Alfred Lo is co-founder and Chief Commercial Officer at Harvest B, a tech startup developing a plant-based meat ingredient system. Previously Chief Investment Officer at Cicada Innovations, an incubator for Australian tech startups, Alfred has more than a decade experience acting as an advisor, mentor and board member for many early-stage technology businesses. In his conversation with Adam, Alfred discusses how Australia’s startup ecosystem compares to other nations, and why he believes “What role should government play in the startup ecosystem?” is a tricky question to answer.
Harvest B: https://harvestb.io/Cicada Innovations: https://www.cicadainnovations.com/
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Alfred Lo: Thank you, T-E-A-M-I-F-I-E-D, and get started today. Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development, but a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you, NTP, for helping us bring helpful content to founders and the startup community in Australia. Back to the interview. Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development, but a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you, NTP, for helping us bring helpful content to founders and the startup community in Australia. Back to the interview.
Speaker C: Hi, I'm Adam Spencer and welcome to Day One, the podcast that spotlights Australian startups, founders, and the organizations that empower Australian entrepreneurship. We go back to the beginning to tell the story of Australia's most inspiring founders and how they built their companies. You're listening to a special interview series as part of a documentary W2D1 is producing about the history of the Australian startup ecosystem. On the episode today, we have—
Speaker D: Hi, I'm Alfred Lowe. I'm one of the co-founders of an alternative protein startup here in Sydney, Harvest Bee. I've been involved with the Australian startup scene for the better part of over a decade now. Maybe 12 years. A lot of people know me as a venture capitalist. I used to run Optus's venture capital fund and AMP's venture capital fund. Prior to that, I was actually a software founder. I've jumped back onto the operator side of things with Harvestbee. But better part of 10 years in investing both institutionally and also as an angel investor, small-time angel investor.
Speaker E: What was the motivation or thing that pushed you to jump back from the venture capital or investing side of things to become a founder again?
Speaker D: I think I'm really proud of the work that I did as an investor and the being part of the, what is a very new industry of venture capitalists. In this country. For me, it was a juncture in my career after I was actually, my last role before Harvestbee was as a Chief Investment Officer at Cicada Innovations, which is a deep tech incubator. When I left there in 2019, I thought about, could I do more work as an investor or could I jump back in the operator's seat to work on something that I really enjoy and really, I think, will have a profound impact to the economy and I can look back on as being really proud of. And given what's happening with climate and sustainability, alternative proteins was something, an area which I thought the skills and experiences that I have, be able to gain as an investor, would really be well placed in doing something in this space. That's why I've found I founded Harvestbee.
Speaker E: So I'm sure we'll talk more about Harvestbee in, you know, the next half an hour. When would you say you first got involved, like what was your first exposure to the Australian startup ecosystem?
Speaker D: Hmm, it's interesting. I finished my MBA at AGSM in 2004 and I'd come back from international exchange at NYU Stern Business School And I, a lot of people doing MBAs, they wanna go off and join a big consulting firm like BCG or McKinsey's. I really wanted to join the tech scene, actually as a VC, but 2004, 2005 wasn't really, you wouldn't call that the heyday of Australian venture capital.
Speaker E: Heh.
Speaker D: It was, It was a wasteland, to not pull punches. It was really a vacant period in the Australian tech scene. We were still reeling from the dot-com blowup from 2000, 2001. There were very few startups, tech startups that you could really call on. There was certainly not really any investment scene. That was probably my first foray into trying to get into the tech scene some 15-odd years ago. I started actually, instead of getting to a job in VC, I got into an operator role running a climate tech water purification business.
Speaker E: When you say you didn't wanna, you know, follow that kind of, I guess, traditional path, consulting firm after your MBA and getting to the tech scene. Why? What attracted you to the tech scene?
