2016 Crossroads report recommends 14 key actions to boost Australian startups and entrepreneurship
Much has changed since the last Crossroads report was released by StartupAUS 18 months ago, with the local startup landscape’s hero Malcolm Turnbull rising to the rank of Prime Minister, launching a much-publicised National Innovation and Science Agenda (NISA), and heralding the death of the mining boom and the rise of the ideas boom.
However, with the release of the 2016 Crossroads report today it is evident that many of the challenges facing the Australian tech and startup community in early 2015 persist and, as global competition in the space heats up, they are becoming more pronounced.
Crossroads highlights that, despite the launch of NISA, and growth over the last year Australia is currently ranked 19th in the world in the Global Innovation Index and is predicted to slide further down the list. The latest Global Competitiveness Report, meanwhile, ranked Australian 22nd overall, down from 21st in 2015, and noted that Australia not only lags far behind the best global innovators but is also losing ground to them.
As such, the key recommendations presented by StartupAUS are centered on a number of familiar themes, that is: that startup ecosystems need to be geographically concentrated; that Australia needs a coordinated innovation and entrepreneurship plan; that startups need access to capital to grow; and that startups need access to world-class expertise.
Also key is access to tech talent and the development of a culture of entrepreneurship to promote entrepreneurship as an alternative to traditional career pathways.
As the report points out, despite the excitement at its launch, NISA was never going to be the all-encompassing fix. The launch of the agenda, after all, followed funding cuts to research and innovation funding, while $400 million of the $1.1 billion in the plan was set aside for continuing initiatives rather than new programs.
In his foreword to the report Paul Bassat, board member of Innovation and Science Australia and cofounder of Square Peg Capital, writes that while there are “a lot of reasons for us to be optimistic” and we have the raw ingredients to succeed, Australia is not operating in a vacuum and action must be taken just to maintain our current position; to become a major player globally will require “extraordinary progress”.
“This is a challenge we must embrace if we want our children and grandchildren to enjoy the same opportunities we have enjoyed. It is also critical that the opportunities and benefits are spread as widely as possible across the whole community,” Bassat wrote.
“We need to proceed with a sense of urgency while at the same time thinking long term. The investment we make now will deliver benefits over a twenty to thirty year period. Our decision making needs to be focused on achieving long term, sustainable outcomes, not a short term sugar hit.”
Colin Kinner, author of the report, agreed that startups can be an economic growth engine for Australia, however there must be a huge increase in support.
“Having spent some time in Silicon Valley it’s clear that Australia is a challenging place from which to grow a global tech company. We are geographically isolated from major markets, and despite having some world-class startups we still see many first-time founders learning by trial and error. We need to invest in startup founders and ensure they have the right skills and connections to compete globally,” he said.
The value of investing in our tech and startup ecosystem is significant: according to the report, improving the conditions for entrepreneurship by just 10 percent could add $170 billion to the economy.
To improve these conditions the report’s key themes delve into 14 concrete recommendations, intended to provide a framework for identifying effective, impactful policy measures that can be taken on by all levels of government.
The 14 recommendations, a number of them having already been proposed by StartupAUS and others within the startup community over the last few months, are:
- Support the establishment of innovation districts in major cities
- Create a national innovation agency
- Improve the R&D Tax Incentive by making it more favourable to startups
- Implement a national Entrepreneurs-in-Residence program
- Make targeted improvements to Employee Share Schemes legislation
- Implement and improve the Entrepreneur Visa
- Establish a program to attract promising international startups to Australia
- Extend the Digital Technologies Curriculum
- Relax restrictions on 457 visas for startups
- Implement measures to counteract high cost of living for foreign skilled workers
- Implement entrepreneurship programs in all Australian primary and secondary schools
- Implement entrepreneurship programs in all Australian universities
- Introduce a Startup Scholarship for STEM graduates
- Immerse Australian university students in Silicon Valley and other startup hubs
The release of Crossroads today joins the publishing of the 2016 Australian Innovation System Report from the Office of the Chief Economist.
Focusing on innovation across businesses big and small, the report defined innovation activities as the “discrete activities that lead to discoveries that have commercial potential”. This definition ecompasses activities such as R&D, innovation funding like venture capital, the training of scientists and engineers in tertiary education, and entrepreneurial activity.
Through this definition the report found that “innovation-active” businesses in Australia contribute to over 60 percent of sales and employment and are 40 percent more likely to increase income and profitability compared to other business.
According to the report, total expenditure on innovation by Australian businesses in 2014–15 was between $26 billion and $30 billion, with sales from innovative goods and services coming to approximately $60 billion.
Image: StartupAUS CEO Alex McAuley. Source: Supplied.