One-way tickets to Delaware an option for startups, in light of the Entrepreneurs’ Infrastructure Program – StartupSmart
The proposed commercialisation strand of the Entrepreneurs’ Infrastructure Program is “comically inadequate”, according to Blue Chilli chief growth hacker Alan Jones.
The first glimpse of the program emerged last week when the Department of Industry released a discussion paper of the program’s proposed services.
That paper says the proposed commercialisation strand of the program will provide a range of tailored commercialisation services designed to provide entrepreneurs and businesses access to advice and support to enhance their prospects of commercial success.
“If the commercialising ideas strand of the program goes ahead as planned in November the scale and depth of the support proposed is comically inadequate,’’ Jones says.
“Australia needs a significant investment in STEM education, a re-write of the tax treatment of employee share option schemes and tax incentives for all levels of investor in early-stage tech startup ventures.
“This discussion paper relates to none of these fundamental issues.
“Workable models achieving real results are available for all to see in the UK, Canada and the US, we need only look, learn and have the vision to implement them here.”
He adds the program will do little to stem the tide of talented individuals and great technology startup ideas leaving Australia.
“The UK, Canada, Israel, Germany, Singapore and of course Silicon Valley are now all significantly more supportive to Australian tech entrepreneurs and their valuable IP, and our current government seems unable to grasp that our tech startup industry is not only the most likely source of our next major export industry, it is also a highly portable industry that can and will relocate if we force it out,” he says.
“By freezing and then dismantling the Commercialisation Australia program and Innovation Investment Fund, the federal government has left many of our best ventures and most talented startup entrepreneurs struggling just to find a way to keep their doors open in 2014.
“In the light of this latest discussion paper, how are we meant to dissuade them from booking a one-way ticket and registering a Delaware corporation?”
(The US state of Delaware has historically had corporation-friendly laws and tax regulations.)
Australian Private Equity and Venture Capital Association chief executive Yasser El-Ansary says the program won’t be able to encourage more private sector investment into startups on its own.
“One of the most important priorities in the area of industry policy should be to facilitate more private sector investment into startup businesses,’’ El-Ansary says.
“This program could help with that, but on its own it certainly won’t be a silver bullet.”
The government is seeking industry consultation on the program’s proposed services, with the consultation period lasting until the end of the month.
El-Ansary was critical of the amount of consultation government sought from industry prior to the development of the policy.
“The government is going to have to lift its level of pre-decision consultation with key private sector industry groups on measures like this,” he says.
“I don’t know anyone who was consulted on the merits of this policy before it was announced.
“The new investment and competitiveness agenda that the government is currently working on for release in the middle of this year has to meet some very high expectations.
“Abolishing key programs like the Innovation Investment Fund, and abandoning tax reforms to venture capital limited partnerships and the research and development tax incentive over the last few months has left many wondering what direction the government wants to take in this area of policy.”