Southern Cross Venture Partners
Increasing participation in science, technology, engineering, mathematics (STEM) and computer science disciplines is critical to the success of Australia’s startup ecosystem, according to entrepreneur and investor Bill Bartee. He says if Australia doesn’t act quickly to lift participation rates in those disciplines, the nation will look back in 20 years’ time with regret. “I think one of the ways we can improve the startup and entrepreneur ecosystem in Australia is to create more entrepreneurs,’’ he says. “And if you look back over the statistics of who starts companies, most companies founders are STEM or computer science majors.” Bartee, a managing director of Blackbird Ventures and co-founding partner of Southern Cross Venture Partners, recently spoke at Sydney co-working space Fishburners where he gave his thoughts on the StartupAus Crossroads report, which was released earlier this year. He says the pool of people graduating with a background in those disciplines is small, particularly when taking into account international students, many of whom return to their home countries. “What it means is in 20 years if we don’t increase participation in these subjects we’re going to look back at it and we’re going to regret it,” he says. “A shortage is going to hurt us. My hope is we can really start to educate kids at a much earlier stage. “I think we need to get to the point where the primary schools wouldn’t think of taking math and English without taking computer science. “Not so they become rockstar programmers, but so they can think algorithmically and they can understand how things work, and how to write basic code.” Bartee says Australia is lagging behind the rest of the world in this regard. “If you look at Vietnam, Vietnam starts teaching computer science in grade five or six, and you’re finding that they’re becoming much, much more computer science literate,” he says. “If you look at the European Union for instance, their Entrepreneurship 2020 Action Plan, technology entry education is part of the program and begins in primary schools.” He says there’s no reason why Australia can’t excel in STEM fields and points to Australian mathematician Terence Tao who was recently announced as one of five winners of the Breakthrough Prize in Mathematics. He says entrepreneurship needs to become a cultural norm. “It has to be part of the social conversation, when we’re sitting with parents, watching kids play on the soccer field, you want the conversation to be ‘my son’s going to be a lawyer, doctor, lawyer or investment banker’ but also ‘my son or daughter is a maths wiz, she wants to be an entrepreneur’,’’ Bartee says. “It has to come to the point where being an entrepreneur, starting a startup is normal.” At @fishburners to hear more about the @startupAUS crossroads report from @peterbradd @wbartee #startups #Australia pic.twitter.com/Xw2dpfwtKs— Ash Pritchard (@AshfordP123) June 23, 2014
The National Commission of Audit report’s contention that government support of startups provides no real benefit to the community is flat-out wrong, according to a number of startup industry figures and two major reports into the industry. Rui Rodrigues, investment manager of Tank Stream Ventures, says the commission’s suggestion is ridiculous. “It’s a very short-sighted view and there isn’t any logic behind it,’’ he says. “They’re essentially saying that the thousands of jobs created through startups and technology have had no impact on the economy.” It’s an opinion echoed by Sydney Angels management committee member Richard Dale. “The verdict’s been in for quite a long time, a startup, as long as it’s a high growth potential venture and not a lifestyle business, is a net creator of jobs,’’ he says. Last month peak not-for-profit StartupAUS released its report Crossroads: An action plan to develop a vibrant tech startup ecosystem in Australia which highlighted that startups play a big role in job creation – three million new jobs are added to the US economy each year by new firms, while existing firms lose a total of a million jobs per year. The Crossroads report noted Harvard professor of economics Ricardo Hausmann’s observation that Australia has “an amazingly primitive export basket”, which he says will lead to Australia becoming one of the worst performers in the region in terms of GDP growth. StartupAUS board member Bill Bartee, who is also a co-founder and managing director of Blackbird Ventures and Southern Cross Venture Partners, believes the commission is taking the wrong position. “Well I don’t know where they’ve been or where they’re getting their data,’’ he says. “It’s pretty clear when you look across the OECD and the US that there’s been lots and lots of job growth from startup and tech companies that build real businesses. “The eBays of the world, all of these very, very large tech companies that drive the US economy in a lot of ways were once very small companies. “It’s not as if the government is assisting a dying industry.” artee says he’s a firm believer in the need to support tech startups by providing capital, both human and financial. Last year, The Startup Economy, a report commissioned by Google and carried out by PricewaterhouseCoopers, found high-growth tech companies have the potential to contribute 4% of the Australia’s GDP by 2033 while adding 540,000 new jobs. Currently, startups contribute just 0.2% to the nation’s GDP. The commission’s recommendation that the government abolish Commercialisation Australia and the Innovation Investment Fund would leave Australian startups in a weaker position, says Dale. “Do they benefit? The answer is yes, these programs are putting experience, talent and money into the startup ecosystem,’’ he says. “Are they perfect? No. Do they help? Yes. Does taking them away have an impact? Yes, absolutely. Are they the best way of reducing barriers startups and early stage ventures face? Probably not. “All programs, all solutions can be improved, but we have programs at the moment that are functioning, providing benefit – so don’t turn off the tap. “The two years it will take to design, approve and implement a new program, that’s two years of lost opportunity.’’ Startup Victoria CEO Lars Lindstrom added to the chorus of startup community voices speaking out against the Commission of Audit’s recommendation. “In our view CA (Commercialisation Australia) has been doing a good job and the IIF(Innovation Investment Fund) structure of government matching investment 1:1 mirrors successful initiatives elsewhere such as in Singapore,’’ he says. “I don’t agree that it’s as simple as saying ‘finance can be acquired from the private sector’, VCs have had poor returns and therefore funding is in short supply.” “It may be short-term cost-saving but in the long run it would be highly damaging to the Australian economy.’’
