Thursday, September 12, 2013

Aussie Startups in Need of More Government Support for Success

The coming federal elections in Australia seems to have amplified just about every issue on the political agenda, while also making advocates of various causes all the more vocal and outspoken. Australia’s startups, for one thing, are expressing their intention of becoming a more central pawn, on the country’s economic chess board. This view is not without just reason, as Australia’s economy is a worthy topic for debate, especially in the face of an approaching election poll, set to happen in under three weeks, as of the date this article was written. Factor in all the recent talk about Australia becoming a major digital economy at a global level, by 2020, as well as the figures, which say some 60 per cent of the country’s workforce is employed by a company with 5 staff members or less. If there was ever a time for small, emerging companies to get their voice heard down under, then now seems to be it, by all accounts.

This view was also substantiated by a report published earlier in 2013, following research conducted by one of the world’s leading financial analysts. The report, paid for by the Australian branch of search engine giant Google, attested to the startup sector’s immense potential for growth. According to the research, in two decades, Aussie tech and IT startups might be able to rake in $109 billion for the country’s economy. That’s about 4 per cent of Australia’s gross domestic product, a sizeable ratio further improved by the 540,000 new jobs tech startups stand to create by 2033. Optimistic as these stats might look, they are still dreams scribbled onto a piece of paper, without some serious effort from the educational sector, major corporations, the federal government, as well as the entrepreneurs themselves – the same report concluded.

Australia is known worldwide as fertile grounds for startups. Its Internet access rate is good, as is the tech literacy standard of its population. What’s more, local small businesses also have access to facilities that stand to lower their overheads. Several companies, for instance, now choose to rent out serviced office space in Sydney, in order to avoid paying long-term rent for no good reason. They only employ a small number of workers, outsource most tasks and only need a business location for meetings and conferences. The digital communication sector has also been awarding facilities for companies just starting out. All is well, it seems; so, then, why aren’t Australia’s startups doing better?

For some, that reason is to be found in current government policies. The serving Prime Minister, Kevin Rudd, also spoke recently on this topic. Rudd explained that Australia needs to be ‘smarter’ about the facilities it puts at the disposal of entrepreneurs. The model does seem to work, if one were to judge by the example of a digital publishing startup which made headlines in recent weeks. The company managed to raise a massive amount of money for initial capital purposes, and the bulk of that partially crowd-funded amount came through as a government grant. The business, which bases most of its activity in the cloud and aims to serve as a quick publishing service for desktop and mobile devices, raised no less than $785,000.

Of course, the company’s managers are wiser than to place all their eggs in a single basket. News of receiving the government grant came in right after they had return from a Berlin accelerator program for startups. The rest of the money came from investors, with over 50 per cent of the remainder donated by a syndicate of Brisbane-based angel investors. The entrepreneurs say most of the money will go into scalability improvements, as they aim to have the company go global as soon as possible.

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