Australian entrepreneurs have a lot to say about the government’s innovation statement, released today.
Malcolm Turnbull told Australia to prepare for “the ideas boom” as part of a $1.1 billion package over four years, which the prime minister says will “incentivise, energise, dynamise” Australian industry.
Here’s what entrepreneurs are saying about it.
Tyson Hackwood, head of Asia at Braintree Payments
“We welcome any effort being made by both government and private enterprise to invigorate Australia’s digital economy. As an industrious and innovative nation the government’s Innovation Statement released today will provide some additional support to address long-held pain points from the thousands of Aussie startups we work closely with including access to capital and skill retention.
“We were a startup so we understand and appreciate how much of a challenge it is to succeed, let alone in a market that is in desperate need of an overhaul of its regulation to support startups at the forefront of innovation. As a nation, Australia needs to be investing in and growing the local startup pool from seed stage investment through to developing affordable solutions that allow businesses of all sizes to capture every sale as soon as they go live online. We are seeing in countries, like Singapore where we are active, government involvement that is driving the innovation agenda, and providing the springboard for success, locally, regionally and globally.
“By encouraging more home grown startups to succeed we will also be encouraging more competition and competition breeds innovation. What we need is a culture that encourages success and to do this we need reform that keeps apace with speed of innovation. Braintree, founded in the US, has made it easier and more affordable for SMBs to start accepting payments by replacing the traditional model of sourcing a payment gateway and merchant account from different providers. Imagine what other solutions could have been developed for SMBs if Aussie startups were given the same opportunities as those in Silicon Valley or global innovation hub Tel Aviv?”
James Wakefield, co-founder of InStitchu.com.au
“While other start ups consider basing or moving their business overseas, to capitalise on lower tax rates, we’ve found that the R&D grants and incentives as they stand in Australia have made it worthwhile committing to growing an Australian-based business.
“The Australian government is already is extremely supportive and the current R&D model highlights the importance that they are placing on growth and innovation remaining in Australia.
“The introduction of equity crowdfunding for retail investors will be a big game changer. The support of our customers has allowed the growth we’ve seen as a company over the last few years – in fact, we are regularly approached by customers looking to invest in our business model. Happy customers make the best investors – they have a genuine interest and understanding of the market that you operate in.
“A crowdfunding platform will make it much easier to access capital and continue the growth of the business at a much faster pace than is currently possible.”
Dominic Bressan, co-founder and CEO of AirService
“Making it easier to hire international workers keen to work in Australia. This is great, every time we haVe a job opening and tweet it, put it on our Facebook page, or post about it on AngelList we have great applications from overseas, far more than we do from Australia. Unfortunately, it’s always been prohibitively difficult and expensive for us to hire those people.
“Exemption from CGT for early shareholders. Anything that helps encourage investment in startups is a good thing, but the exemption from CGT is clear, understandable and easily quantifiable. And it benefits those who take the biggest risks, getting behind ideas and people they believe in sometimes before there’s any real concrete reason for that belief.
“Protection for struggling startups and their directors. Thankfully, this is something that AirService hasn’t had to deal with, but I have a number of friends in startups that this has directly impacted on. Innovation inherently involves risk. And some of the best new ideas and products are the ones that take the biggest risks. That are outside the box. Australia should be, and can, produce those ideas.
“Our startup community should be so much more than looking at what has succeeded in the US and replicating that here. There are even VCs here that have that as a criteria for investment – that the startup is imitating a successful overseas company. We can do so much better than that, and the protection for struggling startups and the directors of those startups is a big step in the right direction.”
Tim Fung, co-founder and CEO of Airtasker
“We’re quite pleased with what the government has presented today. To see both sides of government competing raising the bar and competing over startup policy is a pleasant change of pace for the sector.
“Now, what is really important is how we promote these initiatives to the world to show how strong an ecosystem we have and how good the opportunity is to start a company here in Australia. The new proposed work visa policy could be key here.
“We need to keep attracting great global people, companies and capital into our ecosystem – which will have further ongoing and self-propagating positive impact.”
