We are still awaiting the details of the Federal Government’s Entrepreneurs’ Infrastructure Program, and how this may impact the Australian entrepreneurial ecosystem.
While this program is estimated to provide $484 million of funding, this is only half of what was spent under now-scrapped programs such as Commercialisation Australia, the Innovation Investment Fund and the Industry Innovation Precincts, representing a significant decline in government spending on entrepreneurs and innovation. While many agree that government programs can be improved, the cuts show a lack of understanding of the Australian entrepreneurial ecosystem.
It also places us behind other nations that have put the needs of entrepreneurs at the centre of industry policy, recognising they are a driver of economic growth, prosperity and innovation (for example, as seen by President Obama’s Start-up America initiatives). Many agree that the current budget seems to focus more on SMEs rather than high-growth technology companies, or smart specialisation for the nation.
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There is a glimmer of hope that the government will finally address the Employee Share Option Program (ESOP) in Australia, which is considered a crucial way to incentivise early employees to work in a start-up (and a barrier that all stakeholders have been lobbying to change for many years). Development of crowd-sourced equity platforms are not highlighted, however the issue is currently under review by the Federal Government. Yet overall, this budget points to a broader lack of understanding of the Australian entrepreneurial ecosystem and also the nature of entrepreneurship and innovation.
In a recent study completed at ATP Innovations, Australia’s largest technology incubator, we interviewed many entrepreneurs to understand what entrepreneurial life is like in Australia. We learnt of the difficulties in hiring and retaining key employees in the early stages (with taxation around ESOP the main issue), we listened to mixed views on whether it was necessary to go to the US to secure venture capital funding, to overcome the conservatism of the Australian VC market.
We observed the significant impact that R&D tax concessions can provide – not in determining whether to pursue a technological venture, but in keeping start-ups alive. We noted the value of attracting larger technology firms to locate or operate in Australia (through various industry innovation support programs and incentives) due to the spillover effects for the local ecosystem. So what is it like being an entrepreneur in Australia?
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