A new interactive report by Deloitte Private identifies lack of corporate and government support, access to capital and a culture afraid of risk as factors holding Australian innovation back. Deloitte partner Josh Tanchel, who coordinated the report called Startups: Playing it Safe is the Biggest Risk, told StartupSmart the panellists who took part in the report unanimously agreed about the potential and presence of innovation in Australia, but said Australia needed to get better at commercialisation. “All of the panellists saw greater opportunity for Australian innovation to move forwards and to change the ways we do things. They weren’t saying there was a lack of innovation in Australia, but that we needed to be better at commercialising that innovation,” Tanchel says. The panel was made up of five leaders in Australia’s start-up community: BlueChilli founder Sebastien Eckersley-Maslin; Southern Cross Venture Partners founder Bill Bartee ; Kelly Bayer Rosmarin, executive general manager at the Commonwealth Bank; Lisa Messenger, publisher of renegade COLLECTIVE; and Pete Cooper, founder of SydStart, Australia’s largest tech start-up event. Tanchel said Australia’s attitude to risk and failure was a major issue. He says the attitude in the United States is that failure is part of the entrepreneurial journey, and Australia needs to catch up with this approach. “Here in Australia, we have this culture where once you fail, there really is a black mark on you,” he says. “It’s holding entrepreneurs back here, as they’re less inclined to go for bolder global ideas. Instead they’ll go for smaller niche markets or verticals to test it, because they don’t want to fail and get blacklisted.” He adds this issue goes the whole way up the business ecosystem from start-ups to global companies headquartered here. “As an Australian culture, we haven’t really embraced failure, risk and therefore innovation,” he says. “But the time for playing it safe has passed. If you’re doing that, you’re going to get disrupted and lose your market share.” As the issue affects the entire Australian business landscape and the economy, Tanchel says corporates and governments need to step up to the issue as well. “The government could do more to mitigate risk, by supporting investment and structured, de-risking programs like incubators,” he says. “But the most important is they need to finally fix this ESOP (employee share scheme) problem. It’s the real currency for the ecosystem and it needs to be fixed once and for all.” Tanchel adds it’s becoming increasingly important for Australia to work out how to increase the number of women founders. “We need to work out a way to get more women into the sector, as that’s another huge opportunity for this country to grow.”
Blackbird Ventures is determined to offer Australian start-ups much-needed Series A funding rounds, after announcing the formation and first close of its $30 million venture capital fund.
G’Day USA has returned with a vengeance in 2013, with more than 25 events set to showcase Australian business capabilities, marking the 10th anniversary of the promotion vehicle of all things Australian.
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Clean tech start-up Brisbane Materials, which has emerged from research commercialisation firm UniQuest, has closed a $5 million Series A funding round as it seeks to scale up its R&D, manufacturing and marketing both domestically and overseas.
Carbon-conscious start-ups have been targeted by GE’s new Ecomagination Challenge, which will see five winners awarded $100,000 cash, and a potential capital pledge of up to $10 million.
A new venture capital fund is aiming to take the Australian start-up scene by storm, founded by a self-described “dream team” including Atlassian founders Mike Cannon-Brookes and Scott Farquhar.
Google is rolling out a new series of networking and tutorial events aimed at growing Australia’s start-up scene and fostering the “enormous talent” of local entrepreneurs.
The co-founder of Melbourne-based incubator AngelCube says he makes a conscious effort to recruit female mentors, but believes more can be done to entice women into the industry.
We've bootstrapped Shoes of Prey to date but we've been exploring the possibility of raising capital to help accelerate our growth.
As many as 30 seed stage start-ups will benefit from a $60 million government investment in three venture capital funds, with an increasing focus on bio technology, life sciences, IT and medical research.
Market-ready start-ups are being encouraged to enter a university business plan competition, with $100,000 in prize money offered in addition to one-on-one mentoring from the university’s resident pitch coach.
More than $160 million is set to be injected into high-potential start-ups as part of the Federal Government’s Innovation Investment Fund.