How tech startups rate Australia

Fast growth in spite of funding challenges

Demo day at Sydney's INCUBATE at the University of Sydney.

Demo day at Sydney's INCUBATE at the University of Sydney.

Government support lags

Support for startups from the Australian government is “pretty terrible,” said Paul Du Bois, founder of the Brisbane-based B2B startup Tap-To.

“They’ve got great things like Commercialisation Australia which give grants, but all of its predicated on 50-50 [matched] funding.”

“You still have to come up with $250,000 on your own,” he said. “You really have to be at a certain level as a company to even remotely consider that kind of money.”

The Australian government has not been of much help to startups, focusing instead on mining and education, said Matthew Barnett, co-founder of video interview startup Vimily.

“If the government starts to support, that will bring more investors in.”

Airtasker co-founders Jonathan Lui (left) and Tim Fung. Credit: Airtasker
Airtasker co-founders Jonathan Lui (left) and Tim Fung. Credit: Airtasker

Government needs to “step up to the plate” to establish a solid local ecosystem of technology startups, said Jonathan Barouch, founder of LocalMeasure, a location-based platform for monitoring social media.

“I certainly don’t think it’s up to the government to fund startups ... but given how early we are, they need to encourage super funds to unlock some super, they need to help get the local [venture capital] industry going [and] get global VCs focused on Australia.”

In addition, the government should “start a public dialogue about why technology companies are really important and maybe more important to Australia’s future than the mining companies.”

Drivelist’s Herft stressed how important it is for the federal government to reverse tax rules preventing startups from giving share options to employees. The new Coalition government is expected to address the problem.

“Making sure founders can have a vesting agreement is so critical for a startup,” he said.

“Many startups get sunk because of it. If you have one founder that decides to walk away and he’s walking away with a third or half the company, it’s like, fat chance getting funding ... No one’s going to fund a company where a third of the value is locked away by someone doing nothing.”

Barouch said startups are rising regardless of the lack of help.

“Despite the best efforts of the government to kill off any possible any possible wave of innovation, we’re like cockroaches—we’re flourishing.”

Seeking success stories

While there are many startups in Australia, a great many are early-stage and there are relatively few stories of massive success.

“There have been some successful startups and that kind of whets the appetite,” said Andy Sheats, founder and CEO of Health.com.au. “But it’s still decades behind the real infrastructure approach that you would see in San Francisco.”

Kounta founder and CEO, Nick Cloete. Credit: Kounta
Kounta founder and CEO, Nick Cloete. Credit: Kounta

WeTeachMe’s Huynh said he wished there were a greater number of experienced startups to learn from. “The major difference in Silicon Valley is there are a lot more people who have done what I want to do.”

Alexandra Kinloch, co-founder of video app developer Cinch (formerly CaptureUs), agreed that more experience would be helpful.

“The startup scene is far less developed in Australia, which means there are less people overall that can assist in providing and helping new startups with strategic direction,” she said.

Asher Tan, co-founder of Bitcoin wallet CoinJar, said what's missing in Australia "is more global successes."

“It is sort of trendy to get into startups but at the end of the day the stats show not many Australian-based startups have made it to the world stage.”

However, Dave Slutzkin, co-founder of domain flipping startup Flippa, predicted that will come in the future.

“It’s a really exciting space to be in,” he said. “Some of [the startups] are wild and crazy and aren’t going to come to anything, but some of them just might be the next Facebook or at least the next 99Designs or Atlassian.”

Follow Adam Bender on Twitter: @WatchAdam

Follow Techworld Australia on Twitter: @Techworld_AU

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Tags governmentAustraliabrisbanegrowthMelbourneSydneystartupsadelaideStartupfunding

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