Australia’s Startup Economy
Cloud based tech companies, scalability and disruptive technology. Small, agile startups rushing to innovate and find a gap in the market. It is activity on a scale that has never been seen before.
The way the world conducts business is changing rapidly and Australia has an unprecedented opportunity to transition from a resource and primary industry based economy to one focused on high growth, knowledge intensive and data driven businesses that compete on a global stage. If you need confirmation of how much the business world has changed, look no further than these four companies:
- UBER: a multibillion dollar taxi service that owns no vehicles.
- AIRBNB: an accommodation provider that owns no property.
- ALIBABA: the world’s richest retailer carries no stock.
- FACEBOOK: the world’s most popular media company creates no content.
The recent Startup Economy study conducted by PwC and commissioned by Google Australia projected that high growth technology companies could contribute 4% of GDP (or $109 billion) and add over half a million jobs to the Australian economy by 2033, but only if the current risk averse culture, lack of entrepreneurial skills and restrictive funding regulation are addressed.
There is already proof that this can be reality – over the past 15 years just nine software companies have grown to a point where they collectively contribute 6% of GDP (or $1.3 trillion) to the US economy. Imagine if just one or two of these “unicorns” called Australia home.
According to the StartUpAus Crossroads Report 2015 (“Crossroads Report”), many countries are responding to this opportunity with speed and conviction by implementing policies and programs designed to stimulate and support high growth technology based businesses and retool their workforce by developing entrepreneurial skills. The Crossroads Report emphasises Australia’s need to:
- identify and address the current market failures that are impeding market growth;
- foster economic diversification so we are not so reliant on the volatile and ultimately unsustainable resources sector; and
- create and nurture a culture amongst our existing and future government programs focused on supporting startups and boosting entrepreneurship.
Australia’s startup ecosystem lags behind many other developed countries in terms of startup formation and venture capital investment. Our economy has for a long time been dominated by service based industries and exports heavily skewed towards the resources sector. If Australia is to continue to compete on the global stage and maintain the quality of life to which its citizens are accustomed, then it needs to shift its focus away from these diminishing activities and create high labour productivity jobs that are not susceptible to being undercut by countries with significantly lower cost of labour, as we have seen recently with the car manufacturing industry.
Article written by Corporate and Commercial Lawyer Sam Bassingthwaighte of ClarkeKann Lawyers.