Australia is well-known for its laid-back lifestyle, beautiful beaches and friendly atmosphere which was recently highlighted when Melbourne, Adelaide, Sydney and Perth were ranked in the top 10 most-liveable cities in the Global Liveability Ranking and Report released in August 2013.
More recently, though, Australia is becoming better known as a great place to start a business. In this article I’d like to provide an overview of the start-up landscape in Australia and share some of the assistance available to budding entrepreneurs.
Before I get started, I’d like to make a few disclaimers to ensure transparency. I live in Melbourne in the state of Victoria, have started a business called RosterCloud and run the Melbourne Accelerator Program (MAP) at the University of Melbourne which is an entrepreneurship program. I’ll state upfront that when it comes to state government support I’m biased towards Victoria because it’s what I know best.
The start-up ecosystem in Australia has grown significantly in size in the last 2 years. There are more co-working spaces, accelerator programs, investment sources and corporations and governments providing grants and resources to help drive entrepreneurship. These combined efforts have seen both Melbourne and Sydney ranked in the top three start-up ecosystems in the Asia-Pacific region (source: Startup Genome Report) and both are in the top 20 start-up ecosystems globally.
Australia is ranked as the 6th most attractive country in the world for VC (source: Global VC and PE Country Attractiveness Index) and the GE Innovation Survey of senior business executives saw Australia rise to 13th in the world for their innovation ranking in 2013.
However, Australia does have a relatively small population at 23 million people requiring entrepreneurs to think about selling overseas very quickly after starting their business. Traditionally many entrepreneurs think to expand first to the US and then to UK / Europe given cultural similarities. However, given our proximity to Asia, size of its market and greater emphasis governments are placing on trading (and therefore support) in Asia many entrepreneurs are now looking to Asia in the first instance after Australia.
Commercialisation Australia provides funding and resources to companies through a competitive selection process. The application process is quite rigorous but the opportunity to secure funding without giving up any equity is definitely appetising. The four grants on offer are listed below but do note that generally the funding offered by Commercialisation Australia is required to be matched by the company applying. Case Managers (experienced entrepreneurs) are assigned to each successful company to provide advice as well.
- Skills & Knowledge – up to AU$50K
- Experienced Executives – up to AU$350K to hire a CEO or other senior exec
- Proof of Concept – between AU$50k and AU$250K to prove the commercial viability of new intellectual property
- Early Stage Commercialisation – AU$50K to AU$2M to take your business to market
The AusIndustry R&D Tax Incentive assists companies offset the costs of doing R&D to help drive innovation. From their website, the two core components are:
- A 45% refundable tax offset for eligible entities with turnover of less than AU$20M; or
- A non-refundable 40% tax offset for all other eligible entities
The crux is that if your start-up turns over less than AU$20M then you can claim a 150% deduction for R&D.
At a state level, Victoria offers a number of grants to start-ups. One of the more popular is the Technology Trade and International Partnering Program (TRIP) grants available which provide financial assistance to export-ready Australian companies. These grants help cover the costs of attending international conferences. I used a Networker Grant from TRIP in 2013 to attend SXSW which allowed me to claim AU$2,750 in reimbursement for my travel costs. Larger grants are available for start-ups that are exhibiting at conferences.
The State Government of Victoria also operates the Technology and Innovation Voucher Program to help businesses access R&D capabilities.
The year 2013 saw two not-for-profits established to promote entrepreneurship: Startup Aus and Startup Victoria. These organisations serve a few purposes with the main ones being the promotion of entrepreneurship to the wider community, assisting entrepreneurs on the ground and lobbying government for reform to enhance support to the start-up community.
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Lastly, universities are starting to do a lot more around entrepreneurship. Their alumni networks, connections to industry and government and brand are of enormous value to budding entrepreneurs.
The Melbourne Accelerator Program (the program I run) at the University of Melbourne provides a range of workshops, seminars, master classes and public events to act as feeder programs into our start-up accelerator. The top start-ups on campus are awarded AU$20K, office space and mentoring for the duration of the four-month program.
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