Our high-tech entrepreneurial ecosystem is arid and hostile, but greater collaboration between entrepreneurs and government could lead to economic growth.
To investors, technology entrepreneurs seem unambitious or uncompetitive. To those entrepreneurs, Australian investors seem risk-averse and ungenerous.
One venture capitalist has remarked, “in terms of the availability of capital and risk appetite we are in the Dark Ages.” 99dresses founder Nikki Durkin agreed, lamenting, “in Australia failure is seen as a bad thing... It's a bit of tall poppy syndrome.”
The result has been a steady brain drain of entrepreneurs overseas in search of a more fertile environment – larger investments, accessible markets, collaborative networks and mentorship. Media outlets from Fairfax to Vibewire have tried to generate public concern about this attrition rate, and to attract the attention of policymakers.
But government has been unresponsive.
Besides the occasional overture in the Australia in the Asian Century White Paper or the Innovation Statements, politicians are apathetic towards the development of knowledge-intensive, innovation-driven start-ups. MPs are accustomed to hard hat, fluorescent vest photo-ops in factories. They earn no political capital by supporting lone-wolf entrepreneurs who operate out of garages or solicit venture capital firms.
The high-tech start-up community struggles to articulate the reasons government should intervene. Why should the public care about e-commerce websites and software algorithms?
In part, this is a problem of representation. There are 1,500 tech start-ups in Australia, but the community does not have a visible peak advocacy body. This might change in the near future with initiatives like StartupAUS, a new collaboration between Google Australia and leading entrepreneurs to campaign on behalf of high-tech entrepreneurs. But until then, the voice of the start-up founder remains conspicuously absent from the conversation.
As the start up community grows and coheres, it must press its case. The public returns from a vibrant entrepreneurial society are great. High-tech start-ups are a valuable resource, not a poachable export commodity.
And they could hold the key to our future economic growth.
According to a recent PricewaterhouseCoopers report, high-tech start-ups (encompassing everything from biotechnology to online retail) could contribute 4 per cent of GDP to the economy by 2033 and directly employ 540,000 people. It would be comparable to the GDP contribution of the entire retail trade sector. But at present, high-tech start-ups comprise a mere 0.1 per cent of GDP.
This optimistic vision of a post-mining economy depends, firstly, on increasing the number of new start-ups. Unfortunately, it is here that high-tech entrepreneurs encounter a significant funding gap. According to a report by Deloitte, Australian start-ups receive a mere one-fifth of the early-stage funding available to those in Silicon Valley.
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