Speaker D: Well, I think I traditionally used to come from big corporate. I spent 6 years at PwC, cut my teeth there as a cadet, a chartered accountant by training. Had a lot of clients in the big end of town. But I, you know, I think those industries and those firms are really important, But I mean, I've always had a real technology bent to myself. I majored in information systems back in my undergraduate. I've always loved technology, it's come easy for me. And I was naturally seeing the things that are happening overseas in Silicon Valley and frustrated that why isn't it happening here? I think trying to get involved, trying to build something here, play a small part. I think you need people to start doing things locally for us to build into a community. So, I mean, I'm fascinated by the speed of things that happen in tech. I'm a very curious person and I think there's wonderful things that happen, that are created in our tech community and our tech ecosystem.
Alfred Lo: Yeah.
Speaker D: Generally creating better futures and better standards of living for everyone. So that's why I wanted to build a career in tech.
Speaker E: I think you said, was it 2004, 2005 when you entered the scene? And as you described it, this barren wasteland reeling from the 2000, 2001 crash. What do you think, was it just that dot-com crash a bust that destroyed the investment scene in the Australian startup ecosystem, or, I mean, it didn't really exist at that point?
Speaker D: Yeah, I mean, there was, I think even the current, I guess, generation of VCs when they started, I'm talking about the ones that started in early 2010s, they really struggled with the scar tissue of that period. There were Australian funds, Australian institutional investors in the tech scene, the Australian tech scene, and the global tech scene. But certainly, I think the view was that the Australian fund managers from that dot-com period didn't return capital. And there were a lot of front-page disasters that happened in Australian tech, and that memory was very profound. I mean, the impact of that happening. But it was a different time. Australian tech scene was a very, was structurally very different then to what we've built now in this era.
Speaker E: Yeah. Can you name a couple of those front page disasters?
Speaker D: Oh, I think LookSmart was one that sort of, burnt bright and then crashed. Look, you can really put on one hand the survivors of that era, the Australian survivors of that era. There were, maybe not even on one hand. I mean, Sausage Software was another one that burnt bright and then sort of went, you know, didn't go anywhere. I think it was the marketplace businesses that did really well. So, realestate.com, carsales.com, and Seek. They classically took what around the world was happening, the classifieds businesses, and put them online. That was happening the world over. And they've survived, and they've not just survived, they've gone on to be real pillars for the Australian tech scene. But yeah, I can't really name many after that. There's a country mile between those winners and everyone else.
Speaker E: What timeframe are we in right now? Are we still around the 2005?
Alfred Lo: Yeah. Yeah.
Speaker E: What do you think happened? Was it just those kind of case studies that people pointed towards to kind of start kicking off venture, the venture capital asset class again, like to really start getting it going? Or was it not until the 2010s when it really started to get going?
Speaker D: Yeah, it really, you had a few players pop up and total respect to them. But really delivering outperformance numbers, I don't think really any of them did that. And it would be hard pressed for me to say that, for anyone to say that there was an industry. There wasn't a VC industry in Australia in that period of time. There were, well, there were a few players around. I think, Southern Cross Ventures, Starfish. There were a couple of others, but frankly, there weren't that many startups to invest in. So, not certainly when you compare it to, you know, 2021, it's unrecognizable. It's so different.
Speaker E: 2005, you were in Sydney in 2005, is that right?
Speaker D: I was, yes.
Speaker E: Talking about the startup community in general, like if we can, you know, if that existed at all, like could you see any kind of grassroots kind of movements, community?
Speaker D: I mean, at the time I was head deep in working in the business I was in, which is, as I was mentioning before, is a deep tech company working in water purification technology. I mean, I didn't even think of it as a startup. But it was. There wasn't really community. There were no, certainly you wouldn't read anything in the newspapers about startups or tech. It was something cute, it was not treated seriously.
Speaker E: When did you start to notice something resembling a community emerge?
