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Politics

Things startup founders and investors hope for in the 2024 federal budget

- May 13, 2024 5 MIN READ
Jim Chalmers
Treasurer Jim Chalmers presenting the 2023 Budget
After the federal government committed hundreds of millions in funding to PsiQuantum as part of a $940 million deal to bring the US quantum computing startup to Brisbane, many in the startup sector are wondering if that’s the start of a golden for Commonwealth cash, or the equivalent of blowing you night out budget on shots at the ivy before 8pm.

Two-thirds into its three-year term, many in the tech sector are still waiting for action from the Albanese government amid a series of ongoing reviews.

Rod Bristow, CEO of Sydney and Singapore VC fund Investible believes that while the PsiQuantum funding is a positive for the industry, there needs to be transparency in how these decisions are made to bolster industry confidence and encourage further private investment in quantum technologies.

“The government’s decision to invest in innovative startups such as PsiQuantum demonstrates the forward-thinking approach necessary for Australia’s future economic resilience,” he said.

“By deploying almost a billion dollars into this venture, the government isn’t just backing PsiQuantum – it’s strategically supporting a quantum computing ecosystem that will spur related deep tech industries and innovation.”

Some in quantum are quietly concerned, and Bristow argues the government should look to the approach used in countries such as the US and UK, which have invested in “testbed” facilities to trial different quantum technologies.

The question the broader startup sector is turning its attention to is whether Tuesday night’s federal Budget will provide the boost they’ve been patiently waiting for as the government scrambles to address cost of living pressures. Front of mind for the PM and treasurer is the fact that voters head to the ballot box in the next 12 months to pass judgement on Labor’s first term.

Some, such as Fintech Australia, offered their views in pre-Budget submissions last month.

CEO Rehan D’Almeida said the peak body outlined a number of measures to support growth in Australia’s fintech ecosystem at a time when the entire startup ecosystem faced a downturn in fundraising.

“While we understand the core focus of this budget is cost of living measures, our recommendations are at supporting Australia’s next round of prosperity and job creation,” he said.

D’Almeida said the organisation’s top priorities of capital raising and trade opportunities are issues affecting the entire startup sector, and argues that the government needs to review the policy settings it has in place for early stage fintechs and startups.

“This includes recalibrating and expanding the Early Stage Venture Capital Limited Partnership (ESVCLP) and Early Stage Innovation Company (ESIC) schemes, reviewing regulation on crowdfunding — an industry that has significantly grown and evolved since it was introduced in 2017,” he said.

For other startups, it’s more like a letter to Santa on Christmas Eve, sharing what they hope to find under the tree when Jim Chalmers stands to hand out the FY25 fiscal presents at 7.30pm Tuesday night, his third federal Budget.

Here’s what they had to say:

Ben Thompson

Founder, Employment Hero

Employment Hero founder Ben Thompson

Employment Hero founder Ben Thompson

The upcoming Federal Budget mustn’t overlook SMEs bearing the brunt of rising wages and operational costs.

SMEs can only do so much to help their workers through this current cost-of-living crisis. The reduced margins that increased wages create risk the viability of Australia’s SME sector, which is the centre point of innovation and economic growth.

We advocate for a balanced approach to the Federal Budget that supports both wage growth and business viability, especially for SMEs.

Providing targeted support in the Federal Budget could go a long way towards protecting these businesses from these harsh realities. This could be in the form of grants, tax incentives, subsidies, or even support for adopting technology to streamline processes and improve efficiency.

Rod Bristow

CEO, Investible

Rod Bristow

Rod Bristow

The government’s commitment to subsidise the production of green hydrogen and solar panels will certainly boost Australia’s capabilities in renewable technologies. However, subsidies alone aren’t a silver bullet.

For Australia to truly gain a competitive advantage, these financial injections must be part of a broader, more sophisticated strategy to enable a competitive cost base for locally manufactured products.  This includes building robust manufacturing capabilities domestically and ensuring technologies developed here are globally scalable.

The government’s role in nurturing innovation in different tech industries through strategic investments is commendable. The challenge lies in ensuring these investments not only address current market failures, but are also not competitive with existing industry and sustainable to lead to genuine industry growth.

The approach taken with the federal budget to support key technological and environmental initiatives indicates a promising direction, yet the execution of these initiatives must be consistently monitored and updated in order to understand their impacts and refine the approach accordingly.

 Sally-Ann Williams

CEO, Cicada Innovations

Cicada x Tech23

Cicada Innovations CEO Sally-Ann Williams

In the current geopolitical climate, it’s critical Australia continues to develop and establish sovereign capabilities in future-critical industries to ensure our long term economic prosperity.

This requires a combination of aligning business, investment, and community on a bold and visionary future, while also galvanising short-term action to address the circumstances we find ourselves in now.

Governments globally have de-risked the development of new industries and innovations in their own backyards for decades – and it’s time for Australia to follow suit.

For instance, it’s a little-discussed fact that the US Federal Government is the largest funder of Silicon Valley. Elon Musk has received an estimated $4.9 billion in government subsidies to develop his deep tech empire of electric cars, rockets and solar cells.

It’s time for Australia to build similar opportunities here.

The Government has laid out three principles to move the country forward: to act and invest at scale; to be more assertive in capitalising on our comparative advantages and building sovereign capability in areas of national interest; and to strengthen and invest in the foundations of economic success.

If this Government – and those following – can stick to these principles, we can back winners and create the type of robust complex economy needed to compete on a global scale.

Dr Hon Weng Chong

Founder, Cortical Labs

Hong Weng Chong

Cortical Labs founder Hong Weng Chong

There is a growing frustration amongst the Australian startup community that policy makers both underestimate and under-appreciate us.

Policy is cautious, investment is slow and sentiment is mixed. More and more we’re seeing some of the most exciting start-ups and minds – not just in Australia but worldwide – leave these shores for more progressive, supportive markets.

In 2022, there was a great deal of optimism, when the National Reconstruction Fund was announced. To us, it signalled the dawn of a new era, and investment in a new economy built on Australian innovation, ideas and big-thinkers.

Today, with next-to-nothing to show for its $15 billion fund, it feels like little more than a false dawn.

We’re in arms races in so many crucial technologies and industries. The countries that capitalise in the coming months and years, will lead global hierarchies for years to come.

We’re at risk of being lapped as other economies surpass us. As the Federal Budget approaches, it is absolutely critical that the fund begins to fulfil its intended purpose.

Last week we saw the Government invest heavily in a quantum computing startup, but the tender process was murky as best. Now it’s time to back local, too.

We need a clear tender process, from a government that understands what it wants to be a global leader in, and how it can use this incredible resource to unleash the next wave of innovation.

It’s clear the investment into a Silicon Valley-based startup founded by two Aussies validates the advice given to not only aspiring actors but now to technologists: making it big back home in Australia unfortunately requires a move to the US first to prove one’s worth.

 

Tim Wheeler

MD, Searchr.TV

Searchr.TV MD Tim Wheeler

In this budget, it would be positive to see initiatives that increase the runway startups have, such as deferring PAYG (Pay As You Go) obligations or the ability to carry over company losses for a period of time.

This would provide crucial financial relief and stability for emerging businesses, enabling the creation of groundbreaking technologies that enhance user experiences, improve accessibility, and streamline daily activities.

These technological advancements are not just about entertainment. They have the power to educate, inspire, and connect people from all walks of life. By championing technological innovation, we are investing in a future that enriches and empowers all Australians, fostering a more inclusive and connected society.

 

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