Adam Ryan, founder and CEO of Think Procurement
“There’s no denying that this policy is a step in the right director for Australia’s startup sector, but questions remain around its implementation. Particularly if the Coalition doesn’t hold government after the next election. Both parties are keen on innovation, but there is no bipartisan approach here. This ongoing game of jostling over startup reform benefits, no-one. We need consistency for innovation to grow and prosper.
“For think, it’s great the government has used this policy to announce that it’s open to tenders from startups and small businesses. But it is worth remembering a lot of existing government systems are ingrained. This is easier said than done and will be a key point in our think tank conference later this month. How will the government enable local technology to gain a foothold against the giant ERP system endemic in government departments. What will they give the ERP systems to cede ground to start-ups?
“Another point of interest is the capital gains tax breaks for investors. It’s again a step in the right direction, but does it go too far? It’s worth asking whether Australia’s investment community are savvy enough to understand technology and pick winners here? Are we rewarding bad investments and what happens after a few ill-fated investments hit the press?”
Andy Crawley, director and co-founder at Byron Bay-based online lead generation marketplace Jack Media
“The sections we’ll look to read more into first are the changes to visa rules and changes to R&D grants.
“As a rural business, hiring is something that is always a little tricky to manage. We had to battle through the current visa process to hire one of our early employees. In some instances, we can be sure that our future hires will also come from internationals who need visas. We’re always happy to hire Australian talent but the reality is that there is only so much we can do here, particularly when we are asking people to move to Byron Bay to work for us.
“When we need to hire international staff we need it to be easy so we can do it and get on with focusing on our business rather than navigating red tape.
“We’ve spent the last 5 years building and refining our platforms and tech. While there are current rules that we are able to access certain grants and boost will enable us to push this back into the business, invest more in our technology platforms and speed up growth and development.”
Alec Lynch, co-founder and CEO DesignCrowd.com.au
“As an Australian entrepreneur, it’s fantastic to see innovation back on the federal government’s agenda. In particular, it’s great to see measures that will encourage more investment into startups through venture capital and equity crowdfunding.
“We do think the government could do more – particularly with respect to measures that would encourage startups to expand globally or encourage super funds to invest into venture and innovation – but these measures are a great start.”
Phil Morle, chief startup scientist and CEO of Pollenizer
On universities working with startups
“This is a massive two-way opportunity. Being large is no longer a competitive advantage to companies and the speed and creativity of the startup is crucial to thrive in these times. Pollenizer is busy these days scouting for startup talent for big companies to invest in for growth. And of course, getting smart money from the great strategic investors and customers that companies can be will fund more startups to succeed.”
On skilled visa
“Working across borders is crucial to building a global business. Because talent moves between countries we build bridges that lead to future opportunities. Silicon Valley and South East Asia are full of Aussies that can be safe landings for our startups as they scale globally. On the other side I have been able to work with talented people from other markets who are now important team members in Tesla, Google, Skype, Uber. We learned from them and our network is stronger.”
On Capital gains incentives
“This is fantastic. At one time because if the nature of my work my Pollenizer I sat on 11 boards. They were all startups and as such were 90 per cent likely to fail so it put an enormous amount of pressure on me to not fail in any of them. It is common for startups to sail close to insolvency just because of timing. A new regulatory context that allows timing to be managed is extremely helpful. Without it, directors need to close down companies that are about to become insolvent and have no other options to explore.”
On government procurement changes
“Having a customer is 100x better than having an investor or a grant giver. If this turns into real opportunities for startups it will be a game changer.”
Michael Jankie, co-founder at LeadChat
“This announcement makes sense and is right on point with what we’ve been asking for. We have people with psychology degrees as data analysts and coders, their understanding of human psychology gives us an edge in how we program to understand sentiment. A handful of these guys work remotely from other countries, we’ve been trying to get them here for 12 months, but unable to navigate the visa restrictions on one for one degrees or 3-years experience. This is smart policy that recognises the short-history of technological innovation.”
“We’ll see a shift from property investment into the start-up sector as investors chase a higher return that is no longer stamped out by capital gains. There is no doubt that this policy has considered how to deal with the inevitable decline in growth of both property and mining sectors. They are both over their peak and cannot sustain further growth, Turnbull & Pyne have just made Technology the new boom sector, much like mining brought great wealth into the country, this policy will bring it again. Lets hope the coffee prices in co-working spaces don’t jump to $7.50.