Speaker D: Yeah, it's interesting. I think later in that decade. Started to, 2008, '09, '10. Around then you started to see a change. You know, we'd gone through the GFC at that time. I think whenever there's an economic crisis, it generally happens, it tends to correlate to something happening in tech, an opportunity generally happening in tech. I think around that period of time, it was the advent of the, you know, iPhone as well. I think that changed the game a little bit more. I think mobile networks, ubiquity of broadband connectivity brought change as well. And what I mean by that, I think it democratized a lot of access. Distribution of apps, price points changed. You could be a software developer anywhere and be a hit on the App Store.
Speaker C: And then—
Speaker D: go big, you didn't have to be in the Valley. But I started to see locally in Australia, I think there did start to become people coming together, community forming. You had folks like Phil Maul and Mick Lubinskis at Pollinise at the time being early pioneers, being a startup sort of, Studio. You also had the folks at BlueChilli doing their thing, and you start to see emergence of people coming together. I remember after leaving that deep tech startup, I had a software startup, and we, I would used to go to these things called Jellies. I don't even know if they're still happening around, but it would be people that would often individual folks are working on their own, on their own thing, or maybe they're developer contracting out and they would, rather than working from home, they would go to someone who'd offer up their office and for the day and you'd hold the jelly there, they'd, you'd co-work together then. Because don't forget the time, there were no co-working spaces. And there weren't really co-working spaces until 2011. So I think that was a real point of inflection for our community when we started to have places to come together, physical places to come together regularly.
Speaker E: Have you had much exposure to innovation or startup ecosystems in other parts of the world?
Speaker D: Um, yeah, I spent a bit of time in America. I spent a lot of time when I was with Optus with Singtel Innovate, their corporate venture capital fund. I spent a lot of time in Southeast Asia in the tech scenes, in the Philippines, in Indonesia, in Singapore, in Thailand. So yeah, I have spent a bit of time seeing other communities.
Speaker E: You know, drawing on that, is there anything you can point to that makes our ecosystem stand out, like a unique difference or a unique advantage?
Speaker D: Mm, all ecosystems are very different. The Australian one, how can I say we're different? We bring a different Australian flavor to it. For the good and the bad, the classic Australian not too serious attitude, she'll be right attitude, in the mateship aspect. We also suffer from some Australian traits of ours. We're often not ambitious enough. We're often, we're not classically the best salespeople. We're not like pushy like you might say the Americans are. Not pushy, but you know what I mean, like the salesmanship. We can push harder there. And we sometimes suffer a little bit of being safe on our own shores and not pushing out overseas. Bit of the Goldilocks, you know, not too small, the market's not too small that you have to go out and it's not too big either. It's kind of just right. And I think that's probably a comment on the whole Australian economy.
Speaker E: Yeah.
Speaker D: But yeah, the Australian startup scene is, we've been able to develop a real product focus, excellence, I think, compared to the rest of the world. I think we're, in the time that, you know, the 20 years of our ecosystem being around, been able to show that we know how to build great product. You can point at Atlassian and Canva are great examples of that. And every ecosystem's a little bit different and they've got their strengths and weaknesses.
Speaker E: Yeah, talking about weaknesses in present day now, are there any gaps that you can see today? Like things that you would like to see improved on?
Speaker D: Yeah, yeah, well there's always gaps. It doesn't matter which market it is. I think even if you're in the Valley, there's gaps. But I think things that around, seed capital that we need to, we could get improved on. We've had a real run on investors, I think money being put into the asset class of venture capital, early stage tech investment, which is really great. But I think, we know, we're going from, you think about in 2012, then you probably had funds under management less than $100 million, probably even under $50 million. And now we're in the billions of dollars in 10 years' time. That's amazing. You know, and that's great. But I think a lot of that capital is highly concentrated now. We've got a few funds that hold most of the funds under management. And there's like an increasing gap between the next tier below. And I think part of a healthy ecosystem is a is a good spread of risk capital amongst multiple managers. I hope that we'll see that happen. I think there's also still challenges that we have with deep tech innovations and getting funding in this country. I think getting software investment is much easier these days and much better understood by the investor community compared to science and deep tech related.
