Sydney Startup Hub funding set to be cut amid signs it’s going to be a grim state budget for the NSW startup sector

- September 11, 2023 3 MIN READ
Sydney Startup Hub
The Sydney Startup Hub celebrating its second anniversary in 2020.
Six months after forming government in NSW following the defeat of the Coalition after 12 years in power, Labor has been dealing with a familiar ritual when it comes to a change of ruler who looks in the money cupboard to discover it’s empty.

Now, with the state budget due to be handed down by NSW Treasurer Daniel Mookhey next week on September 19, the softening up for disappointment continued on the weekend when Innovation, Science and Technology Anoulack Chanthivong and Arts, Jobs and Tourism minister John Graham put out a joint ‘OMFG-you-won’t-believe-what-we-just-found’ media release, saying they’d just discovered, quelle horreur, “nearly $190 million of secret program cuts just days before the March election”.

Reports are emerging that the Sydney Startup Hub at Wynyard is likely to be among the victims of funding cuts in the upcoming budget.

The SSH is home to Stone & Chalk, Tank Stream Labs, Fishburners, Antler and dozens of startups and the former government supported it through Covid as it teetered on the brink during the lockdown.

In total, “$188 million was slashed from the Department of Enterprise, Investment and Trade’s budget on 8 March 2023 as part of the Pre-election Budget Update” Chanthivong’s weekend release said.

The cuts included the: Post, Digital and Visual Effects Rebate and Made in NSW Fund; Destination NSW Consumer Marketing, Sport Fixture fund & Policy, Product & Engagement Budget; and Blockbusters Funding Initiative; as well as the Investment NSW Future Economy Fund and Jobs Plus Program Research Acceleration and Attraction Program and Small Business Innovation & Research Program and the Bushfire Response R&D Mission

“The cuts to trade, innovation, tourism, and screen programs have repercussions for more than a dozen programs coordinated by Investment NSW, Destination NSW, and Create NSW, reducing funding to many programs and cancelling others,” the release said.

But what was clear in the media release was that, while it’s all their fault, not ours, what’s been lost isn’t going to be reinstated, and the budget is likely to be brutal for sectors such as startups and the arts.

Minister Graham prattled on about “alerting the public to these undisclosed pre-election cuts, largely to business, innovation and screen,” adding that “we need to make tough calls and reprioritise spending to protect what we can while we focus on funding critical measures such as teachers, nurses and tackle the cost-of-living crisis.”

The traditional Budget Black Hole™ found by this government is said to be around $7 billion. While surpluses were previously predicted for the next two years, NSW net debt levels expected to climb to more than $187 billion over the next three years.

Minister Chanthivong was equally dour while presenting breaking bad news as a virtue.

“We are facing a tough economic outlook and parting gifts like these from the former government only make it tougher,” he said.

“Unlike the former government, we’ll be upfront with people in NSW about the tough decisions needed to rebuild essential services and get the state back on track.”

While Labor in Victoria and Queensland continue to invest strongly in the startup and tech sectors, despite their own fiscal challenges, the NSW industry has mostly lived in a state of suspended animation since Labor came to power in March.

In May programs such as the widely lauded Minimum Viable Product (MVP) grant were suspended “as part of the sector-wide Comprehensive Expenditure Review being coordinated by NSW Treasury”.

The $5.8 million Tech Central rental rebate scheme has had no new recipients since Labor came to power.

And there appears to have been little progress on the $10 million Carla Zampatti VC fund to back female founders, announced $15 months ago by the former government. It’s modelled on LaunchVic’s Alice Anderson Fund, which has been a roaring success since it kicked off two years ago, already co-investing in 25 startups led by women.

The NSW government has not been completely dormant on the startup front, last month announcing backing for university and Startmate programs to support under-represented groups in the innovation and it also poured $7.8 million into new biomedical incubator in Western Sydney as well as backing the Techstars Tech Central program and has continued support for the tech, innovation, music, film and gaming festival South by Southwest Sydney, which the former government landed last year.

But the question the NSW startup sector is eight days away from having answered is will there be any substantial support in next Tuesday’s budget? Based on minister Chanthivong’s release on the weekend, it probably best if they don’t get their hopes up.