Dear Australian VC Firms & Startups.
We have a problem.
Australia lacks successful startups, successful VC firms and healthy innovation.
With the exception of a small few companies and funds, we’re not seeing the levels of successful innovation and development that are coming out of other places around the globe.
I would bet that we have less successful, global startups in Australia than you’d find in New York State.
VC firms here aren’t finding and funding enough companies, aren’t putting enough funding forward, aren’t receiving investment themselves and aren’t getting enough return from the investments they do make.
Adding to the problem, there are not enough VC firms to begin with.
Meanwhile, the companies that are started by Australians tend to quickly vanish overseas. Without feeling the support of their government or community, they are drawn to the money and opportunity overseas.
The standout is Atlassian, whose founders have been incredibly supportive of innovation here — but there aren’t enough Atlassians.
So where does this problem start?
It starts with policy. The fact is, Australian politics has not been friendly to innovation. It has not been friendly to technology.
We aren’t producing enough people with the skills, interests or motivations necessary to build companies, fund companies or support innovation in the political sphere.
- Overseas companies didn’t even have to pay the GST until last year. That’s a huge disadvantage to any Australian companies looking to compete with the major players from the US.
- Our internet is unbearable. The NBN? A huge failure, spurred by a lack of political commitment to a positive outcome over short term political mileage.
These are just two examples — there are more. We don’t have an environment that’s friendly towards innovators and tech startups. That’s a fact.
Wyatt Roy, assistant minister for innovation, wants us to have a truly bipartisan approach to startups and tech.
He’d like both major political parties to cooperate and make Australia a home for tech development and successful startups. I like that vision, and I wish it were possible to make it a reality.
The problem is, in the real world, innovation isn’t something that a government can magically summon with awesome speeches and a prime minister who wears an Apple Watch.
Innovation isn’t something any government can achieve in a vacuum. It’s too dependent on wider policy.
It depends on government policies on education, because that’s where Australian kids learn the skills and information they need to change the world.
It depends on the arts, because they foster the creativity that drives people to think outside the box.
It depends on infrastructure, because without the technology to achieve great things, our startups will not be feasible.
It depends on gender equality and indigenous rights, because we need to stop putting groups of Australians who have so much to give at a major disadvantage.
…and none of these are areas where we are going to see bipartisan politics any time soon.
Without the government and the opposition agreeing on these areas, innovation is going to stay slow or get slower. It’s certainly not going to improve at a rate that will make Australia a major player in the global startup space.
So where’s the solution?
Australian VC firms need to be playing a longer game.
Rather than simply looking for startups that are going to provide for a successful exit or become profitable, you also need to be looking for startups who will improve education. improve gender equality. Improve infrastructure. Support women. Support indigenous people.
By funding those startups, you can contribute to a longer term change in Australia and see to it that innovation becomes a priority for the next generation, for our social institutions and for our community.
Australian Startups need to be giving back.
You need to be getting into schools. Getting into universities. Getting into communities. Finding a way to encourage entrepreneurial and innovative thinking and doing. Whether through social responsibility programs or work experience programs or even just offering funding, you need to be stepping up.
It shouldn’t be your responsibility. But the reality is, if we want to have a country that encourages innovation, we can’t wait for the government to get there. Liberal, ALP, it doesn’t matter. We’ll be waiting a long time.
Final note — if you think I’m wrong or you agree, tell me. I want to hear your thoughts. Send me an email, reach out on Twitter, or invite me out for a coffee. I love a healthy debate, so let’s make that happen.
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Thanks for reading — I’m Jon Westenberg. You can read more about me on my website…
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