Speaker E: Yeah.
Speaker D: Potentially more capital-intensive spaces, which are still venture-backable, but just not well understood by this, by, you know, by investors. They're just two examples of gaps, I think. I think we talk a lot about Australian founders needing to level up, be more ambitious. I think the last 10 years we've gone to show that, that's happened. But I think what's, probably not often spoken about is the counterpoint. I think we need better investors too. And I say that being a former investor as well, from a former investor's perspective. I think there's not enough spoken about, you know, the caliber of investors. How do they get better? How do we create better investors in this country that understand risk, understand spaces?
Speaker E: Yeah, I wanted to ask you that. How do we do that?
Speaker D: It's a great question. I think that takes time to build, I think, and it takes a curious mind, and if you're a VC, you should be a curious thinker. But I think it is, there's no prescription on how to do that. I think a lot of it comes with experience, like doing things. I think we're gonna get more, depth in the types of people getting into VC that bring their body of work, their body of experience to that role. At the moment, we generally have a generation of generalist investors as opposed to investors who have deep domain expertise in one particular thing. And that's because the market has been quite, it's been too thin to create that depth of, subject matter expertise. You know, you, it generally comes over time. You, you, as, as your market increases, your economy increases, the niches become big enough for you, for one person to become really good at, to really know something. And I think we're getting to that point with the Australian tech scene where we're not just some cottage industry. We are ambitious industry with a lot of players and a lot of sophistication. And we're attracting more international people people as well to our community, which only accelerates our level of knowledge and sophistication. It's, you know, I think that's probably the single most thing that will accelerate our ecosystem is how we get more surface area with international founders or investors. That will only improve our, how we do things better.
Speaker E: Do you have any unpopular opinions about the ecosystem? Something that you firmly believe, but people just aren't people aren't on the same page with you about?
Speaker D: I have an unpopular opinion, which I don't know whether people disagree with it, but often unpopular opinions are things that people don't talk about. I think one that comes to mind is there are too many deep tech founders that optimize for grants rather than investors. I think we have a generation of, We've always had really great academics and researchers and deep tech minds in this country. We punch well above our weight in that space. And we talk about how we suffer from not being able to commercialize technology. And it's true, right? But, you know, in my time in deep tech, I've, you know, I spent over 2 years at Cicada Innovations. I saw, I met a lot of entrepreneurial, let's say entrepreneurial deep tech founders, but a lot of them were optimizing for grants rather than investors. And I think we really miss a trick there. And it's a real cultural, it'll take some time to change that. But you compare it to other markets around the world where deep tech gets well funded. Australia really struggles in that respect. And I don't just, It's not just the founder's side of things. I think there's still a market failing in the investment side of things to fund these types of opportunities and types of businesses, 'cause it's not well understood. And it goes back to, you know, the depth of understanding from the investor's side of things. But the risk capital probably isn't there, and there's a market failure. Where there's a market failure, that's where the government steps in with their policy. I feel like grants are really important for our tech community. I think the R&D tax incentive is a wonderful and very important pillar to what the government does. But yeah, in terms of deep tech, I think I see too many founders optimizing for grants and not being commercial and speaking to the investment opportunity.
Speaker E: What role do you think government should play in the ecosystem?
Speaker D: That's quite a contentious question. It's one I can't envy a policymaker on how to do it because you sort of, they get sort of clipped over the ear if they do too much or do too little. I think the policy setting needs to be right.
Speaker E: Some people say they need to be at arm's length and really not have much to do with it at all and other people kind of congratulate what they've done.
