Government at all levels has failed the tech startup ecosystem. It is time for a national summit about this tech startup ecosystem opportunity. Our industry is in flames. Let’s fix it in 2015.
The latest data says we are failing REALLY fast in global terms and need to work together. The rest of the world is moving much faster and we are being destroyed because of our own inaction.
Tech Startup unicorns are now worth more than Australia’s big banks. The big 5 (Commbank, Westpac, ANZ, NAB, Macquarie) are worth around $425 billion (and took decades or centuries to get there) while the tech unicorns (privately held companies worth $1b or more each are now approaching $500 billion (and most of them did it in the last 2-3 years).
The average tech unicorn in mobile is now nearly a deca-corn – $68.5 billion in new value was created in the last quarter alone and the average company is now $9.3billion which is nearly a deca-corn (yes silly name for awesome companies worth ten billion or more). To put that in perspective that means about half a CommBank in terms of value was created in just 90 days.
Even early stage in Europe is booming – $1 billion in seed capital was recorded by a Dublin conference into just 40 of their exhibitors using expo stands just 1m wide. And despite the recent China market issues, their share of the unicorn list is now on par with and about to eclipse the USA.
This may sound good for the global tech startup sector and depressing for us here in Oz but the real story is actually much much better globally and much much worse for Australia’s share of the global pie.
These “global” figures above excluded listed companies which is around another 2.5 to 3 TRILLION (that is 12 zeroes) just in US and EU in value created in the last decade or so.
Most of these figures for private companies are only disclosed (i.e. known to us) because the companies want to share their good news in order to raise funding. There are plenty of quieter and more profitable ones globally we don’t even know much about – yet – think China, Russia for example.
These figures exclude the privately held centurions and gazelles (worth $100 million or more and moving fast) that are publicly but inconsistently disclosing, this may be nearly as much in value again and is hard to track especially in less transparent countries.
Australia’s global tech startup ranking by genome/compass (based on Sydney but Melbourne was in there too) slipped from 12th in 2012 to 16th in 2015.
Australia has just one company in the unicorns list (Atlassian which is moving offshore it seems) and just a handful in the centurions and gazelles (freelancer, campaign monitor, maybe others like tyro, canva, 99designs, design crowd, saasu, invoice2go). Fortunately we do have hundreds if not thousands coming up, but there needs to be more, many many more.
Our vision is for 2 to 5 thousand tech startups around every major population centre and major university. Today it is less than one tenth of that even in the major cities.
Today the picture is cute but in global terms irrelevant. To get on the radar we need to literally be ten fold better and more active.
The short story is we are simply not pulling enough levers to grab this opportunity. We are pulling one lever at a time just a little bit and only for a short time. We need to pull every lever and policy as far as we can immediately or we will continue to miss the boat.
We are 15 years into the biggest wealth creation and social impact wave to ever hit humanity – powered by the internet and mobile. Disruptive Innovation as coined by Prof Clayton Christensen is just starting to roll around the world and may continue for a decade or more. Every industry is being disrupted by software.
Every Industry, even the ones you don’t think are being disrupted.
But the battle lines are being drawn NOW.
Some recent actions have bee positive but not urgent or aggressive enough. Local government like City of Sydney have issued a report that at least shows they are looking at the issue. State Government is also persistently doing small things, same with Federal Government.
But… Putting us back to an employee share scheme from years ago (recently done by the Federal Government) with more constraints and complications and no positive global differentiation is not the answer. Implicitly excluding us from the future fund is naive at best. Not enabling our super funds to easily invest is just allowing other countries to benefit at our expense as our money trickles across the ocean and back again with fees and taxes extracted by others along the way.
The global tech startup world is moving fast and passing us by. RIGHT NOW.
Time to act. Time to get together and time to have a national summit on this issue. NOW.
SydStart and Startup Spring were simple ideas when we first floated them in 2009 and fortunately people with more skill, time and resources than any one individual made them happen. We need to use the next month or so as an industry to call on our leadership at every level for a national summit in Sydney (our economic and startup capital) on this issue to address our systemic quick sand and endorse a national plan.
We can’t continue running through mud. This enormous opportunity for future generations needs attention now, before the end of 2015.
Here is a draft five step plan, most are supported by research here or in other jurisdictions:
- Global grade talent must be easier to source, train and keep in the LATEST skills.
- We must be hyper-connected to get ahead, stay ahead and be more resilient and flexible. Community density is key, not in 3 or 5 years but NOW. Core hubs like Fishburners, iCentralCo by The Start Society, Hub, Tank Stream Labs, York Butter Factory, Inspire9 and more are essential and must be grown literally 10-50 fold in quality, density and space ASAP.
- Investment must be easy, consistent, large and better directed. Future Fund. Direct investment by Super funds via a regulated open platform. Tax concessions. Co-investment. Simplification. Not one of these but ALL.
- Industry Identity, Advocacy and Awareness needs to be created firmly and persistently by all stakeholders. Not just entrepreneurs but every single one of the enablers (government, accelerators, investors, incubators, educators, mentors etc) that feed and rely on entrepreneurs too.
- Create a bigger, accelerated, flexible funnel into the industry. Women are dramatically under represented and engaged. Also, education is starting too late to be a career choice so needs to be K-12 too. Education is not aligned with todays best practice. University curriculum is slow to update and aligned to legacy revenue, there is a 2-5 year gap between what startups use and what universities actually teach.
Our industry size today is circa 2 to 5 thousand, including enablers it is probably 3 to 10 times more. Meanwhile our nation is roughly the population of California with close to one thousandth of the wealth creation, intellectual property and social impact being created in an enduring manner.
The time to act is now. Lets hold a national summit on November 12th to create our new national focus on being the start society. November 12th is the day (or we could run for two days or even three or four days) after remembrance day, it seems as good a day as any to start looking forward to our most possible future scenario for sustainable success.
We can host it here at iCentral but frankly a major venue like the Opera House, NSW Parliament House, The Sydney Town Hall or ATP would make more sense.
Every major speech and presentation over the next ten weeks can throw items into the pot for consideration at the summit and we will collect it into Trello tiered by local,state, federal and other groups then facilitate voting.
We’d also like to crowd source some funding to facilitate the conference.
The Start Society is more than the name of our organisation, it could be the best description for Australia’s next cultural core identity as a national of creators, entrepreneurs and tech enabled global contributors, influencers and maybe even leaders.
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