“Expect the flow-on to mean housing affordability stagnates rather than getting worse. A whole lot more listings of Australian companies in Australia, rather than taking the Atlassian route. An innovation explosion as competition for fund-raising decreases and we see more smart teams being given runway to build great products.”
“There is that now-famous rumour that Elon Musk was finalising paperwork to wind up Tesla as they needed more funds than they had time to raise. The US Chapter 11 laws allow for the freedom to hold on the bit longer before winding-up. The sector is, by its very nature, geared towards big risk taking. The only way to advance that is lower the penalties for the right sort of risk taking. We like this policy, we’ll put our necks out on the line that little bit further.”
“We’ve built technology that covers off all bases of security and compliance to be able to serve all levels of Government, yet the access to Government work is hugely pitted against us. Checklists about past financial records, ISO systems, use of Windows 95 computers and other archaic requirements have meant we are ‘too advanced’ for Government work. I think our accounts team will be making few interesting calls next week.”
Martin Hosking, founder of Redbubble
“In general Australia has produced a lot of good science. Where we have failed is in commercialisation. For example, we have precious few global technology companies. The US has spawned companies from Amazon, EBay, Google to Facebook and now the emergent companies of the sharing economy (AirBnB etc). Australia has no internet companies that come close to this although we have some emergent stars: Atlassian, Aconex and now Freelancer and Redbubble.
“Both the US and Australian companies are not triumphs of research but of applied development. Too often in Australia we have celebrated so-called tech success such as wifi while not understanding that real success is about creating great companies around any development. Many of our universities and research institutions have been preoccupied with the big ideas rather than commercial success. The announcement today suggests that the value of commercialisation is appreciated and this will be a welcome change in mindset from the Government which I hope can be followed by the other institutions and the media.”
Chris Noone, CEO of Collaborate
“Malcolm Turnbull is finally talking about building a sustainable future for Australia. Tony Abbott was fixated on re-creating a past that never really existed.
“This is good for innovation and great for the development of Australia. Our children’s future job prospects now look positive.
Opening up opportunities for startups to sell to government is really exciting. Government has a lot to gain from embracing sharing economy principles for the management of its own assets. We are looking forward to moving our engagement with the Federal Government to another level.”
Chris Whelan, chief executive of Wellington Regional Economic Development Agency
“The Wellington Regional Economic Development Agency welcomes today’s National Innovation and Science Agenda, saying it will have a positive impact across the Tasman.
“The Australian government has recognised the critical importance of innovation to our economic future. In Wellington, we’ve seen the positive impacts supportive local and central governments can have in enabling and fast-tracking the growth of innovative digital businesses. Our part of the world has the capacity, smarts and networks to thrive on the world stage, proving geography doesn’t have to be a limitation, just another challenge we rise to.
“In our experience a collaborative, empowered and networked ecosystem is essential to cultivating success in the technology and innovation sectors. Australia is our biggest trading partner and a market we want to further connect and collaborate with. Along with our colleagues in the sector, we’ll be working to develop the networks and partnerships between enterprise leaders in Wellington and Australia, to drive even greater recognition and success for our region on the world stage.”
James Chin-Moody, founder and CEO of Sendle
“Unlocking more investment capital in Australia for startups is a great step. But in my view the best part of this package is to use the lever of government procurement to spark innovation. As Australia’s largest employer with a workforce of almost 2 million and spender, you can imagine the massive impact it would have if the government started trialling services from startups.”
Gerhard Beukes, COO and CFO at nearmap
“$1 billion in government incentives and spending measures across science, research, commercial¬isation, capital, skills, and government procurement is great. However, what Australia’s innovation and science industries really need is consistent and sustained support. The government can assist by ensuring the measures implemented today do not change with a change of administration. This is more important than simply releasing a new program every so often, and will help safeguard more employment opportunities for our existing and future generations of innovators to work.”
