Adelaide. There must be something in the local wine.

Australia hasn’t yet produced a $1m (US dollars) tech start-up. We say US dollars; it’s the currency synonymouswith start-ups. America is famous for its dogmatic belief in start-ups. Even the UK tried to align itself with US start-up culture recently when the current government created ‘Silicon Roundabout’ – a grubby little corner in the north east end of London’s City designed, rather amusingly, to compete with the Valley.

The start-up culture in Australia, however, is a lot less visible, leading to suspicion it is a sector confined to bedrooms and home offices. A cottage industry, if you will. To say that there even exists a music tech start-up culture in Australia could be misconstruedas hopeful, at best. But, let’s take a risk that we come across overly optimistic: there is an exciting, swarming, successful music tech start-up culture in Australia and we’re going to take a punt that the $1m (US dollars) music tech start-up will emerge very soon. Probability says it’s bound to.

Australia is buzzing with new, music- centric tech start-ups. Many of them are based in Adelaide. There are reasons for that, but we’ll come to that later. For the meantime, our intro into this world came by way of Kicktone, a site that provides a platform for artists to sell and distribute their music to fans, and helps them engage a new audience. Artists upload their music directly to the platform, set the price they want to charge and when a purchase is made, Kicktone takes a 15% cut. Similar to Bandcamp, yes, but it differentiates itself from the lead player on a number of levels. Notably, it was the first very first Australian tech start-up invited to pitch its wares at the world’s biggest music industry conference, Midem.

In the latter part of 2013 Kicktone CEO Savvas Dimitriou was invited to apply for the MidemLabs pitching competition. Convinced that his company wouldn’t even be considered, Dimitriou knocked off a quick application. In early December, they received a call telling them the site had made it through to the finals. Kicktone is the only Australian start-up to have ever been accepted into the finals of Midemlab, marking a seachange in the way the world views Australian music tech companies. Kicktone didn’t win the competition, but the trip proved incredibly fruitful for the three founders who were able to use it as a research mission to meet their users in Europe, and later make adjustments to their business model. Kicktone is now a more fully- developed platform, offering artists a suite of services which even includes the production, storage and sale of merchandise.

Kicktone isn’t the only Australian music tech firm with a headline story attached to it. Genero TV runs a site which links musicians and bands with filmmakers interested in producing promos. Now in its fifth year of business, it is some way past the start-up phase but nonetheless, is still a young, fledgling company. Genero TV received its break when US musician and DJ Moby opted to use the site to find a filmmaker. Andrew Lane, co-founder and CEO, explained how this benefited the company: “We really owe a lot to the early adopters like Moby, who we generated over 300 amazing videos for just one song. It is never hard to convince other clients to tap into our community once they watch some of the videos we generate and see the quality themselves.”

Awards; celebrity endorsements: they’re great stories to slip into press releases, but hardly enough to guarantee longevity. Instead we found that most Australian music tech start-ups had the benefit of working with local incubator and accelerator programmes. Those name-checked included Blue Chilli, Start Mate, Ignition Labs and ATP Innovations. However, the one most cited, by some length, was the ANZ Innovyz programme running out of Adelaide. Perhaps explaining why the SA capital is becoming intrinsic to success in this world. The ANZ Innovyz programme is a 12-week program which adopts 10 companies, offering them free office space, tuition, mentorship, $20,000 in cash (assuming a team of three full-time members) and access to $500,000 in perks. Kicktone was one of the start-ups that went through Innovyz, which to-date has run four accelerator programmes under the direction of Program Director and Managing Director Jana Matthews – a founding team member of the Kauffman Center for Entrepreneurial Leadership and designer of the Kauffman Fellows Program in the US – and Innovyz founder and chairman Philip Vafiadis. Unfortunately neither Matthews nor Vafiadis were available for comment, preferring it seems to remain under-the-radar, but Dimitriou explained how fundamental the program has proved to their success so far: “We wouldn’t be anywhere without Innovyz,” he said. “In the 12 weeks that we were there we made more progress than we would have done in two years without it. Not just the money, but the connections, mentors, advisers. The fact we had Jana Matthews in Australia, in Adelaide is a coup. On paper it really shouldn’t have happened.”

Another company which has been able to take advantage of the Innovyz incubator is Muvli, which used the programme to develop a stunning idea for bands and artists: a platform giving the user an opportunity to create affordable, bespoke videos from pre-loaded footage designed to fit the tempo/atmosphere of the song it is paired with. Muvli combats a common platform for many artists/bands/labels: YouTube remains the most popular sharing site, but it requires a video; videos which are normally costly or too time-consuming to put together. In fact, even the highest-profile acts invest in videos for their lead singles – a problem when you are trying to promote a whole album’s worth of tracks online.