Speaker D: Yeah, I think it's a misnomer to say that government shouldn't get involved. You look at the founding of, you know, tech mecca, Silicon Valley, there was a lot of government involved in the formation of that sector 50-odd years ago. You look at Israel and their startup nation, if it wasn't for government policy and their intervention, it wouldn't be what it is today. You know, Singapore's the same, different to Israel, but you know, they have a tech scene, it's highly, the government gets highly involved. That's not to say it's all good. I think government needs to try things, but it also needs to stop doing things that don't work. And if you could adopt a mentality kind of like what startups do, you know, make decisions, try things, find out if they, they experiment, if they fail, stop. Yeah. Stop it. Try something else. If it works, great, keep on doing it, right? I think governments and the bureaucracy find it hard to work on that cadence, to be able to admit that something's wrong, but also to change policy quickly. And I think that's part of why there's always friction, because startups move so fast, right? And individual firm, individual startup moves so fast, therefore the community moves so quickly. And you can say that about the Australian cyber industry. It's unrecognisable from what it was in 2011 to what it is in 2021 compared to any other sector. Talk about mining, banking, telco, you know, they're all pretty much the same industries, but ours is so unrecognisable and you need to move quickly to keep up with it, Right? So I think government will always lag, and that's part of the challenge. How can they help more? I'm a big proponent of, at the core of it is human beings. Startups are the embodiment of the knowledge worker, and we need to get the best minds in this country. We need to develop them, and we need to bring them in. And I think we have great educational institutions, and we develop really great skills. It's a big industry, has been a big industry for Australia, education. But we need to bring in more talent. I think that's one thing government could do. Again, it's one of those topics which has been politicized, but I wish we would really go hard on being the brain magnet for the best brains in the world. Australia has a lot to offer.
Speaker E: In your opinion, what needs to happen next to get us to the next, you know, that next tier to keep building this ecosystem?
Speaker D: Yeah, I think we're still, we haven't got a full cycle yet, Adam, you know? And what is a full cycle? I think if you say 2011, '12, '13 was the beginning of this cycle. And if you parlay that to a venture fund's 10-year fund life, so the beginning of the fund, you take the money in from your investors and you invest it. You invest it in startups, they build, they have 10 years or, you know, 5 to 10 years to build something significant. And they exit, the company exits through IPO or trade sale. And the money goes back to, returns back to the venture fund, and that gets returned back to its investors, and the cycle goes around again. We're sort of only getting to that first end of the cycle now, if you think about it, right? You're talking about the vintages of funds of 2012, '13, like Blackbird, Blackbird's first fund. You're talking about Airtree, 2013, '14. Square Peg around the time, same time. And we've been really blessed. I was gonna say the word lucky, but it definitely is luck involved, but it's right time, luck, skill, all of it mixed together. But those funds of that vintage, those Australian funds have been bumper funds. They're world-class. Yeah. And that will mean that they'll return capital to the LPs, their investors. It's a flywheel. So we, hopefully we'll see more capital come back into the market and different options to get capital for founders. And with that return of capital, you'll get more, confidence and conviction of the asset class, both by angel investors but also institutional investors, the super funds, endowment funds, that this is an asset class that's worth backing. And we're talking about small, tiny allocations from their total assets under management, like well less than a percent, which is still lots of money, right? And that, I mean, money doesn't solve everything, Certainly doesn't, but it is the lifeblood of this industry. And it will keep that flywheel going. And I think that's why I mean we haven't sort of seen that cycle finish. I think there's more things that we need to figure out. I think our share market and how we list companies, where we list our companies, is something that's not quite solved, resolved yet. Do you list on the ASX? Do you list globally? I think corporate acquisitions hasn't really been resolved yet in Australia. Australian, I think one thing that's really not well understood is that it's important that, not everyone's gonna be a unicorn, a decacorn. Not everyone's gonna list on the NASDAQ. You don't need to, you don't need to be successful. And we need more exits for founders. And if we could sell these, they can exit to local companies. I think that would be super valuable. But we don't really see much of that. Australian corporates don't really haven't been very acquisitive in tech. And I think it's reflective of the Australian stock market and it's ASX 20. It's—
Adam Spencer: Yeah.
