Music courtesy of BlackIrisFilms.com

INTRO

Hey, folks, Andy here. Welcome to episode two of Unleashed with the Dacxi Chain, the podcast that features experts both from within Dacxi and from across the industry. Experts are here to share their insights on the developments that are shaping the global crowdfunding economy, tech startups, and all that good stuff. Today we have a very special guest. His name is Colin Klein. Colin is the co-founder and Chief Strategy Officer at Scalerr, which I think is an Aussie company it helps high-growth technology startups and scale-ups. And I think Colin’s role at Scalerr is to really help tech startups scale their businesses in new international markets. Very excited to have you here, Colin. Welcome to the show.

GUEST INTRO

Andy. Honestly, thank you so much for having me on the show. Massive fan of what Dacxi does. I know that I’ve spoken to the team at length about this and am just thrilled to be able to do this, thrilled to be able to add some value. And I’ll elaborate on how all of this ties in. So my background, I actually used to be an accountant once upon a time and then I ended up transitioning into tech recruitment. So I have owned the business now for nine years and for a good seven to eight of those years, we just had a recruitment business and we solely focused on working with tech startups. Now, in 2020, I asked myself a question that very much changed the entire trajectory of the business and, quite frankly, the trajectory of my entire career. And that is, why do international tech startups from Israel, America, the United Kingdom, and wherever it is, why do they approach me for help to find them a managing director of Asia Pacific, head of sales for Australia and New Zealand, salesperson or country manager in South Korea? And it was upon digging into it and asking that question, I guess it really opened up my entire perspective into the world of valuations, investments and what are some of the underlying needs. Effectively the reason why global businesses were asking for my help to help them expand into Asia Pacific and why Australian companies are asking for my help to help them expand into the UK and the US is whenever a tech company can go to another country, can pick up a couple of customers in that country. It now shows that this is a globally scalable business model. So they have clients in, let’s say, Israel, and now they have clients in Australia. It shows that there’s a much larger market size. It shows the complete division of the founders. It shows that this is a globally replicable business. And effectively that grows the valuation of the company in the eyes of investors. So for the past nine years, I’ve effectively been helping companies to tech startups to grow their valuation. I just happen to be delivering it through the model of recruitment. Upon this realization, and having worked with a large number of Nasdaq-listed companies, and a large number of pre-IPO companies, I realized that a lot of the work which I am doing directly influences the success and valuation, and growth of a business. Like, as example, Wix is a client of mine. I’ve helped Wix, which is Nasdaqlisted, to land and expand in Australia, Mexico, Brazil, India, France, and Japan. And these are new global markets, all of them appearing on their balance sheet. It’s effectively one of the reasons why Wix has actually held up relatively well in the current downturn within tech because they’re a globally scaling business. So we diversify our business model. We ourselves started looking at early-stage investments. I’ve now invested in three companies, and these are businesses where I can come on board as a smart investor. And I know how they can enter global markets, how they should run their channel and alliances strategy, how they need to do a go-to-market strategy, how they need to evaluate, I suppose, what grants and incentives are available to launch in a new market. So, effectively, we’ve created the business scaler because our focus really is on working with that early to mid-stage tech companies and scaling the business and scaling the valuation of the company. So that is my full three-minute sales pitch.

ANDY’S COMMENTS

I love it. Fantastic. You’re just the right man for me to talk to today then, Colin. And I suppose the goal, if you like, of the Dacxi Chain is to create the world’s leading global crowdfunding ecosystem. That’s what it’s all about. That is where we’re heading. So I’d love to pick your brain, if that’s okay, Colin, and just kind of get a vibe, some insights from yourself. Maybe we can start off with in terms of Australia because that’s where you’re based. So how would you describe the state of the early-stage funding market in Australia at the moment?

COLIN’S COMMENTS

Yeah, I’ll generalize it, and then I’ll make it a little bit more specific. Sure. The state of the funding market in Australia is quite underdeveloped per capita, or I guess per capita in the top 30 countries by GDP. We are actually one of the lowest in terms of people, just regular people like yourself and myself investing in early-stage tech startups. So Israel and Sweden are the top two. Singapore is actually quite high up there as well. But Australia is quite far off the mark because a lot of people just simply don’t know how to do this and it’s kind of been exclusive to VC firms and family offices or people that have connections. Now there are a couple of areas that buck that trend. In Australia, prop tech. We actually have one of the highest concentrations of prop techs, med techs, and of fintech and Payments Tech in the world. And because of the network effect of let’s just say domain or a realestate.com dot au or a Sikhin the world say HR Tech or an Afterpay and Zip, it’s created quite a few people that have come up with us through those systems which know how to evaluate what a good startup looks like. So in some of those sectors, the state of early-stage funding is actually okay. But in general, within tech, we are somewhat lagging behind because it’s prohibitive. People need to know people. It’s quite illiquid. So I know that it’s growing and it’s changing but there still is quite a long way to go in Australia in my opinion.

