Unable to join a youth entrepreneurship conference in Sydney, Australia, this week, I used the saved travel time to engage virtually in the conversations and to take a look at the entrepreneurship ecosystem “Down Under” that has been making a lot of noise up and over the world during the last five years.
Over the history of various annual indices such as the Index of Economic Freedom and the World Bank’s Doing Business ranking, Australia has advanced toward the top. Since the 1980s, successive governments have deregulated financial and labor markets and opened trade avenues.
Australia is one of the Asia–Pacific’s richest countries and it has weathered well the global recession in large part due to smart conservative global banking practices. It is a nation that benefits from sound economic fundamentals including monetary stability, openness to global trade, reliable property rights protection and a well-functioning independent judiciary. It also has an efficient approach to enabling entrepreneurship relative to 183 other economies – with, for example, no minimum capital standards and only one procedure to start a company.
An equally healthy picture can be found at the grassroots levels across Sydney as well as increasingly Melbourne, Brisbane, Perth and Adelaide. A quick scan of the Sydney entrepreneurial ecosystem reveals energetic startup founders across its incubators (e.g. ATP), co-working spaces (e.g. Fishburners and HUB Sydney), and events (e.g. The Entourage Unconvention and SydStart). They are inspired by a handful of global startup rock stars and advocates that stemmed from Australia, such as Matt Barrie from freelancer.com, Mike Cannon-Brookes from Atlassian, and Jeremy Liddle who leads the Enterprise Network for Young Australians (ENYA).
As entrepreneurship evangelist Miriam Feiler of the newly formed Start Up Australia tells global colleagues, the city’s entrepreneurial activity does not stop at the startup tech scene. Entrepreneurial activity spans many industry sectors and links both the commercial and social aspects. For example, Australia has its own emerging maker movement.
Yet something is holding Australian entrepreneurs back. Deloitte partnered with global Startup Genome and other local stakeholders to compare more than 1,000 Australian tech startup companies to more than 50,000 companies being tracked worldwide, and found that fewer than 5% of Australian startups are scaling into sustainable, global businesses. When compared to startups in the United States, Australian companies are raising 4.8 times less capital in the early stages and 100 times less when they are ready to scale their operations. Some local observers point to a scarcity of both high-risk capital and an understanding of technology.
With so much happening in the entrepreneurship space, I have been vocal on the importance of a new more assertive phase of data collection and research that starts to figure out what is and is not working in terms of interventions by third parties to help entrepreneurs succeed. Australia is not the exception.
Academia is stepping up its efforts to figure out the science of growth startups. The Australian Centre for Entrepreneurship Research (ACE) at the Queensland University of Technology (QUT), for example, brought to the floor at last week’s G20 SME Conference research-based knowledge on entrepreneurship and innovation. In their quest to translate research into actionable knowledge, ACE has begun producing animated videos useful for both businesseses and policymakers.
Another innovative player stepping up efforts in academia is UNSW Australia. Seeking high-value added innovations, the NewSouth Innovations (NSi), a private technology transfer company at the university, recently launched two commercialization programs for UNSW students – Easy Access IP and a Student Entrepreneur Development program. With the former, the university forgoes any claim to royalties from commercizalization of its research outputs. As highlighted by the Accenture report released at the opening of this last weekend’s G20YEA Summit, more than 200 student entrepreneurs have benefited from free intellectual property (IP) in exchange for letting the university continue to do research on the IP, in the first two years of this program.
This type of research has led the Australian Government to explore ways to leverage local strenghts and attract capital from overseas. The previous administration for example, opened the doors to immigrant investors. The current government seems eager to let the private sector take the driving seat. For example, Commercialization Australia (CA), the government custodian for funding and commercializing startups was erased from the new budget and Prime Minister Tony Abbott has endorsed the creation of Start Up Australia a non-profit, private-sector-led organization.
After the Summit closes, the work must begin. Despite there being plenty of innovation and entrepreneurship happening in Australia, the country has high taxes and a poorly supported ecosystem. These and other factors indicate that long-term government engagement in removing barriers and opening doors will be essential, according to Marcus Tan, CEO of one of the innovation drivers in the country, Health Engine. Many entrepreneurs who have scaled up their ventures agreed this week openly with negative assessments of the tax landscape.
Education also needs a revision. Matt Barrie, in face of difficulties finding people to fill its second office in Sydney, has publicly expressed Australia’s dire need of a world class technology curriculum in the K-12 system.
“Meanwhile, in Estonia, 100% of publicly educated students will learn how to code starting at age seven or eight in first grade, and continue all the way to age 16 in their final year of school,” Barrie said.
The task is an urgent one. Australia’s population includes 2.6 million people between the ages of 15 and 25, so many of which are affected by the continuing rise of youth unemployment. While there are so many factors causing it such as a high minimum wage and offshoring to Asia, new firm formation is clearly a leading remedy. While governments come and go – and even Australia is vulnerable to shifts in the global economy – job creation for young people remains a constant political priority for all parties.
The Australian organizers and their sponsors, are right to shed the spotlight of this years’ G20YEA Summit on entrepreneurship as the only sustainable strategy to job creation rates over time. I hope Australia’s leaders attending will take note of the fact that the other 40 nations in attendance have reached the same conclusion, and embark on a new Australian crusade without delay to remove barriers to new firm formation.
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