Last week we were among the many startups and small businesses who suffered a kick to the guts by the sudden (and quiet) halting of Investment NSW’ MVP Ventures grant program.
In one brief email, our plans for the year were turned upside down.
Only last month we publicly praised the NSW Government for its industry-leading program as something that should have been emulated in the Federal Budget.
Far from benefiting our economy through costs saving, this is a knee-jerk reaction that is obviously a political chess move. It’s a cowardly play to ensure the NSW Treasury and Government more broadly can balance its books and avoid any short-term rocks thrown by the opposition over reckless spending. What it has done is cause businesses to hit a wall at a critical moment. The impacts will be felt by the local startup community for years.
Crippling forward planning
As it is, Australia is losing our future rising stars due to soaring costs and difficulties accessing funding.
Our recent seed raise surprised a lot of people in Australia because it is notoriously difficult to get money out of a local VC. Startups are also struggling with overheads. The ‘hubs’ that have popped up across our cities are great incubator spaces but are very expensive. There’s also the enormous cost of jumping through regulatory hurdles.
We might be one of the lucky ones with private funding, but the grant nonetheless was allocated to execute a hiring plan to help us scale faster. For others, whole bodies of work have been based on these grants – it will be crippling.
Money and time down the drain
Most disturbingly, the pause applies not only to new applicants but also to existing applicants. It has left many businesses completely out of pocket who were literally waiting for the money. Worse still, the application process is so onerous that some companies have poured tens of thousands at accounting firms to support them through a successful grant application. It is huge time and money down the drain.
Future unicorns won’t traverse the ‘valley of death’
Speaking to one of our advisors, they described the path to commercialisation for startups as a ‘valley of death’. You’ve got to remember that MVP Ventures was intended for ‘high potential’ NSW-based startups so they could cross that valley and make millions (or billions). I have no doubt that among the cohort impact by this loss are a couple of possible ‘unicorns’ who may never make it across the valley.
And it is not just MVP Ventures. Other grants including manufacturing and regional jobs creation have also been put on ice – pretty important areas, you’d think.
The overarching sense among the startup community is that Investment NSW, a body that we thought was well versed on the needs and timing of commercial industry, is completely out of kilter with it.
We cannot place our work on hold for six months while a ‘review’ takes place. The Government’s disregard for vital, emerging businesses is short-sighted and greatly disappointing.
- Ben Zyl is co-CEO and co-founder of payments startup Waave