It’s a conversation that those within the Australian Tech start-up community know all too well. Why are so many of our most innovative and successful start–up founders taking their talent overseas? And will there be any changes in attitude under new leadership?
THEN
In August this year Malcolm Turnbull, Communications Minister at the time, strengthened the notion that with better access to capital and support from the government along with a fundamental shift in the culture of the nation we could put Australia’s start-ups on the national agenda.
Mr Turnbull discussed the start-up community in comparison to ‘the centre of the technology sector world,’ Silicon Valley.
“That’s where most of the companies are, that’s where most of the big money can be assessed, and so naturally as it gets bigger the network effect means that more and more people gravitate toward it."
Mr Turnbull maintained that Australia could still be hot on the map, despite our small market, “there is a lot of innovation in Australia and in fact there is much more venture capital available to Australian start-ups and technology companies now than there used to be."
NOW
So that was then and this is now…. Fast-forward a month to September 14th when Mr Turnbull became Australia's 29th prime minister after beating Tony Abbott in a dramatic leadership ballot in Canberra.
Immediately after winning the Liberal leadership Turnbull spoke out again on the subject of technology, this time as prime minister.
“We have to recognise that the disruption that we see driven by technology, the volatility in change is our friend if we are agile and smart enough to take advantage of it."
So we can now say the importance of start-up’s survival is at least well recognised within Australian government (lets think back for a moment to Turnbull’s predecessor Tony Abbot who placed his faith in fossil fuels and retained an avid distaste for renewables).
Australia is currently holding down a start-up community that shows plenty of seed capital from individuals and financial investors but is unfortunately lacking when it comes to investment at the second and subsequent rounds of capital raising.
Turnbull is not denying these facts, believing it’s a big gap in our market, “but it is starting to be filled. There are billions of dollars in the VC Limited partnerships that have got special tax concessions that have been established, and there is money in the market."
According to Turnbull the federal government is also close to finalising its model for crowd sourced equity funding, an initiative that aims to open up new avenues to capital for the nations fast-growing technology start-up ecosystem.
So, if we think back to the start of this year, the future is looking a little brighter yeah?
WHAT ARE AUSTRALIAN’S IN TECH THINKING?
Nitro co founder and chief executive Sam Chandler believes ambitious, big start-ups have no choice but to leave Australia due to the 2nd and 3rd tier of funding options simply not being available.
Founded in Melbourne in 2005, Software Company Nitro turned over $25 million in 2013 and is now headquartered in San Francisco.
“In the intervening period between when we moved in 2008 and today, later stage funding has basically fallen in total capital commitment,” says Chandler.
“The lack of government support for start-ups and early stage investors wont hurt Australia this year, or even next. But over the coming 10, 15, 20 years, the nation will pay the price because it takes years for innovation to return on investment."
Catherine Eibner is a lead start-up advisor at venture technology accelerator; Blue Chilli.
Eibner agrees that the trend of bigger start-ups leaving the country is a concern, but maintains that it is not an issue we cant overcome.
“I strongly believe you can build a global company anywhere especially at the beginning – when your refining the idea and testing product market fit."
“Its not just about simpler regulation. The bigger issues are access to capital and resources. We’re seeing lot of both of the latter at the very early stages now."
SO WHAT NEEDS TO CHANGE?
So what needs to change within Australia?
Australian’s living in Silicon Valley say there should be more mentoring, networking and education available for potential entrepreneurs before they even considering leaving the big red rock.
Founders may leave to grow and establish themselves in the US but if it’s viable they will bring that money back home. Take Bardia Houseman for example, a tech investor with a net worth of $30 million who recently returned to Sydney with a promise to improve the city’s tech ecosystem.
Houseman believes Australia’s entrepreneurial community needs to undergo a major cultural shift; his advice to Australian entrepreneurs is to take greater risks and not hesitate in sharing ideas with other entrepreneurs.
“The risk culture here [in Silicon Valley] is very different to Australia’s. Australians are definitely not as risk-taking. People who come here are trying to solve very big problems. One of the things I have noticed about Australian entrepreneurs is that they don’t really share their idea. They think someone will steal it, whereas in Silicon Valley everybody will share an idea. It’s through collaboration that they are able to validate their ideas and develop faster."
Lets get audacious and invest in nurturance and education to accelerate Australia’s presence in the global tech market.