It’s very easy to talk about investing in innovation and often a little harder to encourage it.
We constantly see entrepreneurs and leaders touting how Australia has all the talent, the creativity, the ambition, the intelligence, yet somehow we’ve been slow to rise to what could be a very profitable and promising occasion.
We could blame it on a number of things; policy, location, culture, but sitting around pointing fingers has never gotten us anywhere. It’s proven that supporting domestic business brings insurmountable reward including job creation, economic activity and an entrepreneurial landscape that could attract international talent to our shores.
But the question is not what great things will happen if we do begin to invest, it’s what will eventually happen to Australia’s economy if we don’t?
How is Australia doing right now?
According to the Global Innovation Index, Australia is ranked 17th in the world and outperformed by Singapore, Korea and China in our region. With Australia’s mining boom dwindling, innovation will now pave the way for a stronger economy. But, if we don’t figure out a way to power investment and get back in the innovation race quickly, we will be left behind the rest of the world.
One of the main setbacks is the lack of incentives for investors. This comes in the form of tax breaks, barriers to entrepreneurship, effective government policy, etc. As a result, many startups are migrating to US markets in search of resources, capital and a better developed market. If we ever want to see our tech market boom, more investors are going to have to put their faith in promising business here at home and hence be made aware of the potential gains that can be made in this space. We need to not only invest money, but also invest confidence.
When I see a new idea, I see an opportunity. As both an investor and business owner myself, I know the benefits local investment can bring, both tangible and intangible. When someone invests in your business at home they have the opportunity of assisting first hand in the growth of that business, closely watching its progress and enabling it to go global from the start. This is a whole lot harder to do when the startup is on the other side of the world.
I recently came across a new app from radio and TV presenter, Jules Lund. The app is called Tribe and aims to offer a virtual meeting space for brands and social influencers to connect and forge working relationships. This micro-endorsement model really piqued my interest after reading it would be scalable to accommodate both large and small pay-per-post campaigns. I contacted Jules on Facebook and ended up investing. I won’t be involved in the day-to-day running of the business but instead am available in an advisory role to help the business scale and grow.
This type of investment not only allows someone to help foster success but also to insure they see a return on their own investment.
While individual participation is integral we also need policy support. Good news comes with the Senate recently passing the government’s new tax incentives for early stage investors and a scheme to improve access to capital for VCs. These two initiatives are designed to make investment for Australian startups more attractive, with Christopher Pyne, Minister for Industry, Innovation and Science, stating that, ‘the tax incentive will promote investment in innovative high-growth potential start-up companies and improve businesses’ access to venture capital.’
This is excellent for a number of different reasons; not only will the tax incentives encourage more positive contributions, but they will also recognise silent investors and mitigate a degree of risk in terms of losing money on an investment.
The Victorian government are also leading the way with, ‘Launch Vic’, a $60 million start-up fund created late last year to support ‘the infrastructure which supports startups, entrepreneurs and scale-ups’.
While these are both promising developments, they will only play a small part in decoding Australia’s larger innovation issue – we still need to motivate and encourage actual investment to occur, in order to stimulate growth. If we are really to solve this problem and catch up to the rest of the world, change and investment needs to happen now, it needs to be ambitious and it needs to inject global sized confidence back into this country we call home.
So, instead of talking about what could or couldn’t happen let’s focus our individual efforts on the things we can do right here and now on our very own doorstep.
Nick Bell is an entrepreneur, angel investor and start-up mentor. He is the founder of tech companies, WME and Appscore. WME is Australia’s leading full service digital agency. Their expertise covers SEO, website design, PPC, CRO and social.