Market failures stifling Australian startups: StartupAUS
- 15 April, 2014 09:55
Australia’s tech startups are urging the government to better promote entrepreneurs and innovation.
StartupAUS, which was formed last year by Google and includes board members from startups, accelerators and other leaders of the scene, has today released a report called <i>Crossroads</i> that identifies how Australia’s startup ecosystem lags other countries.
“This paper makes the case that as a nation we need to take immediate and far-reaching steps to address market failures that are impeding the maturation and growth of our startup ecosystem,” the report states.
StartupAUS said it plans to present the paper to federal, state and local policy makers.
The report claims that Australia has not kept pace with other nations, which have launched programs to invest in and support high-growth companies. Australia has one of the lowest rates of startup formation in the world and one of the lowest rates of venture capital investment, it states.
In addition, Australia lacks good entrepreneurship education, with limited university engagement and poor cultural support for entrepreneurs, said StartupAUS, citing a 2013 World Economic Forum report on entrepreneurial ecosystems around the globe.
The Crossroads report also includes information from the PricewaterhouseCoopers (PwC) report commissioned by Google last year. That paper found that Australia’s startup scene could add $109 billion to the economy – or 4 per cent of GDP – and 540,000 new jobs over the next 20 years, if fostered properly.
The StartupAUS report recommended seven key actions:
- 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 regulatory impediments, particularly in relation to employee share schemes and crowd-funded equity for start-ups
- Increase collaboration and international connectedness
“Australia’s fledgling startup sector has experienced a groundswell of activity over the last three years and we are seeing a number of Australian technology companies begin to achieve meaningful global scale,” said Alan Noble, StartupAUS board member and head of engineering for Google Australia.
“However we still lag behind many other nations, with one of the lowest rates of startup formation in the world, and one of the lowest rates of venture capital investment.
“If we fail to address this, we risk forfeiting over $100 billion in economic benefits from emerging tech companies, and an irreversible decline in Australia’s competitiveness.”
Jana Matthews, another StartupAUS board member and the managing director of the ANZ Innvoyz START accelerator program, said the Australian government must step up to promote startups.
“With new technology companies disrupting almost every global industry, Australia has a huge opportunity to capitalise on its creativity culture and ability to deliver world-changing innovation such as Wi-Fi and Cochlear implants,” she said.
“Great successes such as Atlassian and Freelancer prove that Australian startups can be successful on the global stage. However, if governments at all levels do not take the lead and do more to foster, promote and back tech startups, Australia will miss out on major economic and cultural benefits.”