Is an innovation golden age looming for Australia?

Could Australia be on the cusp of a start-up boom? Economic and social shifts mean the concept may not be as far-fetched as you might think.

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Digital marketer Randi Zuckerberg talks innovation with NAB’s General Manager of Brand Experience, Michael Nearhos, at the World Business Forum in Sydney, May 2017.

While many commentators see Australia as delivering more than its fair share when it comes to breakthrough concepts and inventions, some feel our innovation efforts don’t quite match the rest of the world.

So, is Australia an innovation nation on the forefront of all that’s new? Could we be on the cusp of a start-up ‘golden age’ or do we need to step it up a gear?

Private View takes a look at some of the innovation myths doing the rounds.

1.    “It’s too hard for start-up founders to access capital”

While it may historically have been true that it was difficult for start-up founders to access capital in Australia, that has arguably had its upsides. Dr Michael Cameron, for example, founded Rome2rio, a multimodal transport search engine. And as he wrote for The Australian last year: “Australia’s harsh capital environment has been the perfect breeding ground for world-class ‘cockroach start-ups’.”

Cockroach start-ups? These are bootstrapped businesses (companies begun by an entrepreneur with little capital) that grow slowly but sustainably. Ones that turn a profit early and, as Dr Cameron explained, “fly under the radar and capture the market before competitors wake up to the opportunity.”

It’s also the case that more early-stage funding is coming online. In recent years, well-resourced venture capital funds such as Square Peg Capital (set up by Seek co-founder Paul Bassat and backed by James Packer) and Blackbird (backed by two of Australia’s cash-rich super funds) have launched.

Plus, on September 29 this year, ASIC introduced a well-regulated crowd-sourced equity funding regime – one that will make investing in tech start-ups more attractive to hundreds of thousands of mum and dad investors and self-managed super funds.

2.    “We’re too complacent to care about the new economy”

The founder of the Freelancer website Matt Barrie recently put it another way in the Financial Review. “Australia is a property bubble floating inside a mining bubble”, he wrote, and thus enjoying a “lucky free ride”.

The mining boom is over and recent findings from the Bureau of Statistics suggest the housing boom has peaked. It would therefore seem logical that we’ll come to accept that easy-money ‘free rides’ are over. And that we’ll all be more amenable to the argument made by NAB Chief Economist Alan Oster this September in the NAB Labs Innovation Index, that Australia’s next phase of growth must be defined by ideas, creativity and execution. “Our future lies in our ability to foster a culture of innovation,” Oster said.

Leaders of both major political parties have been pushing this message for several years. Malcolm Turnbull, an enthusiastic investor in start-ups, famously encouraged the nation to become more agile and innovative. Likewise, Bill Shorten regularly calls on the electorate to generate the new economy jobs that will allow “Australia to win the future”

If we aren’t paying much attention to our politicians, it’s likely we are to our increasingly vocal tech tycoons. Figures such as Atlassian’s Mike Cannon-Brookes, who this year told the Australian Financial Review Business Summit in Sydney: “There are going to be a massive amount of jobs destroyed, there are going to be a massive amount of jobs created. Are we ready for those jobs to be created, and are they going to be created here or somewhere else?”

3.    “We’ve missed the boat”

There are plenty of reports and op-ed pieces painting Australia as a laggard in public and private research and development investment, in our lack of a national innovation body, and our poorly designed ‘innovation pipeline’ and start-up-unfriendly tax system.

Again, two points can be made.

First, the situation may not be as bleak as it appears. Dr Peter Binks, CEO of the Business Higher Education Round Table, argued in The Weekly Times in July that international surveys underestimate our level of industry-university collaboration.

“A lot of great collaboration takes place in Australia, it just takes different forms to the way they do it in Europe and the US,” he told the publication.

The fact that there are more than 100 incubator support programs being run by tertiary institutions suggest Dr Banks may have a point. As do plentiful examples of promising university-industry collaborations, such as the University of NSW partnering with companies such as Telstra to pursue cutting-edge quantum computing research – research that has the potential to generate new local industries – and NAB partnering with the University of Melbourne to research the drivers of innovation.

Second, there can be advantages to being a late adopter. When we do resolve to transition to the new economy, we can draw on the lessons around education reform, innovation hubs, high-skill immigration, start-up accelerators and tax breaks that nations such as Finland, Israel and Singapore have had to learn through costly trial and error.

Innovation in our sights

While we may not yet be at the head of the pack when it comes to the innovation race, neither are we being left in the dust.

The list of Antipodean start-up success stories – Atlassian, Campaign Monitor, Menulog, DesignCrowd, Freelancer, Kogan.com, Prospa, Shoes of Prey, 99Designs, to name just a few – suggests that that if Australia isn’t punching above its weight class it’s definitely doing pretty well within it.

And as Randi Zuckerberg recently explained at the World Business Forum, there are plenty of easy to implement strategies Australian companies (start-ups and otherwise) can embrace which will maximise their chances of enjoying Facebook-level success.