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News & Analysis

Australian startup founders feel ignored by government

- August 18, 2020 3 MIN READ
Pause Fest Founder George Hedon
  • 53% startup founders feel ignored by governments and policymakers
  • Founders say Australian policies compare unfavourably to Asia, the US and Europe
  • 37% say capital raising is harder today than it was last year
  • A quarter believe local regulations have impeded their growth
  • 28% say the nation’s communications and privacy laws make it harder to start a business

A majority of Australian startup founders feel ignored by governments and policymakers, amid growing dissatisfaction with the regulatory framework they operate in, according to The State of Australian Tech 2020 report, released today.

Pause Fest, the annual Melbourne business and creativity festival, spoke to 400 startup founders for the inaugural survey, and plans to track the progress of the tech sector over the next decade.

Pause Fest founder and CEO, George Hedon said the findings were a concern, especially when the technology sector will play a pivotal role in job and wealth creation in the recovery from Covid-19.

“Clearly we need to examine the barriers startups face and listen to their concerns if we want to maximise the benefits the industry has to the nation,” he said.

Aside from dissatisfaction with the level of government support for startups, many of the more than 400 founders who took part in the survey, 43% said Australia lacked a regulatory advantage compared to Asia, the US and Europe, with 28% singling out Australia’s communications and privacy laws as making it harder to start a business here.

Other key findings include 44% identified data privacy and management as requiring urgent attention, closely followed by artificial intelligence and intermediary liability (both at 38%).

Almost half (49%) of the respondents have a Bachelor’s degree, with another 24% holding a Master’s degree. 2% did not complete any formal education.

And despite major investments in the first half of 2020, 37% said capital raising was harder today than in 2019, while half the respondents said they were bootstrapped and weren’t planning to raise this year. 66% said they used either their personal savings or personal debt loans to set-up their companies. Another 13% took a loan from family or friends. 26% funded their initial stages via accelerator funds or angel investment.

Asked about their biggest challenges as founders, 60% said it was securing capital.

Hedon said the lack of activity in the early-stage investment space was having an impact on the vibrancy of the ecosystem and formation of new startups.

“It will, in fact, be even harder to start, build and maintain a small business in the very near future,” he said.

“I wish I could say that exciting times lie ahead of us but unfortunately, decades of playing safe with our country’s riches, the recent bushfires and now COVID-19, have set us back, much further back.”

Hedon decided to launch the State of Australian Tech report to improve the data about the sector.

“Most research is outdated, inaccurate and not supported by industry enough,” he said.

“That’s why we’ve established the State of Australian Tech 2020 report to allow us to meaningfully recognise the successes of our ecosystem, but also to confront the shortcomings that need to be overcome for us to be truly world-class.”

Nonetheless, Hedon said there was  “lots to celebrate” in the reports findings, including the fact that 51% of founders said their employees are placing increasing importance on CSR, with 25% of all startups say they now actively measuring their social and
environmental impact.

And importantly for creativity, 41% said the diversity of candidates coming forward for jobs has increased.

Mental health was also a focus with nearly a third (32%) of respondents saying being a founder has had a mostly positive impact on their mental health., although nearly half of them (46%) said they felt “lonely at the top”.

Hedon said that while the conversation around mental health had made huge leaps and bounds, there was still quite a way to go.

“Australian startup founders are under enormous pressure. One in two day told us they feeling lonely at the top, and our data shows third say their personal financial situation has worsened since founding their business,” he said.

“Two in three founders said they would value support from their board or investors in managing mental health, yet half (47%) said they had no received no support to date.

“However, it goes both ways. A third of founders say they would not feel comfortable discussing their mental health with their board or investors. It’s on all of us in the start-up community to encourage and facilitate two-way debates on this issue.”

The State of Australian Tech 2020 report is available for download here.

The release of the report coincides with the opening of the 2020 Pause Fest awards. Entry details are available here. Entries close October 30. Pause Fest will be held in Melbourne Feb 3-5 2021.