Jodie Fox, co-founder of Shoes of Prey
“This is exactly the oil that the Australian entrepreneurial machine needs. I’m excited by the global perspective and the fearless (yet not foolhardy) approach to tooling and empowering this ideas nation. But we must also remember not all ideas should succeed — we must be aiming for a nation of inventors and innovators.”
Anne Moore, CEO of PlanDo
“As a founder of a tech startup I welcome the tax rebates on investments in startups. However, I think big business, rather than individuals need to be encouraged. By spreading the ‘investor pool’ out to large businesses, start-ups have more chance of actually securing investment. This means more companies can get off the ground, generating wealth and innovation to the economy. Start-ups would have access to so much more valuable advice and experience, from people working in big business, who could advise or mentor them on how to work with large corporates and hopefully prevent them from making expensive mistakes.
“By working with business, start-ups are more likely to develop new technologies or create innovative solutions that actually help businesses solve existing problems. An employee could have experienced an issue in his/her work environment that they’d like to solve or may see an opportunity for something to work differently and more efficiently. If corporates were given financial incentives to invest in start-ups, employees could launch their own start-up, backed by their employers.
“More people who haven’t got a technology background, like myself, would be encouraged to launch a start-up business. This would encourage more women into the start-up community, something we desperately need, so we’re not developing new technologies that are solely designed and built by men. Women are the most powerful consumers today after all, driving 70-80% of all consumer purchasing. The most successful technologies and innovations are those which appeal to both men and women.”
Jason Philactides, VP sales APAC at Vend
“This is a great initiative by the federal govt. and a huge step forward for Australian start-ups to have capital gains pressure relief for start-up investors. Whenever an entrepreneur begins the journey of building a start-up business there is always the question, how will I fund the move from stage 1 to stage 2? Generally the best way to do this is working with Venture Capitalists who are willing to invest in start-ups in exchange for stock. So having the capital gains relief will not only help provide start-ups with some well needed funding, it will allow them to tap into some great investor minds and networks, but it will also encourage entrepreneurs to solve problems through tech that they’re passionate about.”
Steve Orenstein, CEO of Zoom2u
Orenstein welcomes the changes and is hopeful this will lead to a greater understanding of the unique challenges faced in Australia’s start-up industry with the removal of some red tape. He reports that when Zoom2u moved into their new office recently they wanted fibre which was available in the street.
“We couldn’t get it because our business had less than 15 employees and we had to use the NBN. Except the NBN isn’t available yet. This sort of red tape is painful for business. It meant we had to go with a slower internet connection.”
Chris Power, sales and marketing director at Ento
According to Power 457 visa changes will be hugely beneficial.
“Hiring talented people is our number one problem. There aren’t many people in Australia who’ve got experience working in high growth technology businesses. If we can capture some talent from overseas, they will help educate and nurture future Australian talent on global best practices. This will also incentivise more Australian start-ups to stay here. Capital gains tax breaks are also highly beneficial to fuel investment in a sector that can generate massive job growth for our country.”
Simon Kantor, CEO of IoT Group
On the Predominantly Similar Business Test.
“This is an excellent concept and policy from Malcolm Turnbull that will affect almost every ICT start-up at some point. Nearly every business at some point comes to a fork in the road of its development where they need to pivot.
“For the IoT Group this point comes at almost a daily basis – where we are constantly shifting focus in our laboratory, performing experiments on new technologies and systems then choosing the most viable options, thus changing the business focus in small but substantial ways.
“For us, that’s what makes the IoT Group so different and in my opinion will lead to great success.
“For most other technology companies and start-up businesses where they focus is a lot more acute – pivots often means an almost complete shift in business direction where there technology may actually be commercially viable in a completely different area to the original concept.
“The PSBT will mean that our business and many other start-ups will be able to offset their losses (or expenses) in R&D and power forward to commercialisation. I am a huge fan!”
Nick Austin, founder and CEO of Divvy Parking
“Looking at the general success of collaborative consumption and share economy business models with Australian consumers, it makes total sense for the government to allow these educated and enthusiastic individuals to get behind an idea or business they believe in. They should be able to support a business in more ways than buying their product or services. “
Josh Anthony, general manager of River City Labs
“We are thrilled to witness such an energised commitment by the Turnbull government to boost Australian entrepreneurship.