One of the site’s founders, Ben Smith, who has a background in music, explained how Innovyz came to inspire the idea for Muvli: “The program gave us access to a huge number of high-calibre mentors from around the world,” he enthused. “Through a number of intensive mentor sessions and talking to potential clients we found that the concept we came into the program with wasn’t scalable long-term and we lacked a significant point of difference. We had a hefty brainstorming session and found a need in the music industry that we could fill.”

Smith goes on to explain why he believes Adelaide is particularly fertile ground for start-ups, as though there’s something in the water (or wine, maybe). “The start-up culture in Adelaide is very alive at the moment,” he says, conveying a sense of pride. “It’s easy to integrate into the start-up scene with co- working spaces like Majoran Distillery and HubAdelaide and a whole range of avenues for start-ups to accelerate growth,” he notes. “A lot of people are working very hard to build a robust, sustainable environment for start-ups – and it’s working. I think it may be coincidence that a number of music-focussed companies have begun building businesses out of Adelaide – but it definitely helps being together in a close and accessible community.”

Indeed, not all of the start-ups have been able to throw themselves into accelerator platforms. Many of them demand a full-time staff, which is not always achievable. This doesn’t appear to present any great hurdle for a raft of Aussie companies though. Start-ups such as Panda Crowd, Vocalizr and Musio– all of which are dependent on founders who have to keep cash coming in via other full-time jobs – are still flying onto the music tech start-up radar, mainly through a can-do approach seeing them them plug into other support networks, such as co-working spaces like Majoran or The Hub in Adelaide, or via Start-Up Weekends.

Majoran was established in 2012 to provide a co-working space for start-ups and to bring Adelaide’s tech and creative communities together (there’s Adelaide cropping up again). It houses many start-ups, among them Musio and its founders. Musio calls itself the ‘inbox for the music industry’: an email client which sorts through mp3s into a personalised order of music preference. The founders, who are particularly ingratiated in EDM culture, saw an opportunity which they initially felt would appeal to DJs. They hope to roll the service out to all those working in music, particularly those in the media. Musio CEO Mal Chia holds down a full-time job while developing the new service. He explained that while he hasn’t been able to access an accelerator program, the company’s founders were able to take advantage of SA’s Start-Up Weekend last year, and even went on to win its top prize.

“A friend encouraged us to enter Start-Up Weekend here in Adelaide. It’s held in multiple locations over the world, so different cities have their own Start-Up Weekend competitions. It’s an intensive 56 hour period where you work Friday to Sunday, build a business plan, make a prototype and pitch it to investors. The winner takes home kudos, prizes, and free hours with consultants and without thinking for one minute we’d win, we did,” he enthuses. “It was great validation for us.”

Musio, like Muvli and other companies we’ll come to – Panda Crowd and Vocalizr – are bootstrapped. Kicktone, via Innovyz, has been able to pick up initial funding and is going through another fundraising round as this article goes to press, but those guys are some way down the track now. The bulk of these companies are in very early beta stage and many of the founders are reluctant – for the moment – to accept funding until the time is right.

Chia explains, “We established the company and re-organised our day jobs so that we’d get a day off a week to invest in our business. That was a year ago and we’re still working hard on it. We were adamant we wanted to bootstrap Musio. We’re aware that we need to build the minimum viable product ourselves before touching anything like Innovyz yet.”

It’s a sentiment shared by Vocalizr’s Luke Chable. Chable is already a well-known figure in the Australian music business having carved out an illustrious career on the EDM scene, both domestically and internationally. His company, inspired by his work in this area, provides a service which, for now, links musicians/producer with vocalists. On the horizon is something more far-reaching and community-building than the beta service which is currently live. Vocalizr, which already boasts more than 2000 users in 87 countries, has to-date been funded by Chable and his team. He explains: “As we only launched our beta a few months ago, we thought it best to gain traction and iron out the inner workings before we started looking for funding to accelerate our growth. We are now looking for seed, angel, or VC funding as we are certain we have a service the both parties are quite keen on, and with the roadmap we have planned we know we are in a position to really shake-up this segment of the industry.”

