Let’s be very clear about one thing: there has never been a better time to build a startup in Australia.
The tools available to support budding entrepreneurs have never been simpler to use. It has never been easier to access capital and global markets. Never have so many people wanted to leave the formal economy to go and build high-growth technology companies.
In the past few months, it is true, the startup industry has suffered a couple of setbacks.
Like everyone else, I was disappointed to hear Muru-D and Blue Chilli are being forced to adapt their business models in the face of a changing funding environment. These programs made important contributions to the creation of the startup ecosystem in Australia and we can only hope they will continue to do so under new operating models.
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Similarly, CSIRO’s ON program has been an enormous success. Its ability to directly engage with Australia’s scientific community has helped pull researchers into the startup community in ways that will immeasurably benefit the nation. If federal, state or private interests cannot find a way to fund the accelerator past next June, it will be a great loss to the industry.
But let us not lose sight of the bigger picture here.
The success of the government’s ESVCLP policy has helped attract billions of dollars into venture funds that directly invest in early-stage companies. As AirTree partner John Henderson wisely wrote a couple of months ago, investments by the top 10 ESVCLP funds are directly responsible for 12,500 jobs, according to LinkedIn research. This statistic does not even consider platforms such as Airtasker and Expert360, which facilitate enormous gig-economy employment.
At the top end of town, these investments are already yielding significant results. Australia currently mints a new unicorn on an annual basis. According to Nick Crocker, general partner at Blackbird Ventures, more than 50 Australian startups founded since 2011 are valued over $100 million. Fourteen are worth more than $500 million, and six — Afterpay, Airwallex, Canva, Zip Co, Zoox and 10X Genomics — are worth more than $1 billion.
There is also plenty to be excited about at the earliest stages in the ecosystem. Antler entered the Australian market in March and has encountered nothing but positive signs about the health of the local industry. Our first program received over 1,000 applications, clearly evidencing the underlying demand to build a company in Australia.
In what is a good problem for the ecosystem to have, Antler’s graduating companies will find it difficult to get space in the Sydney Startup Hub, which after only two years of operation is already packed to the gills with early-stage startups. The success of the NSW government’s Startup Hub project has led it to think even bigger, and we remain hopeful it will proceed with a technology and innovation precinct (TechCentral) near Central Station and Eveleigh, in what would amount to another huge boost for the local industry.
Similar projects are underway in Melbourne, Brisbane, and Adelaide, suggesting a widespread understanding, at least at the state level, that everyone in the nation needs to be focused on supporting startups and innovation.
Of course, it’s not just the evolution of our local ecosystem that matters. We need to improve quickly and, more importantly, we need to improve more quickly than our competitors. Here, regrettably, we are failing.
Sydney has suffered its fourth-straight fall in Startup Genome’s annual global startup rankings. And while Melbourne’s performance offered up a more rosy picture, StartupAUS chief, Alex Macauley, correctly commented: “Reports like this remind us that local growth is great, but this is a global race with very real prize money and lots of competitors. We need consistent, long-term support to ensure we’re a genuine contender.”
Startup founders and their investors are clear-eyed about the reality of success in the startup environment. Most companies fail, and those that survive can expect to wait eight to 10 years for an exit, according to TechCrunch. Those of us who are in the industry recognise the risk and our need to be patient in waiting for the rewards.
Our commitment to innovation needs to be the same. There is a reason that ‘moonshot’ has entered common parlance — creating world-changing technology takes leadership, commitment and steely resolve. Rather than hand-wringing, we need a full-throated commitment to innovation from federal and state governments — and for the dollars to follow. Corporates must continue to invest and engage with the local ecosystem and not lose faith if they don’t see immediate returns.
We are in the midst of an epochal change in the ways that companies are formed, financed and scaled. Nations and incumbent companies that fail to adequately embrace these new economic conditions will simply be left behind.
As a society, we must ensure we have adequate safety nets in place for those who do not succeed or who need our support. And, of course, we need to stay firmly focused on the task at hand: to keep increasing the number of high-growth technology companies that are built on Australian shores.