ANDY’S COMMENTS

And what would you say? Do you have some advice that you would give to early-stage businesses that are just reaching that stage where they want to seek to find some capital, they want to get some new funding? What advice would you give them at the moment? 

COLIN’S COMMENTS

The advice that I would give them is if you want to grow and scale your business, success leaves clues. Many of the world’s most successful tech companies have gone out to seek venture capital funding. Now, I think it’s very, very valuable because you will now get given the resources that can push your business into the next stage. Let’s just say with a $5 million rejection you can now go ahead to hire a head of sales and performance marketing team, and a channel, and alliances partnerships manager so you can take that 5 million and you can see tangible growth within your monthly recurring revenue. So I think it’s really vital that businesses do it. The advice that I would give is that a lot of businesses are really desperate to get capital without realizing that not every single venture capitalist is the right answer for their business. A lot of the times they will partner with VCs which don’t really add value and my biggest recommendation is a partner with VCs that can help to grow and scale your business so that they can offer something different. So, for example, a VC that has also worked with similar types of companies can appoint somebody to the board of directors within your business who can coach and mentor and lead them. Or a VC that happens to know recruitment. So then they know who are the people that you need to be putting in place, exactly how much that’s going to cost, and where to be able to get that from. Or, say, a VC, which is exceptional in PR and marketing. So if they’ve invested in you, they know how to get you published in the Financial Review or various publications like Tech Crunch Tech in Asia. And of course, the other one is VCs that don’t take dilutive equity. Instead, they can do something like debt financing but provide you with the money that will really help to kick you into that next stage, like get you that key highlight ahead of sales or an enterprise account executive that can really take your business to the next level. That is the advice that I would give to businesses that are seeking capital. It needs to be a good fit and you need to partner with someone that’s going to add value to you genuinely.

ANDY’S COMMENTS

Yes, I think that’s really good advice, Colin. And it is interesting that you talk about, I suppose almost like, the pros and cons of VC investing, right? Because yeah, I mean it’s great if you can get some venture capital, but they really can come with what can be a double, double-edged sword. So VC funding, it’s not always in the best interest of early-stage companies, right?

COLIN’S COMMENTS

Correct, I agree with that 100%. A company has to remember when you go for VC funding, there have been cases where a company gives away so much of its equity that the founders of the business are no longer in control of the business and can effectively get pushed out of the business. Now, sometimes that may end up doing well because sometimes the founder is actually holding it up and they are better off stepping into a different type of position. It’s just one of those things to be mindful of, that the more that you are giving away, you need to understand that you are very much going to be beholden to the VC and if the VC is not adding something extra to you, it ends up being quite a stressful situation.And I think the founders need to consider this.

ANDY’S COMMENTS

Yeah, very much. But of course, the flip side is this funding gap. So here at Dacxi, we’re very much aware that there’s a funding gap, particularly with these kinds of early-stage businesses. Interested in your thoughts, Colin, in terms of any problems that you typically see that businesses can struggle with if they have insufficient funding at that early stage. And any thoughts on roughly what percentage of those businesses that are looking for that funding at that early stage? How many do you think are able to successfully access that funding, that capital versus those that unfortunately cannot?

COLIN’S COMMENTS

Sure. So I beread about that question in a couple of different ways. So let’s just say it’s a completely early staged business that has obtained no funding. And I know quite a few businesses like this where they could only bootstrap it for so long, but at some stage, they’re going to need to invest in a key hire. And that can be an operations manager that already has the startup experience within your sector, or a sales leader, or managing director, whatever it is, but someone who genuinely already comes with the experience in growing a startup within your sector because they can take you to the next level. The other one that I’ve seen is companies that have raised the capital, but it’s actually not enough to see it through to fruition to be able to take the company from A to B. And I’ve seen businesses where excellent they’ve gone on, they’ve raised $2 million, but what they actually needed is to raise something like $4 million. And it leaves them in a state of limbo where they have raised the capital. And typically when you raise it, you invest in things like marketing, hiring, etc, etc. So they now have been able to develop their product, but they’ve made a mistake where they’ve overspent on talent and hired people from Amazon and Microsoft as opposed to looking at people who have got the startup experience, and now they’re out of cash and now they’ve got a product, but they don’t have anybody to sell it. And it’s one of those mistakes that can be quite easily avoided if a business actually seeks advice on, right, what is the amount of money that we’re looking for? And specifically, what is it that we’re going to invest it into? And genuinely getting good advice in terms of how much is all of that going to cost? Because it’s when companies make the mistake of either overspending on hires or underestimating how much particular talent or expansion will cost, that when they fall short, that’s when they need to give away even more equity, or that’s honestly where a lot of companies can just crash and burn and go under because they haven’t thought of that. It’s something that businesses really need to consider. And I strongly suggest actually getting professional advice to avoid that situation.

