Venture firm hunts slice of next big idea

By CHRIS BARTON

Booz Allen and Hamilton wants your dot.com business.

The international management consultancy has formed an Australasian "Accelerator" unit offering "cradle to capitalisation" consultancy for entrepreneurs with "the next big idea" in e-commerce. All it wants in return is a 5 to 20 per cent stake. Sound familiar?

But Martin North, who heads the e-business practice from Sydney, says Booz Allen has a different agenda from venture capitalists aiming for five to 10 times their original investment within five years.

"We want enough return to cover our costs. We're not looking at those significantly high multipliers. Ours are more like four or five times."

He argues, too, that the involvement in incubator development differs from the approach of traditional venture capitalists, who mostly come in later on the dot.com journey.

There are also internal factors. The company recognises the need to develop expertise in e-commerce to help its traditional corporate clients. It also needs to stem "a bit of haemorrhaging of bright people going off and doing dot.com stuff."

One recent example is Australian internet job site Seek, which was formed in 1998 with a number of former Booz Allen consultants.

The new venture, combining investment bank Rothschild Australia and international law firm Blake Dawson Waldron, means Booz Allen staff now get a chance to work in the dot.com space and can "cross-pollinate" new e-commerce ideas to a traditional client base.

Booz Allen has been in New Zealand for about seven years, providing management consulting to large corporates.

The co-venture www.ebiz-accelerator.com provides entrepreneurs with a "one-stop dot.com shop," providing access to a pool of money and legal expertise for set-up.

The firm is also betting that budding entrepreneurs will not mind having the Booz Allen name attached to their business plan.

Mr North says the sort of entrepreneur the firm is looking for has deep understanding of the internet, an idea that is "a little bit unique," drive and enthusiasm.

"You almost want a sense of desperation underpinning the idea."

One example is Australian company R&R Direct. The company had an idea for a loyalty programme tailored for the online world. Booz Allen has taken about 6 per cent equity, helped develop R&R's business plan and enabled it to move quickly towards a stock market listing.