David Gonski has blamed Australian investors’ penchant for short-term gains for a shortage of early stage venture capital in the country.
Australian technology startups have traditionally looked across the Pacific to Silicon Valley for early stage capital, mentors and growth, although some in the community say the situation is improving.
Speaking on a panel of business chairmen at an Australia-Israel Chamber of Commerce event today, Gonski, who is chancellor of the University of New South Wales, said it was a “tragedy” that local entrepreneurs had to go overseas to make their fortunes.
Here’s what he said:
We need an industry that is involved in early-stage investment and I don’t think we can get that when the major pools of money are being judged on 30, 60, 90 or 180 days because these things take much longer.
In America the market is much deeper – they have funds that do that sort of thing. We are a smaller market but we could achieve that if we had this change from short-term [thinking].
As a chancellor, I get one call a week – if not two – with people saying: ‘We’ve developed this at our university; have you got somebody who can give us some money?’
I could refer them to the CSIRO, which has a limited budget to do their own thing, or I could refer them to some of my friends who may have some money to invest … [but] we need to develop [an Australian pool of] funds to develop innovation.
That’s something that Israel has done fantastically well, that’s something that America has done fantastically well.
I think that it’s a tragedy that people have to leave here to make their fortune or indeed their discovery.
Gonski is currently chairman of the Australian Government Future Fund and Coca-Cola Amatil, and has long called for investors to stop making decisions based on monthly or quarterly figures.
He agreed with fellow panellist Belinda Hutchinson – who chairs insurer QBE and is chancellor of the University of Sydney – that directors tended to think for the long-term, but said shareholders did not see things the same way.
“At the moment, if we say that our results are this or that, people immediately cane the stock,” he said. “That is, I think, wrong.
“People should be saying, ‘Why is that the case? Are they building a better future or are they incompetent?’
“If it’s the latter, fine. If it’s the future concept, they should embrace it. It’s exciting.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.