We all know what needs to happen (part 1 CrossRoads — R&D)
StartUp Aus recently released the latest version of its excellent CrossRoads Report (https://startupaus.org/our-research/reports/) — the latest installment in this series giving us a yard stick to measure things against over time. Aside from an unfortunate sojourn into NBN it is an excellent body of work.
It does a good job highlighting the progress over the last 4 years, about how things are getting better, how the message is changing, about successful Aussie companies strutting more on the world stage. Once again — well done StartUp Aus.
What strikes me is that it seems to make the same or similar recommendations as previous years, they all need to be made and please do not take this as criticism against the authors but rather — what do we have to do to get policy makers to take this seriously? Crossroads has excellent commentary on the size of the prize, if people in policy areas think that this rubbish then please say so and let’s debate that. If you do think the size of prize is valid and something that we need to pursue then WHAT THE HELL ARE YOU DOING ABOUT IT ? How many more CrossRoads do we need ?
My summary of the bits important to me are:
- R&D can be better
- Visas and talent badly broken
- Employee Share Schemes, time for more than triage
CrossRoads does highlight the awesome progress made on Innovation Precincts and this has been pleasing. Whilst there have been the typical chest beating contests between city and state and between states to outdo each other the result speaks for itself. Is more required — yes, but well done to all involved in getting these endeavours up and going. It is easy to lay criticism where overlaying jurisdictions compete with each other instead of pooling for a superior outcome (eg. Brisbane City v QLD Gov and NSW Gov v. Sydney City and similar stupidity) the competition between the states has been a win for the sector. Whilst many lament the lack of consensus for one area of Australia where all effort should focus (Tech Sydney is an expression of this) we do not need another outcome that results in a “Canberra” — where the difference gets split. The result has been an overall net positive.
I will release more 2 more articles covering the above dot points but first I will try to cover the R&D issue.
CrossRoads also highlights the good, the NISA scheme to incentivise early stage investors into ESIC startups (see page 65 of CrossRoads) needs to be soundly applauded as a bloody top first go. The scheme isn’t perfect but it does serve to “ring fence” the concept of a startup and try to provide assistance. It does a good job of excluding things that are not startups for sure even if it does leave some startups (potentially) outside its definition — over all it is to be applauded.
It is in this context we should use (initially) the definition of an ESIC to alter the R&D distributions. Allow more timely R&D distributions to ESIC companies, this will allow such a scheme a soft start and will only include startups for sure given the bar that is set for an ESIC definition.
Whilst I think many companies outside that definition would greatly benefit from more timely payment under the R&D scheme let’s try it out here first with an aim to taking those lessons to companies that fall outside the ESIC definition in short order once more is understood — MVP this with the ESIC community.
It strikes me that we have a beaut defintion of a startup in the ESIC and we can apply lots more leverage to those companies. It seems like an easy win.
From all of my interactions with corporate and government Australia I have some of the most maddening conversations, people in large organisations just do not realise what innovation and disruptions delivered in the startup way means. It means trying lots (lots) of crazy stuff; taking lots of risk; enabling really smart, engaged people who have amazing incentives if they get it right (wealth) and then getting out of their way. I know very few corporates going close to getting it right.
So how do we get corporate/government Australia to innovate — you make it easy for lots of people to commercially challenge them. You make it really easy to start, get funded, use equity to remunerate and provide tax assistance. You do not pick technology winners — you pick smart young people. The one real thing that WILL force a corporate to innovate in a genuine way is when a competitor starts to eat away at their customers and revenue — then the CEO’s words have meaning, before that their efforts seems to come more from the CSR side of the corporate ledger, rather than from above the line !
Using the ESIC definition to boot up more disruptive local startups is one way to go. We have the ring fence — let’s get more startups inside it and lavish them with support — R&D seems like an easy early win.