“With River City Labs’ expansion plans on the horizon, I am extremely encouraged to see a consistent and collaborative national approach to Australia’s innovation sector. To have our government pledging its support to growing the number of startups establishing businesses here is a landmark win for the startup and entrepreneurial community.
“The $8M incubator support program investment will go a long way to creating a more vibrant startup community in Australia – bringing together innovators who can bounce ideas off one another and mentor each other. This will create an ideal culture and will facilitate the growing trend we are witnessing in Australia’s entrepreneurial arena.
“The proposal to establish five landing pads in major, global hotspots is also critical. Whilst increasing incubators and accelerators will grow the number of startups here in Australia, putting into place landing pads in key destinations will allow our entrepreneurs to more rapidly expand into pivotal export markets.”
John Stefanac, CEO of Xped
“This is a HUGE step in the right direction. Given Turnbull’s background, it shouldn’t come as a surprise that he recognises the importance of technology and the part that Australia and its citizens can play.
“We have stopped looking back on what has sustained Australia in the past, i.e Primary Industry and Mining and are now looking forward and setting the direction of what Australia needs to focus on in the future – not just being part of that future but actually defining it. This is a role that many Australians are all too familiar with and have had to travel overseas to realise it.”
Bridget Loudon, CEO of Expert360
“We welcome the substantial steps announced today to modernise Australia’s economy. Not only does it show that we’re keeping up but that we could pave the way for global best practice by 2020 if we keep this momentum. The risk and reward of getting this right or wrong, respectively, is huge.
“At Expert360, we’re pleased in particular to see initiatives aimed at boosting capital and talent especially early-stage investment tax incentives and visa measures. We’ve has been advocating for these policy measures for some time and it’s great to see government listening to and working with genuine stakeholders.
“The tax incentives measures are probably one of the biggest game changers in the medium term for the Australian ecosystem. It’s a 20% deductible offset which is more or less equivalent to a 50% taxable income deduction, but easier to administer. The only critical piece the government should consider is to backdate to today’s announcement. Otherwise, we don’t only risk but will see an instant drought of angel capital in Australia as investors wait for tax deductible legislation. This would be an issue.
“Being in the Series A/B stage of capital and growth with Expert360 removing friction around visas will genuinely positively impact our business.”
$13M for more women in stem
“We have one female developer (out of a team of 6) and she’s from San Francisco. I’m surprised and delighted to see the $13M for more women in STEM.
“More people in STEM is excellent. Scientists, logicians, engineers will be the future changemakers, so it’s important to have make sure we’re growing a gender-balanced group of bright, ethical, Australian leaders in that space.”
$8m incubator support program
“We were able to be successful (and I think many are) without an incubator, however, the greater cultural significance here is to give a structured path to new entrepreneurs coming from a corporate track or even straight from school. “
What’s not on the agenda
“The above shows how we can help generate successes but it will be for nothing if we do not celebrate them. One of the biggest things that I think the government can do is simply celebrate successes more. “
Peter Bradd, CEO of StartupAUS
“The innovation statement announced today is a great start, and shows clearly the government is intent on real action rather than just rhetoric. We are particularly pleased to see policies aimed at boosting capital and talent available to startups. Some of these policies, such as tax incentives for angel investors, have been central parts of StartupAUS’ policy platform for some time. We expect this scheme to substantially boost seed capital available to startups.
“We’ve also been calling for the introduction of entrepreneurship visas, which will significantly boost the talent available in Australia.
“It’s a credit to the government that it has listened to the needs of its stakeholders on this topic. Startups have had a strong and consistent voice in this process – and the result is that we are now seeing innovative, effective measures to boost jobs and growth.
“Transforming Australia’s economy to take advantage of emerging technology is no easy process. Malcolm Turnbull’s government has moved very quickly on these issues, and these policies establish a strong initial platform for growth. We’ve got a budget and an election next year, so we’re going to focus on consolidating these gains and setting ourselves up for the big strides we still need to take in order to start to catch our international competitors.”
