Last week was a big week for the startup ecosystem, and the country as a whole, as the Turnbull government delivered its first budget.
Given it is an election year budget – and the first real opportunity for Malcolm Turnbull to outline his vision for the country’s economic future – the night itself was a surprisingly quiet one for the sector.
Much of the startup community saw it as a chance for the government to make good on its rhetoric about continuing to build momentum on innovation and Australia’s economic transition. And while we did hear from the Treasurer that “harnessing the power of innovation and entrepreneurship, to create our own ideas boom, lies at the heart of our plan to support jobs and create growth”, the budget itself didn’t deliver many new ideas about how, exactly, we are going to harness that power.
Thankfully though there has been some fantastic work going on behind the scenes over the last few months.
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The morning after the budget was delivered we saw the early-stage investor tax incentives pass the Senate. This was the final stage of a complex political process that has been conducted at break-neck speed by government standards.
It is a substantial piece of legislation, worth $106 million to startups, and it will now definitely come into effect from July 1.
The government worked hard to deliver this – and it wouldn’t have been possible without support from the Opposition, who supported it in the Senate despite the fact that they didn’t feel the measures went far enough to support entrepreneurs.
The tax incentives are a huge win for startups. They will rapidly increase the amount of capital available, and broaden the sources of capital startups can call on. It’s also a real windfall for anyone interested in investing in startups – Australians of all stripes (not just sophisticated investors) now have the world’s most generous incentive to explore the investment opportunities available in this exciting space.
StartupAUS has been actively promoting the adoption of early-stage tax incentives for startup investors for some time.
In July last year our CEO at the time, Peter Bradd, led a fact-finding mission in the UK, where they have had a similar scheme in place for since 2012. The evidence from Britain was compelling, and by the time the StartupAUS Board met Christopher Pyne in October we had adopted angel investor tax incentives as our number one priority for the sector. StartupAUS has also worked closely with Treasury and the government since the policy was announced in December to help get the scheme right.
This scheme is a game-changer for startups. Research done in the UK by Deloitte suggests the number of angel investors increased by 58% as a direct result of the introduction of the scheme. If we see those kinds of numbers, Australian entrepreneurs will enjoy substantial improvements to their ability to access early-stage capital and investor talent.
The fact that the government has kept working hard on this through the turmoil of an early budget and an early election is gratifying. The budget might have been disappointing for startups, but this should reaffirm that they remain a key part of the national economic agenda.
As a sector, we should celebrate the new tax incentives as a triumph, and look to build on this success and momentum in the upcoming election campaign.
Bring on the election.
We see this campaign as a key opportunity for both the government and opposition to continue to outline their vision for startups and innovation in this country. We can’t rest on our laurels here – our competitors are acting decisively. We can’t afford to be left behind.
We’ll be working hard to ensure – whoever wins in July – that Australia has a credible plan to capture some of the extraordinary value that technology is delivering to leading economies around the world.