It's holy writ for Australia's IT industry that if only we had more technology startups, everything would be better and the nation's economy would have a bright future once its to-all-intents limitless iron ore, coal and sunshine resources are depleted or become unfashionable. The reason Australia doesn't have more startups, the …
It is actually spelled "anus".
Anus terribilis. For some reason hardly anyone spells it correctly.
Maybe just a little more whining...
You describe the finding that new capital decreased by 77 per cent ($2.4 billion) in the 2012-13 financial year as "a shocker" but I'd say that's a significant understatement. Three quarters of the capital dried up in a single year? We shouldn't be concerned about that?
A problem with the report is grouping late stage PE with VC and not breaking out early-stage private equity at all. Late stage private equity in Australia doesn't usually invest in Australian tech startups at all, or if it does, it usually follows in an investment round designed to take the investee to global scale, in life sciences, mining tech or engineering tech.
My gut feel is that the early stage private equity proportion of total capital actually increased quite a bit in the past 12 months. But it's still very small and is dwarfed by late-stage PE and VC funds. And it's just my gut feel.
The report also groups all IT, media, communications and electronics companies into one stat. There are massive differences between the economics and investment in startup media like The Register, compared to early-stage ventures in electronics or cloud services.
Even grouped into one stat, the first graph shows that Australia backed half as many ventures last year (30) than it did back in 2005 (60). And 2005 was not a great year — the Australian tech startup industry in 2005 was just beginning to grow again after weathering the 2000 Dotcom Bubble and the aftermath of 9/11. It was on the beginning of the climb back, and only to the vanishingly small early-stage tech startup ecosystem we had at the peak of the Dotcom Bubble. It was nothing to aspire to.
In the second graph it's clear that new investment in $M hasn't moved an inch in relative terms to any other industry except retail in the past decade. Despite wanting to be the 'clever country', whatever we've tried has not succeeded.
Tech isn't like utilities or manufacturing — it is highly portable investment capital backing highly portable intellectual property that will go wherever the ecosystems are most viable.
You can't pull up a coal loading terminal or a mobile telephone network and move it to China in less than a year for $100k in total relocation expenses. Unless Australia is amongst the top viable tech startup ecosystems, we'll be exactly where we are now in 2024.
All the current startup industry support is based on the same tried-and-tested ideas that have achieved nothing in the past decade. That's why the startup industry is making a lot of noise right now, trying to persuade the new Fed govt to listen to the industry seeking the support, for a change, on the assumption that we probably know what we need.
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