But Martin Hosking, managing director of RedBubble, stressed the need for a strong business model if a company is to attract investors. He pointed to the recently launched Color.com (a new-generation photo sharing facility), which he said needed rapid and massive uptake to become a success. Acquiring the color.com and colour.com domain names cost the company $500,000, he claimed.
Although Color.com raised $41 million from venture capital funds, "You can't do that in Australia," said Hosking, Instead, you need a clear business plan, a strong customer proposition, and the ability to scale the business and pick up investment as you grow: "a clear, steady path to growth" rather than requiring "a monumental step change" along the way.
A growing amount of investment money is becoming available in Australia, he said, and some investors are prepared to move a portion of their funds into more risky areas - ie. to become angel investors.
David Jones, founder and advisor at ThreatMetrix, believes the old model of identifying a market, creating a product and then building a team to make it a reality (as well as the more recent variant of putting together a proven team to identify a market opportunity and then create a product to address it) is no longer the route to funding.
And a good relationship with one or more angels who then are prepared to put in some money provides "social proof" for others. If you can attract at least one big name in the angel community, a "herd mentality" kicks in and others are likely to follow that lead.
Jones also noted the existence of local groups of angels that are prepared to help early stage businesses. While giving up 7% of the equity for a $25,000 investment might seem like a lot, he suggested it can be good value for companies that value the networking component that such an arrangement brings.
But he warned that while some businesses can use the local market as a springboard to overseas growth, if your market is predominantly overseas, that's probably where you need to be. Another advantage of moving the company's base overseas - or at least establishing a significant presence there - is that it makes it easier to obtain investment in that country. Furthermore, "you don't have to go back to the same well if you're overseas" (ie, there are more potential investors in the US than there are in Australia).
The fourth and final speaker on the panel was Adrian Vanzyl, general partner at AdVenture Capital and VTO of Blumberg Capital. He believes there has been a "profound shift" in the venture capital industry in the US and Australia as a result of the emergence of 'capital efficient startups'.
Such companies no longer need big budgets for hardware and software in order to get off the ground. They can use highly scalable, pay-as-you-use hosting services such as Amazon to run open source platforms instead of shelling out for their own servers and licences for proprietary software from companies such as Oracle.
Together, this allows companies to make money from Day 1, he suggested, and eCommerce and advertising revenue have supplanted eyeballs as a measure of success. Vanzyl said this shows "we are not in a bubble" because tech companies have revenue to support their valuations.
But the changed environment can lead to a problem when it comes to finding investors, as it may put a business into the "valley of death" between the traditional realms of angel and venture capital funding.
Fortunately, that gap is being filled, in part by the rise of the 'super angel' in the US (the high profile investment leaders that are followed by their peers, as pointed out by Jones).
In Australia, angels and groups of angels may invest up to a few hundred thousand dollars. There are also seed stage investors and incubators such as StartMate and PushStart. Vanzyl also noted the emergence of early stage venture capital funds that have actually invested amounts in the $1-2 million range.