Speaker D: It's very stale, stagnant. There's very few companies in the ASX 20 that are new companies or tech companies. When you compare it to other markets, you know, we're still full of resource companies or banks. I think that's something I think government needs to look at. I know that the Australian tech community's always gonna be pushing to be a bigger part of Australian economic mix. And hopefully one day we'll see a lot of new coming startups make that ASX20.
Speaker E: What advice would you give a brand new founder?
Speaker D: As a founder, as an entrepreneur, you only have 3 things to do. Actually, just 3 things to sell. You have product that you have to sell, you have to find customers. You have stock to sell, equity to sell to investors. So you have to pitch that. Pitch to be an attractive investment opportunity for investors to buy your stock. And the third thing that you have to sell is vision. And that's to get employees, to get the best people to work for you. If you can simplify how you think as a founder, as an entrepreneur, there's only 3 things that you have to sell. You're the number one salesperson. And every day you're selling one of those, well, hopefully all 3 of those. Yeah. Focus things. Everything you should be doing should be focused around selling those 3 things.
Speaker E: What I'm trying to do here is to tell a story in the most holistic and truthful way possible. I want to catalog the history of the Australian startup ecosystem. Keeping in mind now that we want founders, investors, policymakers, academics, people from all corners of this community to hear this story, what's something that you think about constantly or that these, that people need to hear from you?
Speaker D: I think, I think there's so much we have to do. We need more people involved in the startup ecosystem with the right attitude, the right culture. It's so important that we bring people in, collaborate and build businesses and build, build hopefully what will be their legacy, but build it the right way. You know, a good friend of mine who I used to work with, Peter Huynh from Qualgro said to me many years ago, and I've said it to many people since, like, it's not what you do, but how you do it. It's so important. We can build a tech ecosystem, but we do it the wrong way, with the wrong culture, and that does happen in certain ecosystems. You build this bad culture. One thing we started to say at Startmate, you know, culture eats strategy for breakfast, right? You have to build it in the right manner. I think we've been so fortunate that we've had really good leaders and trailblazers in our ecosystem that have, by and large, done it the right way, you know, been inclusive. And it's not to say they're perfect. We're not perfect, but we, you know, we— And it's not to say there hasn't been things that have been called out about how our ecosystem and the things that were wrong about it, and how we go about addressing it. But I'm very proud of the tech ecosystem we have built to date in Australia. And I'm super proud that I've been part of it. And I'm one of a chorus of people, and there's more and more people getting involved every day. It's an industry of choice. I'd say, for graduates to go into, and that certainly wasn't the case when I graduated from university. And that, to me, means that we're doing a good job. We are building an industry from scratch. It doesn't happen often, ever, in any nation. You know, all the industries that we know today in Australia, they've come before us. They've been around.
Speaker E: Mm-hmm.
Speaker D: But the tech industry, by and large, wasn't, was vastly different, and if it even, if you can even call it existent, prior to, you know, this generation, it was very different. And we have this opportunity to mold it into one that is the way that we wanna work, but also one that's gonna hopefully be bigger than mining and resources, or banking and finance.
Speaker E: Yeah.
Speaker D: Hopefully it becomes one of our biggest exports for this country has ever seen. That's why it's vitally important how we do things, how we treat each other, how we set ambition, how we play, how we collaborate. I think those things are— it's nothing with this stuff is written down. There's no formula for it. We have to make it up as we go. But it's one of those things if you get wrong, it's quite insidious. It'll be— it can be the death of anything that's good. And I think we are, we have, we're very lucky to have, I feel like the Australian tech scene's in good hands, but it requires a lot of hard work and consistent work. Nothing's for granted, nothing should be taken for granted in that respect. But yeah, hopefully we're creating, We're attracting the best minds and the most ambitious minds and the most curious minds to work on their most audacious problems to solve. And Australia, oh, and probably the world has to benefit from that because we can bring to life amazing innovations.
Alfred Lo: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast wherever you're listening right now. Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem. Thanks for listening and see you next time.
