Letter to the Editor
Not all Anthill readers thought the axing of Commercial Ready (CR) was an unmitigated disaster for the start-up ecosystem in Australia. Clint Walker, CEO of Rising Sun Research (winner of the “Coolest of the Cool” award at Anthill’s 2007 Cool Company Awards), believes the abolition of CR will lead to the creation of leaner and more competitive start-ups and force the private investment community to step up. His Letter to the Editor is published below.
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As Anthill’s Coolest Company, we’ve also received some serious grant assistance over the past years that has helped us along the way to delivering our nigh-on 100 percent average annual growth rates into profitability territory. And on the back of the ‘easy money’ we were toying with the idea of going through another grant run (our third). With the Commercial Ready (CR) grants now gone, some really hard questions have come up within our own circles, spiced with some vicious debate about the nature and consequences of programs like CR as administered by the government.
Now, I’ve seen some Aussie venture funds complain that scrapping CR increases their exposure as investors, because the investment market here is so small. I think that perhaps there is some merit to that argument (why not redirect CR funds to develop the local PE market instead?), but the majority of the rally cry I’ve heard seems to be coming squarely from the private SME sector caught out in the rain with their dirty little secret subsidy finally telling them that it feels used so go home and sleep with your wife.
I understand this cry, and our company truly feels its pain. But you know what? This is possibly one of the best things for Australian business to come out of the Labour budget thus far because it means that companies all across Australia (including ours) are being forced back to the drawing board to draft better, tougher and leaner business plans; whether or not those plans still require funding. The private-sector funds are far more ruthless in what they say ‘yes’ to, and Aussie businesses are simply going to have to get better at what they do to stay in the game. And I reckon we’re going to be a lot more successful because of it.
Anecdotally, never have I seen the look of amazement and disdain as I have when explaining programs like CR to my American business counterparts.
This is all with the greatest tip of the cap to the genuine and real assistance that government funding provided in the relative desert that is the Australian venture/private equity landscape (not the least of which to our company). Was the axing of the CR program from the budget handled well? No. Are a lot of companies going to die because of this move? Probably. Is the Angel/Venture/PE market in Australia ready for its sudden and unexpected prime-time? Paul Ryan could write a wicked piece on this one I’m sure, but I don’t know the answer.
What is emerging is a hard-nosed consensus, within our company at least, that our commercial success has a better shot without recourse to a funding program that gets used as much to propel ‘R&D’ to ‘commercial readiness’ as a stop-gap for cashflow shortfalls that enables lazier, less hardcore management (financial/business/commercial).
Not that you asked, but those are my five cents.
Clint Walker
CEO
Rising Sun Research
