Start-ups need support and governments must lead the way
At a consultation meeting in Adelaide this month, I heard about an ICT entrepreneur forced to seek his fortune in foreign shores after struggling to attract local funding.
A £100,000 ($200,000) offer from London proved to be a compelling incentive to set up shop there and the start-up now has more than 100,000 users globally, and is working with some of the most recognised brands in ICT.
Clearly his business case had substance, but where was the local money needed to get it off the ground? Where were the angel investors? Where were the programs to shepherd budding entrepreneurs through their growing pains?
This is an all too familiar tale for Australian start-ups and it’s a serious problem for our economy.
CEDA chief executive Stephen Martin says Australia needs to get serious about incentivising innovation or risk being left behind.
Speaking at the launch of CEDA’s Australia’s Future Workforce report, Professor Martin said: “Currently the commitment needed to link education and innovation policy with funding is appalling compared to other countries and Australia’s industry innovation strategy is woefully underfunded compared to global competitors.
“For example the five Industry Growth Centres announced last year by the federal government should be critical in driving innovation but only $190 million has been allocated over four years.
"In comparison, the UK Catapult centres have been allocated almost $3 billion over the same period. The German Fraunhofer Network, The Netherlands’ Top Sectors Strategy and US National Manufacturing Institutes have had even larger allocations.”
Australian governments have traditionally taken a laissez-faire approach to developing new technology based-companies, relying on market dynamics to drive growth.
So it was refreshing to hear Communications Minister Malcolm Turnbull respond to the CEDA report by advocating the importance of building Australia’s ICT capabilities and the need for governments to lead the way in creating a culture of innovation.
“While digital literacy is critical, given the rate of technology adoption in Australia … it is important that we move beyond only teaching students how to consume technology and instead focus on technology creation,” he said.
Perhaps the first port of call could be governments using their procurement power more effectively to promote and encourage local technology-based products and solutions.
Sure there may be an increase in the risk profile of such action, but is that not worth it to the Australian economy?
After all, Australia has an impressive pedigree when it comes to technology world firsts.
Black box flight recorders were invented and first used in Australia, as were ultrasound technology, electronic pacemakers, facsimile machines, cochlear implants and polymer banknotes.
Of course, wi-fi was developed by the CSIRO back in the 1990s and more recently, the quantum bit, now the basic unit of quantum computing, was created by a team of Sydney-based scientists. And I’m really just scratching the surface.
But if we want to parlay that ingenuity into a dynamic, innovative economy which can underpin the kind of jobs growth and economic prosperity we need for the future, then we must do more to intervene and support the start-up community.
The Crossroads 2015 report from StartupAUS revealed, “a concerning trend for our fastest growing technology companies to leave Australia in search of talent, capital and more favourable regulatory environments”.
StartupAUS believes that there is a significant gap in the government’s understanding of what tech start-ups are, how the government could support them, and the impact that they could have on Australia’s economy.
Clearly Turnbull gets it, but it will require a whole-of-government response to deliver the kind of massive reform that is needed in policy and practice.
