Luke Anear, the founder and CEO of SafetyCulture, was invited to speak at the Australian Financial Technology and Regulatory Technology Select Committee. The inquiry examines how Australia can better foster startup culture and further its growth. This is Luke’s opening address on how to support the technology industry in Australia.
SafetyCulture’s life started when we were three people in a garage in the northern suburbs of Townsville, in Queensland.
I had been running businesses since the age of 16 and my goal was to make safety and quality available to every worker in the world. I was a single father with 50% custody of two girls aged nine and 11, and we all shared a single toilet at my house with my staff.
I understood that technology could play a role in helping workers around the world do their jobs better, but I didn’t have a network of other technology founders or access to capital. Traditional lenders wouldn’t loan us money as we had no assets.
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The local AusIndustry representative introduced me to the Commercialisation Australia grant process. I also learnt that we required venture capital investment to match any grant funding.
As a result of receiving a $1.79 million grant and matched venture capital funding eight years ago, I leased an office in Townsville and employed a team of 30 product developers over the following six-month period.
That foundation has directly contributed to SafetyCulture employing a further 540 people and adding an additional 25 people a month, with 350 of those people employed within Australia. Our average salary of our employees in Australia is $128,931.
In 2021 SafetyCulture will generate more than $100 million in revenue with an 82% gross profit margin. Eighty per cent of our customers are outside of Australia, therefore, we are an export business. Software is unique in that you can build a product once and sell it millions of times without any distribution costs, thanks to the App Store.
SafetyCulture has been valued at $1.3 billion and attracted $180 million in funding, with the majority of the funds coming from overseas. Each year we have reinvested into building the business by creating more jobs and continuing to develop new products.
What I have just described is a success story on every level.
And yet, today, the Accelerating Commercialisation grant program has been scaled back to a $1 million cap and most founders are discouraged from applying due to the likelihood of success. Subsequently, the Research and Development Tax Incentive program has been significantly challenged recently.
We need to do two things:
- Funnel investment into technology companies; and
- Attract the best product teams from around the world.
If we do that, we will build products that the world will consume.
Many of the best people for the job have not completed university degrees and do not have five years experience. Certified technology companies should be able to attract the best talent, without university degree restrictions. Early-stage companies cannot pay high salaries to meet the current criteria for senior applicants, and so equity is provided to offset salaries.
We need to simplify employee equity. It should not be taxed upfront. It needs to be taxed at 24.5% as a capital gain upon sale, not as income tax, so we can issue equity and top-ups without penalising workers when they join a company.
Remuneration used to consist of salary, leave and superannuation. Today it also includes equity. Equity needs to be as simple to offer as leave or superannuation.
Australia benefited significantly from the immigration in the ’60s and ’70s. We know that attracting technology founders and workers is critical for the future of Australia.
‘Brand Australia’ has never been stronger following COVID; we have an opportunity to attract the world’s best people, but we need to act now.
I propose we set up a green belt for technology talent allowing visa applicants between Australia, US, Canada, UK, Germany, The Netherlands etc to relocate to Australia provided they are working in a technology company.
SafetyCulture is a fast-track visa accredited employer and we are audited to ensure we are complying with the legislation. But we need to broaden the criteria for applicants.
We need to urgently incentivise technology companies to establish their product development within Australia. This will lead to new product development and innovation.
This article was first published on the SafetyCulture blog.