Australia has a nascent but growing startup community with the epicentre in Sydney for the tech startups. Compared to other developed countries Australia’s current level of venture capital activity is significantly lower and this fact is partly hindering our innovation ecosystem. For example, Canada’s venture capital industry is nearly four (3.6) times larger than ours, and over last decade the US invested US$285 billion in venture capital funding. This is four times more than Australia (per capita) which invested just US$4.5 billion.
Capital is not the only constraint on our startup market. Around the world, we see innovation led economies underpinned by thriving ecosystems. When assessing Australia, we see gaps in collaboration, R&D and mentors.
To grow an innovation ecosystem and mitigate the venture capital funding gap between Australia and other developed countries our nation needs to:
- Lower the procurement barriers for startups to pitch for corporate and government work
- Improve local conditions to attract entrepreneurs, including Australians living overseas, to mentor and invest here
- Incentivise innovation champions which will bring quality skills and access to customers
- Develop concentrated innovation communities in key hubs which will increase cross-pollination
- Increase collaboration amongst key players through funding mechanisms and mentoring
- Develop ‘entrepreneur careers’ where people work on a range of originated and non-originated businesses
Greater focus needs to be placed on developing a truly supportive innovation ecosystem to drive improved productivity and economic growth.
1 Australian Bureau of Statistics, Venture Capital and Later Stage Private Equity 2011-12, accessed 17 February 2014
2 National Venture Capital Australia, Total U.S. Investments by Year Q1 1995 – Q3 2013 -MoneyTree Report, 2013