ANDY’S COMMENTS

Yes, indeed, that is great advice, as always.Get professional advice, listeners. Another problem, Colin, is just the limited number of investors. How many investors are there in the available pool, if you like? And one of the reasons for that is, of course, the infamous accredited investor rule. This is obviously very different depending on what country you might live in around the world. But generally speaking, do you think the accredited investor rules stifle innovation because they restrict the number of potential investors?

COLIN’S COMMENTS

I think so. The reason why, as I was saying at the start of this, the ecosystem of investment in Australia is growing. The ecosystem of tech in Australia is growing. I think 15 years ago we didn’t have a unicorn and then, it’s kind of like the exponential growth curve. Then came the Atlassian, then the Canvas, then the Afterpay. So it really, really starts to grow and to accelerate. But the fact is, these businesses, Mr. YAMMERS, another one, have had to go overseas to get their massive capital raises. The reason they’ve had to go overseas to get the massive cap raises is we don’t necessarily have the experience in Australia of let’s give a business 100 million or 200 million to really ramp up its growth. We don’t do sizes like that, but because we don’t do that. We don’t have the experience of VCs that knows how to just rapidly scale and make a business super, super successful. You find those types of VCs in places like Israel and America, as well as Singapore, and London, you have quite a few. But then we have our laws, which restrict the world’s smartest VCs that have a proven track record and rapidly scaling businesses. It restricts them from getting access to them because of some of the laws that you were speaking about. So I do think that they actually stifle innovation. I understand the reason that they’re there, but I think that if we are to be serious about being a tech powerhouse and really growing in this particular space, I think that there are changes that can be brought to encourage more investment and to get expertise from abroad to create something like World and Israel has.

ANDY’S COMMENTS

Yes, indeed, Colin. And look, if we zoom out for a second and kind of speak about this more generally, let’s say hypothetically if we had a world where there were like exponentially more successful early-stage businesses, what would your thoughts be on what would that world look like? What would be the benefits in that world? How would it help the economy? Would it be a better world to live in?

COLIN’S COMMENTS

Yeah. So the thing is, innovation solves problems. Innovation solves problems across a number of different industries. I look at Israel as an example just because it’s a sector that I’ve done quite a lot of work in because they need to very much innovate because of the circumstances that the country is in. It creates some incredible solutions that really change much of the world that we operate in. They’ve had some of the most amazing breakthroughs in medical science and biomedical technology. Just crazy advancements, like 3D printing of, let’s just say a tooth, for example. Incredible advancements in terms of agriculture and agritech. So they have a device that you can take out into the ocean water. It filters the water and now it’s drinkable. They were able to make, effectively, plants grow within the middle of the desert through a deep vein technology, AG tech, as well as they also created a combination between a solar panel and a wind turbine so that it’s constantly getting energy. Now, innovation solves problems. And incredible businesses, as an example, in America, there was a lady which was actually close to creating a treatment that attacks coronaviruses of any kind. So not just COVID-19 or something special, but of any kind. But she wasn’t actually able to get it through and get the funding and get stifled. The more entrepreneurship that is encouraged, the more that people can identify a particular problem in the world and be able to create a solution for it. But then if they actually knew how to commercialize and grow and scale and obtain the funding for their solution, it would be incredible for the economy, and Australia would turn into a powerhouse. We could do something like what Israel or San Francisco has, but we have so many successful tech startups that are growing, that are going abroad, solving genuine problems within the world. So we could diversify our economy, let’s just sayin’ Melbourne, away from heavily focusing on education or professional services, or to be able to diversify it away from the reliance upon mining oil and gas. And the thing is, we know this as a matter of fact because there are other countries in the world that are doing this. Like, if you look at a place like India, they’ve done this historically, Chennai was pretty much famous solely for medicine. And then they started creating this entire innovation hub just that’s, creating unicorns. Indonesia has had exactly the same benefit. They’ve created five of the biggest e-commerce unicorns in the world. And what that means is that there’s now an entirely new ecosystem spawning other entrepreneurs that are rapidly dragging up the economy. But you also look on the flip side, where there’s no entrepreneurship happening and there are no tech stops getting created. In a place like Japan, where culturally there is so much honor associated with staying with one of the big companies like a Mitsubishi or a Panasonic for 22 to 30 years, people aren’t going down to starting startups, and their economy and their GDP, their stock market has effectively been flat for 30 years. So entrepreneurship solves issues, entrepreneurship creates jobs, and entrepreneurship is creating the jobs of the future, the technologies of the future, and it’s enhancing the entire human experience. That is why it’s so crucial to do, in my opinion.

