With the Australian economy undergoing rapid structural change, the nation and its policy-makers are faced with the question: where will the jobs of tomorrow come from? Supporting and growing those Australian industries that are well-placed to innovate and create the next wave of employment growth is critical. In particular, this will involve start-ups and small and medium size enterprises (SMEs) attracting capital and expertise to grow their businesses, and turn great ideas into commercial reality.
To date, the National innovation & Science Agenda (NISA) has focused on bolstering the start-up ecosystem, including providing early stage investors with the right incentives to back promising ideas and products. These policy changes will be transformative for the startup sector.
The next phase of Australia’s innovation reforms – NISA 2.0 – must now move to support ‘scale-ups’: those businesses that have graduated from the initial start-up phase with a proven product and market opportunity which now need further capital (often $5m-20m) and expertise to hire staff, drive sales growth and invest more deeply in research and development.
Currently, a lack of institutional funding at this vital stage pushes maturing, innovative Australian companies abroad. Making sure that these companies receive the support they need has economy-wide implications, including the nation’s ability to drive innovation, productivity and employment growth into the future. Over the last five financial years (FY2011-15), only 19% of venture capital-backed companies received later/expansion stage funding, down from 30% of companies in FY2006-11.
This document sets out AVCAL’s views on how government and industry can work together to ensure that Australia retains and nurtures its promising entrepreneurs and businesses. In a globalised economy where capital and labour is increasingly mobile, and the rate of technological change rapid, it is essential that Australia has a competitive environment for those companies at the heart of the economy.