Government needs to support startups: A Vision for Australia

| May 27, 2015

Australian entrepreneurs need more support from the government. As part of the ‘A Vision for Australia” consultation, Nick Stanley shares his views about how to build our startup scene.

The startup scene in Australia has a long way to go.

After just returning from an excellent private trade mission to San Francisco (as organised by co-founders Brian Goldberg and Hany Pham of Investors Org) I can say that we have to pick up the pace to join the leaders, but this does give us an excellent target to aim at.

By contrast to the US, the Australian early-stage venture and investment scene can be characterised as something of a desert.  It’s a desert with the occasional well and quite a few mirages…all of which give the weary traveller (ie: the entrepreneur) the illusion of water (ie: cash) but are either a mirage or a very deep well that is difficult to access…

However, I can report that the US scene is positively thriving with “water a plenty”!

It is no longer the age of the Unicorn (ie: a tech startup with a $1 billion + valuation), but now the “deca-unicorn”, a new term to define those tech startups that exceed a $10 billion valuation (think Uber, Twitter, Snapchat, etc).

Consider that there were four unicorns in March 2013 and there are now more than 80.  The number of unicorns has almost doubled in the last 12 months.  Clearly the market is moving rapidly and we are again experiencing something of a tech gold-rush…unfortunately though for Australian entrepreneurs the conditions here are still anything but conducive to us creating our own unicorns.

With examples few and far between, the best I can offer here is our local success story of Atlassian.  Our own unicorn is no longer “ours” after moving shop to the UK due to a more conducive environment for tech startups.  What would Derryn say?  Yes, that’s right, “shame”!

The difference in other markets is that entrepreneurs are encouraged to aspire to the BHAG.  The “Big Hairy Audacious Goal” is part and parcel of the startup scene in Silicon Valley, Israel, and London and is now becoming central to Asia’s rising prominence as a startup destination.  Terms such as “swing for the fences” and “go big or go home” reflect the appetite for risk that is ingrained in the successful startup entrepreneur.

This doesn’t sit comfortably at home though.

Our appetite for risk is lower and our venture scene is looking for the safe bet.  More than that though, the due diligence and process that usually accompanies local investment is at another end of the spectrum to what you see in the US (and other markets).  We also suffer from the tall-poppy syndrome and a tendency to play our successes down.   Whilst we want to retain what is unique to our approach, we do need to get better at pitching our successes and vision and being willing to be a success.

Australia truly is a country strong in natural resources and I know from direct experience that one of those powerful resources is in our innovators and entrepreneurs.  However, as with mining, we don’t want to just ship that raw product off; we need to cultivate it here, to refine it and to then benefit from it.  To achieve this we need to make sure that we invest in our entrepreneurs so that they have the right infrastructure and are encouraged to stay here and to build our own startup scene.

The government can play a key part in this.  By investing in policy and initiatives that encourage early stage ventures and startups, the Government can create a hot-house effect to rapidly grow our local startup scene.  This can’t be left to industry though, as it will take too long and we’ll simply miss the boat.  The market has got to be there to encourage the privateer and it’s in the act of bridging the gap that the Government can play the most important role.

Initiatives such as the recently announced “Startup Victoria” initiative need to provide support for an ecosystem and they must be conducive to the way early stage entrepreneurs work to be truly impactful and beneficial.

We have some of the smartest people and some really exciting innovators; it’s time we backed them.  This will transform the Australian economic landscape and allow us to join the global “tech gold-rush” in a very real way.

We need to welcome the BHAG and swing for the fences!


One Comment

  1. Avatar

    Petras Surna

    February 16, 2016 at 10:14 pm

    As someone who has worked
    As someone who has worked actively with startups and owning one myself, I have to say I disagree with the concept that governments should financially support startups. Why? Because it will waste lots of money on startups that were never going to be viable businesses. This has been my experience over the last 15 years in technology.

    It would be good to see some studies that price government technology grants around the world to see what the return is on such grants. I’d also like to see some best practices for the most successful countries.

    Until then, the best advice I’d have for a start-up is that zero funding will force you to be ruthlessly efficient and prove you have what it takes to be a viable business.