The innovation sector has been hit hard by the Covid-19 pandemic and with turbulence across global financial markets we are now seeing investment in early stage and high growth companies literally disappear.
Many start-ups already found it challenging to raise capital as they battled it out against thousands of other investor pitches to stand out from the crowd before the coronavirus crisis. With many early stage innovation companies, high growth start-ups and scale-ups across Australia relying on investment to operate, we need to work on how we can simulate and incentivise investment before it’s too late.
“Australian start-ups significantly contribute to the growth of our economy and with the majority being technology companies they actually have an opportunity to grow through this period, create jobs, make a difference now and in recovery,” says Irwan Iriks, a Perth based entrepreneur and co-founder of global SaaS company OviDrive.
“We don’t want a hand-out but a leg up”
Irwan has rallied together over 200 start-ups from all over the country who are in support of an initiative to stimulate and incentivise investment. The common theme is that start-ups don’t expect a hand-out but a leg up. Start-ups, innovators and entrepreneurs are a group of Australians that are already resilient, tenacious and used to growing their companies with limited resources.
The group is now getting support from the community itself with a petition on org.change getting considerable support with over 500 signatures in less than a week. Comments from supporters are resonating the message. One comment says “Start-ups are a major employer but not only that, if they fail then we will not only stymie our recovery, we will damage our future was well. This sector is vital to the future of commerce.” Another goes on to say
The group of start-ups led by Irwan Iriks has now joined part of an even bigger movement representing the entire Australian innovation sector called the Australian Innovation Collective. There are representatives from every state and sub-sector that are coming together to form a unified front and take a very clear message to government as an industry. The group are calling for the Government to include the sector before it’s too late. The mantra is to Respond and Recover.
“The challenge is that each sub-sector needs a solution relating to their circumstance. There is no one size fits all, I am representing start-ups that have been affected by the investment market contracting. With deals going on hold, start-ups will need some help through this time and they currently rely on investment to operate. I believe the government can help investors back start-ups and we can push through this crisis,” says Irwan.
How are Aussie tech startups doing in this time?
Founder of insure-tech company Insure By Us, Ben Waters shares his current situation “Insure by Us is a travel insurance platform that powers some of Australia’s largest brands and has over 20 full time staff and contractors. Our revenue hasn’t just dropped, it’s gone into the red as we have to refund unused insurance premium.”
“When travel resumes, there is a significant opportunity for Insured by Us. A matched funding initiative would give investor’s confidence and would enable us to keep all our staff and contractors employed and put us in a great position to capitalise and scale when travel resumes.”
Insure by Us is one example of many companies that were raising capital before the Covid-19 pandemic and seen a dramatic drop off of investor interest.
Another is Founder Danielle Bodinnar of disability start-up company Karista responds “We at Karista are playing a critical role in assisting NDIS participants to move from one service provider to another, based on personal needs, as a result of service provider delivery shortages and closures in Australia.”
“Matched funding would make the difference for Karista – it would make investing in Karista more attractive for the Angel investors we currently attract, and potential VC’s now we are generating good revenues”.
“There are hundreds if not thousands of companies like this across the country that need support,” says Irwan. “Amongst a number of requests as a collective we are asking the government to follow suit to both France and Germany and start a co-funding initiative now.”
“Many of us are technology companies, our operations are un-interrupted, and we can continue to grow through this crisis. Not to mention there are many solutions that can add value to the community right now.”
Irwan goes on to say, “We are asking that the government provide a matched funding initiative to Australian investors to de-risk their investment through this period. We are also asking that investors get significant tax advantages for making investments into early stage innovation companies.”
“We are looking to take pressure of government spending, incentivise investment, stimulate the Innovation eco-system, create jobs and enable funding to go to vetted companies with investors doing the due diligence.”