Kate Morris, founder and CEO of Adore Beauty
“First of all I find it such a relief to see our government making a genuine investment in science and innovation. Australia is not a manufacturing economy any more and we need to look towards replacing those jobs for the next generation.
“I am very pleased to see some real action being taken to encourage women in STEM, combined with the additional funding for digital literacy in schools. I love the idea of a national concerted effort to encourage more girls to embrace STEM careers and to promote female innovation role models. “
Steve Baxter, founder of River City Labs
“It’s encouraging to see Prime Minister Turnbull and his ministry follow through on their promises to prioritise innovation and the growth of our Australian startup sector. I am confident today’s policy framework will mark the beginnings of a new era for Australia’s startup and entrepreneurial community.
“As a passionate advocate of the pipeline approach, I believe to achieve a truly entrepreneurially friendly and inclusive environment we require a collaborative, consistent and multi-faceted approach to business. In my view, there has been too much emphasis placed on the traditional support for university and education sectors in today’s announcements. Left unaddressed, this will be to the detriment of our global positioning. To compete on the world stage, we need to put the focus on supporting the people with real skin in the game, in the trenches of our startup community.
“Another important point within today’s statement is the emphasis on giving Australian entrepreneurs the confidence and the support to build their entrepreneurial skill set on home soil. Most entrepreneurs have made a number of startup attempts before they succeed, and we need to encourage Australian entrepreneurs to start and grow their own businesses here, to be mentored here, and to potentially fail here and pick themselves up and do it all again if they do. The government’s plan to adopt bankruptcy laws more closely aligned with the US’ system is a strong first step in that direction.
“We have never seen innovation at the top of the national agenda before – we need to make the most of this historic opportunity. This demands collaboration between all levels of government, our higher education sector and industry.
“The policy framework is in place – Australian entrepreneurs need to make the best of this extraordinary opportunity and get out there and start creating the new businesses of the future.”
Adrian Di Marco, executive chairman and founder of TechnologyOne
“The initiatives announced in the Innovation Statement sound very positive on the surface, and capitalise on some great ideas from the UK. It is important that the government takes a long term view, and is committed long-term to these initiatives. What we don’t want is a change of heart, like what happened with the Forestry Industry years ago, which saw the industry implode and many investors hurt.
“There is a lot of positive energy around the technology scene in Australia now, and we hope to see this continue and grow through the opportunities the Innovation Statement will bring. Start-ups have the potential to lead this effort and engage in national discussion by focusing on sustainable R&D strategies, market-ready innovation, and maintaining an entrepreneurial spirit around tech innovation.
“Once a start-up has gained momentum and growth, the entrepreneurial spirit that has brought them success can easily diminish. Start-ups need to recognise the importance of ongoing R&D investments, and need to continuously improve and evolve their products to meet market demands. Through R&D, start-ups can continue to reinvent themselves and their business to keep pace with changing technologies and market developments. At TechnologyOne, our significant investment of 20 per cent of revenue back into R&D ensures we are encouraging local and sustainable innovation.
“Start-ups typically fail at transitioning ideas and innovations into marketable products that can turn an actual profit. For a company starting out, it is essential to gain a thorough understanding of their target audience, their pain points, and potential challenges that could be coming up, so their product can be sold from the launch date based on a sustainable business model. The tax breaks outlined in the Innovation Statement should assist with this shift, however the government must proceed cautiously with choosing the right businesses to sponsor: those with demonstrable results and models.”
Andre Eikmeier, cofounder and joint CEO of Vinomofo
“Finally, it feels like there’s solid momentum being achieved to foster innovation and make it a priority, in Australia. More than about time we saw coding on the curriculum in primary schools, but why not from Year 5 onwards?
“The tax incentives for early stage investors sound like they could drive money in that direction, but whether that’s where it’s needed or not is up for debate.
“For me, the real driver of jobs and stories in the Australian startup space is in growth stage support. I think founders need something of a baptism of fire in the early stages to teach them how to differentiate, to teach them to focus. I’m not saying it’s not good to see more support to get ideas to product, but if it’s too easy, then companies run the risk of not having learned what they need to learn for the next stage.
“I like the focus on categories (eg: biomed), but would love to have seen backing into renewable energy development”.
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