Australia still failing its tech startups

21 April, 2015

MEDIA RELEASE

Australia still failing its tech startups

Australian Govt level of support for startups is going backwards compared to global benchmarks

Sydney 21 April 2015 – StartupAUS today released the Crossroads 2015 report, which reveals that, despite positive developments over the past 12 months, Australia continues to under-invest in catalyzing high-impact entrepreneurship and supporting its startup ecosystem.

Australia still records some of the lowest rates of startup formation, and one of the lowest rates of venture capital investment for a developed nation.

The report further notes a dramatic fall in the government’s provision of matching capital to support startups, with the Innovation Investment Fund abolished in last year’s budget and the Entrepreneurs Infrastructure Program having only half the funding for startups of Commercialisation Australia, the body it replaced.

Compared to our regional neighbours Australia is performing poorly. China recently announced the creation of an $8.3 billion seed-stage National Venture Capital Fund, South Korea is implementing a $4 billion Creative Economy initiative, and New Zealand is extending its network of government supported startup incubators, innovation precincts and funding programs for startups.

Further afield, the UK is delivering a multi-billion pound suite of pro-startup programs, while at the same time Australia still lacks a coherent innovation strategy, and has reduced its investment in knowledge economy initiatives at a time when almost all other developed economies are increasing theirs.

Key actions recommended by Crossroads 2015 to accelerate the growth of Australia’s tech startup ecosystem include:

  • Establish a national innovation agency: The report calls for the creation of a national innovation agency responsible for innovation and entrepreneurship programs to give greater focus to Australia’s efforts to transition to a knowledge economy.
  • Create a national network of entrepreneurship centres: Creating a network of entrepreneurship centres would provide a vital layer of infrastructure around which startup communities can be fostered. They could also act to support and connect existing private sector incubators, accelerators and co-working spaces, and provide much needed practical training to entrepreneurs.
  • Increase government’s provision of matching capital to support startups: Australia has one of the lowest rates of angel investment and venture capital investment in the developed world. Increasing the funding available to startups under the Entrepreneurs Infrastructure Program, offering tax incentives for angel investors and establishing a seed co-investment fund are all actions that would help to unlock more private capital and enable more Australian high-growth tech companies to achieve their full potential.

Peter Bradd, StartupAUS director and Entrepreneur-in-residence at Fusion Labs said: “Over the past 12 months, we have seen some great Australian tech startups emerge and begin to make their mark globally. But Australia is actually falling behind other countries when it comes to rates of tech company formation and growth. Our future economy depends on our learning how to mine our knowledge and commercialise that resource, just as much as it depends on finding and extracting oil and gas or mining coal.  Other developed countries are making far greater investments in their startup ecosystems. Australia’s policy-makers need to invest in finding, supporting and growing the tech start-ups today that can become the pillars of Australia’s economy tomorrow.”

Alan Noble, StartupAUS director and Engineering Director, Google Australia said: “Beyond government action, we need genuine cultural change to view startup as a viable and attractive career choice.  Currently the Australian education system is geared toward preparing students for the workforce. Introducing entrepreneurship education across the primary, secondary and tertiary education system would equip young people to start businesses and spur economic growth.”

The full list of StartupAUS Crossroads 2015 Report recommendations are:

  • Create a national innovation agency
  • Increase the number of entrepreneurs
  • Improve the quality and quantity of entrepreneurship education
  • Increase the number of people with ICT skills
  • Improve access to startup expertise
  • Increase availability of early stage capital to startups
  • Address legal and regulatory impediments
  • Increase collaboration and international connectedness

Professor Jana Matthews, StartupAUS director and ANZ Chair of Business Growth at the UniSA Centre for Business Growth said: “The choice is ours to make: we can either invest in the development of a knowledge economy in which startups can flourish, or we can maintain the status quo and forfeit Australia’s prosperity and competitiveness.”

Glenn Smith, StartupAUS director and founder, ATW Capital said: “StartupAUS is committed to working closely with all parts of the Australian startup ecosystem, including entrepreneurs, corporates, universities and all levels of government, to develop and implement policies and programs to systematically grow Australia’s technology sector so that it can drive economic prosperity for future generations.”

The full 2015 StartupAUS Crossroads report can be downloaded here.

Other Comments and Quotes:

“Crossroads 2015 is a powerful commentary on why Australia must invest in building our innovation capacity.

PwC has recently predicted that Australia will drop 10 places in world ranking by 2050 – and out of the G20[1] – because we have under-invested in non-resource parts of the economy such as STEM.  Getting the basics right in areas such as education is critical if we are to create an environment conducive to tech savvy innovation, entrepreneurship and business growth. StartupAUS Crossroads Report 2015 should be read with a sense of urgency.” Suzanne Campbell, CEO, AIIA

“Australian entrepreneurs over the last two decades have given us an enviable track record of competing and winning markets all over the world with ground-breaking businesses. We’ve proven what can be done, the challenge now is to do everything we can to build on that into the future. We can’t afford for this to be a second order priority, this has to be one of our top priorities right now.” Yasser El-Ansary, CEO, AVCAL

– Ends –

Media contacts:

 Ashford Pritchard, Launch Group

E: ashford@launchgroup.com.au | T: 02 9492 1040 | M: 0411 020 680

 Louise Proctor, Launch Group

E: louise@launchgroup.com.au | T: 02 9492 1003 | M: 0452 574 244

 

About StartupAUS

StartupAUS is a not-for-profit entity with a mission to transform Australia through technology entrepreneurship.

StartupAUS believes a strong home-grown tech sector is vital to future Australian jobs and wealth. But getting there will require a national imperative to create the right environment, with a supportive culture and more entrepreneurs with the right skills.

For more information: StartupAus Reports

A Special Thanks to Our Leadership Partners

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