Vocalizr, unlike many companies we spoke to, isn’t based in Adelaide, where the start-up culture is receiving a renewed bout of attention. Chable and his team in fact moved from Melbourne to Sydney to target the industry it needs to pitch to. Back in Melbourne, Panda Crowd – a crowdfunding platform for local acts – is quietly building its audience without any financial backing. Founder Brad Lyons explains how he sees the funding situation in Australia: “The start-up world is tough. There is no shortage of competition and getting noticed has been our biggest battle. I think the community is definitely there and ready to support start- ups and people these days are more open to the idea of getting involved, but there is still that initial fear of no-one wanting to go first. We’ve been approached by some well-known artists who were definitely interested but nervous that we might not go the distance, as is the case with a lot of start-ups.”

Start-up funding in Australia, especially for music tech start-ups, isn’t in abundance. There’s certainly no pot of gold waiting at the end of a rainbow. Ben Smith’s Muvli, which has been through a fund-seeking round, remains confident but is contemplative about the situation: “There have been a few companies gaining investment in South Australia, but many fantastic businesses which haven’t. Most companies looking for serious investment will also look interstate and overseas for investment. Although there are a number of great angel investors looking at start-ups the general investment culture is more conservative. There have been a number of exciting success stories from Australian start- ups but it will take time for this to translate to investors seeking out and being comfortable investing in early stage companies.”

Smith neatly sums it up: the attitude towards start-ups in Australia is conservative. Dimitriou, who has managed to raise significant funding for Kicktone, points out the hurdles facing Australian companies: “As a start-up, you’re always looking at ways to raise finance. We’re closing tentatively $1.5m but we’re in discussions to see if we can stretch it to $4m, so we’ll see what happens in that regard. It’s a bloody hard slog. In Australia we don’t have easy access to capital like the US does. You go to America and people offer to throw money at you. In Australia investors are a lot more risk averse. There are so many things to put your money in here – if you put your money in anything, you put it in property so you can negatively gear it. There are tax incentives and various other incentives so start- ups tend to get overlooked.”

The issue of being ‘overlooked’ is something that the South Australian government is attempting to counteract, perhaps in response to the energy around start-ups that exists in its capital. It provides yet another reason why Adelaide is flying above the radar right now. Earlier this year Premier Jay Weatherill announced government’s backing of five industries by way of ‘clusters’. The music business – and its supporting infrastructure– was one of the beneficiaries, alongside more traditional sectors such as mining and healthcare. ‘Clustering’ is very fashionable right now, particularly those cities ravaged by a collapse in traditional manufacturing.

Developed at the start of this century, ‘clustering’ as a business strategy came out of Harvard and puts forward the idea that if you ‘cluster’ those companies, individuals, trade bodies operating in a particular sector that sharing research, ideas, workforce and more can benefit a city or region. A 2000 study by Professor Ian Marsh, now at the Australian National University, found that intense domestic competition and collaboration through strong industry associations created the shift from domestic focus to strong premium global brands.

The first step in Adelaide’s advancement of clustering – in the music space – was the hiring of Glastonbury booker Martin Elbourne as a ‘thinker in residence’. Elbourne produced a research paper earlier this year, advising Adelaide and SA on how to grow its music industry. Although Elbourne didn’t include the idea of ‘clustering’ in his paper, many of its recommendations could be enacted through its adoption. Simultaneously, peak body Music SA general manager David Grice had been working in the city’s music business for more than two decades and understood at a very deep level its workings. Cut to September this year and Grice has been appointed the CEO of SA’s first music body to affect a ‘clustering’ change: Musictec. He explains what the association plans to do over the course of the next six months: “Musitec will be building a strong network of industry professionals and a thorough understanding of who is doing what, where they are doing it, their reach, and who they are doing it with. From this we will be able to draw a map of the skillsets within the industry and work out the best strategic connections to build new business opportunities.” Grice also recognises how central technology isto the future of the local business: “Now more than ever the music industry needs to embrace technology and work out how to use it to generate income, as the traditional income streams for artists have changed so much over the past decade. Our government and councils are working together to make Adelaide a fertile place of opportunity, and have a desire to build ground-breaking businesses with worldwide markets.”

It’s worth keeping tabs on these start-ups, particularly those in Adelaide. Their commitment and dedication is infectious and that level of ‘buzz’ (much like the ‘buzz’ around an unsigned act which has often set many a town alight) isn’t something which will die overnight. At the risk of sounding overblown…

This article is taken from the November issue of the Australian Music Business Review.If you'd like a hardcopy of themagazine pleasecontact us.

Jobs

Powered by
Looking to hire? List your vacancy today!

Related articles