Maximising Australia’s tech shots on goal

Published on the 01/08/2023 | Written by Heather Wright

Maximising Australia’s tech shots on goal

Sector failing at scaling up…

As the Matilda’s eye glory in the Fifa Women’s World Cup, the Tech Council of Australia is eyeing glory for Australia as the best place in the world to start and scale a technology business ­– if we can up our game and support more players to take serious shots.

It is calling for urgent policy and legislative changes to address the challenges facing Australian startups and create an ecosystem enabling companies to get a genuine ‘shots on goal’ to become globally successful technology companies.

Kate Pounder, Tech Council of Australia CEO, says there is already good work underway to improve Australia’s competitiveness.

“Australia can get our players onto the field but not enough players are supported to take serious shots.”

“But we need to accelerate and coordinate these reforms to give Aussie firms the best chance of succeeding globally while creating jobs and growth here in Australia,” she says.

In the past 20 years Australia has created 100 tech companies worth over $100 million, with 28 – including the likes of Atlassian, Canva, Aferpay and REA – going on to become unicorns.

But Shots on Goal: A strategy for Global Success in Tech highlights the differing experiences of startups, vs scale-ups.

The report paints a positive picture of early stage startups, saying those founded between 2013 and 2015 have seen similar survival rates to in their early stages to those founded in comparable countries.

Critically, Australia has made significant progress in addressing funding for early-stage companies, with the country on track to achieve the same per capita levels of funding for early stage firms as the US come 2030.

The bad news is that in the later growth stages Australian startups are facing ‘significant challenges’ in scaling, over and above that seen in competitor countries.

“From series B onwards the experience of Australia-based startups diverges from the United States significantly. This means Australia can get our players onto the field and a small share are scoring goals, but not enough players are supported to take serious shots.

The report says without action, Australia will have a $53 billion scale up funding gap by 2030.

If Australia were able to match the US success rate through the scale up phase, TCA says there could have been an 30,000 additional tech jobs in Australian scaleups today, though the report also notes that finding talent with experience in scale-up companies is also a struggle.

“Australia is now a great place to start a tech company,” Pounder says. “We urgently need to ensure it is also a competitive and supportive place to scale it too.”

Governments around Australia are, however, already starting to address the issue. In Victoria, Breakthrough Victoria manages the Victorian government’s $2 billion fund, providing investment across the capital lifecycle. The National Reconstruction Fund is also investing in startups.

But the report says while those initiatives are welcomed complementary policy processes are required to enable funds and programs to attract sufficient co-investment.

“The NRF for example, has the potential to attract $2.7 for every government dollar invested into tech, which would inject a total of $7 billion into Australia’s critical tech sector by 2030.

“However for the private sector to meet this co-investment potential we will need a 19 percent increase in specialised foreign investment, and also an uplift in investment from private sources, such as venture funds and superannuation.

“This emphasises that while Australia has great tech talent, we do not always have the right mix of skills and experience.”

Prioritising the introduction of a specialist skills pathway, accessible to startups and scaleups and with globally competitive visa processing times is also ‘essential’, the report says, noting the speed of visa processing in the Australian skilled migration system can be a handbrake on an important source of experienced talent.

The report volleys recommendations for both federal government and for state and territory governments saying a game plan is needed to create a more level playing field for high-potential Australian startups and scaleups to take national performance to the next level.

It’s calling for the federal government to provide a more comprehensive strategic direction for the tech sector, building on the national tech jobs target and the strategic direction for emerging tech areas like the National Quantum Strategy.

Expanded investment in scaleups, via policy levers such as increased direct investment programs, tax system changes and specialised, strategic procurement programs for emerging technologies is also suggested.

Increased pathways, including apprenticeships, for Australians to enter tech jobs and fixing of gaps in education and training; and ensuring policies affecting global integration of the tech ecosystem are working are also outlined for the federal government.

State and territory recommendations include supporting greater adoption of technology in the delivery of public services, regular measurement and progress reviews of the environment for starting and scaling tech companies, and more support of local strengths in tech.

Of the importance of tech growth, Robyn Denholm, TCA chair, notes of current Australian success stories: “That success may not be as visible as someone standing on a dais raising a trophy. But the thousands of jobs, and billions of dollars of value and exports these companies are creating, are generating very real benefits for Australians…

“We must back ourselves to go big or risk being left behind in the new global race for jobs and growth.”

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