No deal flow in WA? There’s plenty if you look

Some people say there’s no deal flow in Western Australia. Or that the deals in WA are bad deals, otherwise they’d get funded.

It’s a common enough view, but I believe – in all humility – is totally wrong. And quite a bit insulting.

What we’re talking about here is the early-stage innovative sector. Tech startups and the like.

Low investment. True.

It is true that there is a woefully low rate of capital investment in the sector in Western Australia, compared to other states, and countries.


  • $11B is invested annually into WA-based companies, but only 0.4% of this ends up being invested into private early-stage companies. 0.4%!
  • WA invests one quarter to one fifth per capita into the sector compared to Victoria and NSW respectively
  • Only 1.5% of Australia’s venture industry resides in WA, despite WA representing 15% of the national economy, and 11% of its population

These are shocking statistics, borne of a state that has grown fat (and maybe a bit lazy?) on mining and property. Investors have made money from mining and property, and so that’s where they tend to invest. It’s a self-fulfilling cycle.

Don’t get me wrong. There’s nothing wrong with mining and property. Great, solid industries. Except the former has links to climate change, and they both tend to boom and bust. They can enjoy upswings, as now, but these are always followed by longer downturns. (When we then wish… why didn’t we diversify more?‘)

To remove this boom-bust curse, we should (of course) be developing new industries. And one such sector of promise is the early-stage tech sector.

We tend to import our tech. Most of the digital services we use are from overseas companies, who are mightily cashed up, are gladly eating away at our industries, yet pay little tax and employ relatively few locals.

Think Google, Facebook/Meta, Amazon, Netflix, Spotify, Youtube, AirBnB, Uber… I use them all, but where are the local tech companies (beyond Atlassian and Canva)?

No dealflow? False.

Which brings us back to early-stage capital in local tech companies.

Apparently, so the belief goes, there’s no deal flow in WA. Well, I would like to dispute that, and here is my evidence…

  1. I have a list of nearly 500 local startups, and I don’t claim to know every single startup that may exist in the State. The startups I know have a product, founders, and are plying a new path, and most are winning customers, gaining revenue, and employing (in some cases tens of) people. Are these all “bad deals”? By sheer weight of numbers, there will be some great deals here.
  2. In a quiet market (as shown above) for early-stage funding, local founders are price takers. For investors, this is precisely what you want to hear (!), as you are not clambering over competitors trying to get in. You have the lay of the land to yourself. Ideal! Founders bemoan the prices of their companies in WA. Ergo, there has to be some great deals in WA.
  3. Just because fewer deals are being done, does not mean the deal flow is bad. It means there are less people investing, as they are more used to investing in mining, property and other stuff. They aren’t used to investing in tech, so they don’t. They don’t know how to value it, how to add value to it, how to advise it, as they’ve not done it. That’s not the founders’ fault!
  4. Anyone saying ‘there’s no dealflow in WA’ is simply not looking hard enough. In fact, they’re probably not looking at all. They are waiting for stuff to fall in their lap. Life’s not like that. You have to search, analyse, listen, consider, advise, and yes, you’ll say no to many, many more than you invest in, but there will be good deals there. If you do the work.
  5. You also have to see the wood for the trees. Anyone can criticise any early-stage business. By their very nature, things are uncertain. You can pull apart any deal, and give an excuse not to invest. I’m sick of attending pitch nights, where all the so-called investors show off to each other picking holes in each presentation. (Who’s doing the screening, by the way?) If you are fair dinkum, you will find founders you can work with, who have got something, where you can add value. Don’t be ‘that jerk’ at pitch nights.
  6. You have to be patient. Good deals show themselves over time, and can take 5 to 7 years to bear fruit, if at all. By their very nature, startups are developing a new business model, a new service, a new market. It’s high risk. If they get it right, they can scale like nobody’s business, but that will take time. Being early feels a lot like being wrong. You need to have wisdom and coolness to spot the difference.
  7. You need to work at it. That’s the gig. Some founders will need nurturing, and you can add some real value. Most of the time, you will stay out of the way, but when required, you’ll be pulled in to help. Keep in touch, keep the founders accountable, we’re all in this together. Spot trends and back them. That’s your job.
  8. Spread your bets. Some (real) angels in Australia suggest that you need to invest in 50 to have good enough exposure in this asset class. One or two angel investments is not going to cut it. If you’re serious, you need volume in order to hit some crackerjacks. Your job is to move them to scalable revenue where the business feeds itself, and/or help them to the next round of funding, where they inject rocket fuel for rapid growth. Or, they fail fast, and you recycle your remaining investment and attention for other deals.
  9. A few years ago, I worked on the Accelerating Commercialisation program, a federal government startup fund. I took 9 deals to Canberra for funding. Of these, two-thirds duly won investment (worth a collective $5M of fresh funding). One of these now turns over $3M a month and employs 70 people. No deal flow in WA, eh?
  10. I have seen hundreds and hundreds of early-stage ventures in WA. I’ve invested in a few. They are all early stage, and I would like to invest in more, over time. I invite you to join me, and others. We need more of you, as do the founders. The opportunities in WA are boundless.

I doubt anyone touting the ‘no deal flow in WA’ argument has been a founder themselves. It tells me more about them, than the early-stage innovative sector in this state.

Oh, let’s explode another myth while we’re at it: that ‘good deals always get funded’. I’ve seen many bad companies get funded, and despite loads of money, go under. I’ve seen great founders with great products flounder for funding, due to a lack of early-stage investor appetite in this (otherwise great) state. They then either give up, go back to their day job, or move away. Either way, the state loses.

To be clear, while championing startups and the like, I’m not talking about a ‘spray and pray’ approach. I’m arguing for an analytical method, over time, building up a significant portfolio. Done with the right mindset, it can be a lot of fun, and you can learn a lot, and give a lot, along the way. And you’ll enjoy all kinds of returns.

Plus, thanks to the 2016 (‘ESIC’) tax changes, you may be able to claim a 20% tax rebate on your investment and a 10-year capital gains exemption (with no ceiling!).

So, what’s stopping you? There are plenty of great deals out there, despite what the naysayers say. Go find them. It’s an asset class you should be in. It’s the future.

About the author

20+ years in Perth’s business, tech, media and startup sectors, from founder through to exit, as CEO, mentor, advisor / investor, and in federal and state government. Originally an economics teacher from the UK, working in Singapore before arriving in Perth in 1997 to do an MBA at UWA. Graduating as top student in 1999, Charlie co-founded, running it for 10+ years before selling to REIWA, to run In 2013, moved to Business News, became CEO, then worked on the Australian government’s Accelerating Commercialisation program. In 2021, helped set up and launch The Property Tribune, and was awarded the Pearcey WA Entrepreneur of the Year (at the 30th Incite Awards). In 2022, he became Director Innovation, running the 'New Industries Fund' at the Department of Jobs, Tourism, Science and Innovation (JTSI).

Related Posts

Leave a Reply