ANDY’S COMMENTS

Yes indeed. I love it. Very exciting stuff. Colin, thank you so much for that. Yeah, I mean, and that really is what the Dacxi Chain is all about. Unleashing that global innovation for the bitterness of everyone, the bitterness of the planet. Let’s start to finish off. Colin, it’s been fantastic talking to you today. You’re based in Melbourne, so you’ve been hanging out with some of the local Aussie Dacxi crew as I understand it.

COLIN’S COMMENTS

Yeah, I have. So I’m based in Melbourne, and I’ve lived in Singapore. I’m heading back up to Singapore in a couple of months’ time as well, but I’ve kind of lived right across Australia, so yeah, absolutely hanging out with the local Dacxi crew. And I just wanted to say I am a huge fan of what Dacxi is trying to do. I think it’s amazing for a number of reasons. Number one, the solution that you guys have thought of as a way to solve some challenges, like liquidity problems or having to rely upon people who you have to know somebody to be able to get into this sector, it also opens up investments that can potentially be life-changing. It’s been quite well known that some of the greatest investments or the greatest multipliers are unlisted investments. If people think of Facebook as this incredible business that’s made so many people so much money, what they don’t realize is that the companies like Facebook and Twitter, something like 90 plus percent of the wealth that was generated, but that was created from the investment in that company was actually done when they were pre IPO. It was the early-stage investors in the business. Only 10% of the wealth that was generated is after the company was publicly listed. But it’s nearly impossible to be able to get into the early stage unless you know people because of the liquidity issues. And I just think that Dacxi is not only allowing people to invest in incredible businesses from right across the world, but it’s also bringing an entirely new audience that’s got a genuine interest that can genuinely add value and be able to access incredible investments. I am a huge believer in what you guys are doing and I’m really looking forward to seeing the growth and scale of the company. I think that it’s absolutely needed the innovation that you guys have come up with.

ANDY’S FINAL COMMENTS

Brilliantly said. Colin, again, thank you so much. Really enjoyed hearing your perspectives both on Dacxi and on early-stage investing around the world and of course, in Australia. Hey, as I said, Colin, fantastic to talk to you. All right, well, there you go, team. How good was that? That was Colin Klein, of course, the co-founder and Chief Strategy Officer at Scalerr, which is an Aussie company as we learned. Yeah, helping high-growth tech startups to scale up, is simple as that. Fascinating to hear Colin talk and of course, great to learn that Colin is very much up to date with what is happening with Dacxi and is obviously spending time on the ground in Australia with some of the Dacxi team.So fantastic to hear Colin’s belief in the Dacxi project and what the Dacxi Chain is trying to achieve. And really that’s what this podcast is all about. We’re just slowly building the narrative around the Dacxi Chain, what it is to create the world’s leading global crowdfunding ecosystem, solving problems both for early-stage businesses and of course, for investors, and connecting innovators and investors all around the world, empowering everyone to bring their best creative ideas to life. And it all comes back to encouraging innovation, which is one of the key takeaways I took from Colin today.

Anyway, I do hope you enjoyed that. That was episode two of the Dacxi Chain podcast: Unleashed with the Dacxi Chain. Hey, if you enjoyed the show, please do us a favor. Please make sure you subscribe to the podcast. The easiest way to do that is probably just to listen in either Spotify or Apple podcasts. Those are the two main platforms, but there are others where the podcast is. Wherever you’re listening today, just press the subscribe button. And also, I would really appreciate it if you could give us a rating. Five stars would be great. That’ll help. All right, team, that is today’s episode. We’ll be back real soon with episode three.