Startups lost a number of programs which funnel funding their way in Joe Hockey’s federal budget, with programs like Commercialisation Australia replaced with a new entrepreneur support program.
But so far, there hasn’t been much clarity from the government on what exactly this $484 million program will do.
Coming under industry minister Ian Macfarlane’s portfolio the Entrepreneur’s Infrastructure Programme was allocated $484.2 million over five years and is due to start on July 1.
The EIP has been slated as a program which will support the “commercialisation of good ideas” and boost small businesses.
It is currently accepting submissions from industry groups as part of a consultation process.
StartupAUS, an industry group which represents Australia’s tech startup community, and whose board members include Bill Bartee of Blackbird Ventures and Alan Noble from Google, has made a submission outlining what it believes needs to be done to support Australian startups.
If we know one thing about Australia’s startup community it’s that there’ll be a range of competing views on this subject, but here, for the record, are the key points from the StartupAUS submission.
- Cutting funding is a “backward step”. Reducing funding for the program by more than 50% is going to hurt startups. Commercialisation Australia had $82 million a year in funding while the new commercialising ideas stream of the EIP will have about $35 million a year it its funding pool with individual grants capped at $250,000. Making it even harder to access capital, StartupAUS said will speed up the existing trend of Australian startups going offshore as they seek out funding.
- Sector funding bias is too simplistic. There should be no bias for particular sectors, including for example mining or agribusiness. Startups should be funded on the basis that they show promise.
- Streamlining and cutting bureaucracy. Consolidating multiple government agencies, including Commercialisation Australia and Enterprise Connect will provide some benefits.
- Startups need to be defined, they are different from SMEs. StartupAUS said not defining between the two shows a “lack of clarity in the types of companies the government is targeting”.
- Improve startup environment. Without a competitive startup ecosystem which addresses access to capital, talent and markets startups will continue to go offshore. StartupAUS said the new program should support companies that have “originated in Australia regardless of where they are domiciled”.
- Remove the need-for-funding test. Under the previous Commercialisation Australia program the test determined whether it believed companies could source funding from private investors. This saw some startups shop around for investor rejection letters and excluded promising companies from receiving government support.
- Parts of the old programs should stay. Parts of the Commercialisation Australia should continue under the new program as it addressed a funding gap Australian startups faced. It does however need to include companies that are focussed on business model innovation, not just “hard” tech businesses.
- Boost staff numbers. With 26 case managers staffing the commercialisation arm of the EIP, StartupAus said it is a “significantly smaller resource than would be needed to make any material contribution in an advisory capacity to Australian startups”.
- Making startups write business plans is out of touch. StartupsAus said it was a costly application process and removing the requirement will streamline the program, adding, “for startups the notion of writing a business plan is no longer accepted as good practice”.
We do not believe that the provision of a network of case managers as advisers to startups is a good use of funds and would be a duplication of services already provided by incubators, accelerators and startup co-working spaces.
The group said startups need to be supported and distinguished from small business because of the economic value they can potentially deliver when they set off on massive growth trajectories over short time periods and their ability to transform exiting industries with innovative ideas and technology.
The full submission is here (PDF).