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Australian Government Should Follow Singapore in Supporting Startups (forbes.com/sites/jlim)
32 points by jaezen on May 21, 2014 | hide | past | favorite | 52 comments

One of the worst aspects of Australian business is its default to rent-seeking in the face of any adversity. Look at the car companies and their blackmail for handouts over the last decade. Look at Alan Joyce's recent attempt to get a government debt guarantee for Qantas.

This attitude infects start-ups in this country too, though this article isn't too bad. The demand for special tax treatment of start-up investors is regularly made, and the demands for government grants is equally regularly made.

Neither of these should be considered - the first from a position of mutual obligation, where those investors who profit from startups need to contribute to the society that makes those start-ups possible.

The demand for funding is best looked at by seeing what actually has been funded by Commercialisation Australia grants, and - to put it politely - there's not a lot of stuff there that is "commercial". Instead, there's a museum of half-baked ideas that were able to cobble together a business plan sophisticated enough to fool bureaucrats. My favourite, from memory, was one for several hundred thousand dollars to develop software to help manage car washes. Car washes!

(And by the way, the funding scene in Australia is vastly different from what it was 5 years ago - seed capital is very much available from private investors, even if subsequent round VC money is still a far harder boat to catch)

>One of the worst aspects of Australian business

The only way you can say this is you know nothing about the businesses in other countries.

The reason why Australian car makers needed those concessions was because America gave much bigger ones that made our industry non-competitive. Same for airlines, Quantas is the Australian national carrier yet compared to companies like Air France, Emirates, Lufthansa or British Airways it is left to fend for itself much more.

To try and compete as a free market firm against companies with government support is a recipe for bankruptcy or off-shoring, as our magically disappearing car industry has shown.

I wonder how much Australian industry is affected by resource exports driving up the currency making other exports more expensive and imports cheaper.

It varies from industry to industry of course but it effect is huge.

> The demand for funding is best looked at by seeing what actually has been funded by Commercialisation Australia grants

Is the list of what has been funded available online?

I look at what Norway has done with their oil wealth and compare that to what Australia done to manage its mineral wealth and I cannot help but shake my head in despair. Sure Australia isn't the same as Norway in many respects but the fundamentals are the same. Ensure you collect and save a fair chunk of the profits of your non-renewable resources for investing in a future that doesn't involve hauling large amounts of rocks out of the ground.

The difference is that when Norway runs out of mineral wealth, they have nothing unique to them (everyone can do a service economy), but when Australia runs out of mineral wealth, there is still a very strong, growable agricultural sector. Not saying that it's right - I prefer Norway's future fund method - just that there's not a mineral-dependent economy with a termination date in Australia.

Hi all - I work for Andrew Leigh MP, the Shadow Assistant Treasurer who is responsible for Labor's tax policy leading up to the next election.

I'd be interested in hearing your views on what a future Labor govt could do to support startups in Australia. If you'd prefer to email them, thomas.mcmahon@aph.gov.au.

Drop (explicitly and unambiguously) all your policies around censoring the internet.

Seriously, you have no idea how damaging these are to the image of Australia in the eyes of young IT entrepreneurs, not to mention investors. It makes the government look like luddites with no idea about technology, and is a giant red flag to anybody who would think about starting a business here (if the government is this stupid about technology, can you imagine all the other red tape and moronic regulation that is going to fall on you?).

EDIT: as a second issue, reform copyright to give broader rights for "fair use" similar to the US. The current exemptions are far too narrow and make it very difficult to start a content based startup here without having a lot of potential legal problems.

Thanks mate, noted.

Fix the internet. It doesn't matter how much it costs.

I have to wait a month to get our office connected to Optus, Telstra, iiNet et al were just as bad, and as a small business that is killing our profit for this year. I called them on the 10th this month and they will not have any capacity until the 6th next month to connect anyone new. And this is in the Melbourne CBD.

I've heard people suggest that internet access within AU is important for startups, but could you explain why?

I think most AU startups would be targeting a global market, so the internet in Australia is irrelevant for all but a small percentage of their customers.

On the other side, most startups now use cloud hosting with Amazon or Google. So again the quality of internet access in Australia isn't very relevant.

In terms of getting work done, I think it's difficult to make an argument that current internet speed is insufficient.

Don't get me wrong - faster internet would be lovely and I know that there are other groups that would benefit, just not convinced that AU startups specifically would benefit.

First of all, its hard to build an internet business when you dont actually have internet access.

Also, the vast majority of internet plans in Australia, provide very little upstream bandwidth.

Your right, the market being targeted is irrelevant to the speed of internet.

With regards Amazon / Google, they need to get their files onto those services in the first place. This ties into your point of getting work done.

When it takes a day to upload 1GB of data - business starts to suffer.

Faster internet, especially upstream would not change the quality of ideas coming out of Australia, but it would remove a significant bottleneck in terms of getting things done.

Everywhere urban in Australia does already have internet access. For that reason, I don't understand your first point.

The upstream bandwidth isn't hampering any businesses that I am aware of, but I agree that businesses uploading large amounts of data may struggle with it. (sidenote: would it be worth spending so much on infrastructure to support those few businesses?) That said, my understanding is that the upstream bandwidth is intentionally capped by ISPs rather than being a result of the infrastructure. Even with the most amazing infrastructure, you would need to convince ISPs to drop the artificial limitation.

There is also an emerging behaviour where all data crunching is being done on machines in the cloud. In that case, not much of the data would ever even enter Australia unless you wanted it to.

Bingo. I'm in Melbourne and have founded/co-founded three online businesses, and have exactly zero servers in Australia. Even if I could have 1 Gb fiber with the NBN tomorrow, that wouldn't change.

IMHO the Australian government would be better off expanding international network capacity to Australia across the Pacific and up to Asia. It's absurd to hear non-technical politicians arguing over which NBN architecture is better. That shouldn't be their job any more than deciding whether I use Python or PHP.

Agreed. My servers are in the UK where the market I'm dealing with is, and where I live usually. Even setting up edge servers for an Australian company starts in the US or UK for me, and comes back over the sea pipes to Australia. When I'm in Australia my Netflix comes over fine through a server I proxy through. The vast majority of consumers will never need the maximum bandwidth, many will hit cap limits earlier, and for latency reasons there's good reasons for keeping servers close to viable markets.

I really don't think Australian politicians know enough about this subject, and that may include the PM's Mr Internet, Malcolm Turnball.

> Fix the internet. It doesn't matter how much it costs.

I care how much it costs, which is why it's utterly insane to go with the coalition's VDSL2 at $40+ billion. GPON on the other hand is a bargain at any price below $100 billion - not least of all because of the higher revenues, but also because of the lower maintenance, higher speeds, higher reliability, lower latency and the future upgrade potential.

But Labor failed to get that message out there, didn't they...

Well this is an area where I can safely say we're going to have a more attractive policy than our opponents. Our office in Braddon ACT is one block away from the NBN, it's frustrating.

> we're going to have a more attractive policy than our opponents

Going to have? In 2 1/2 years it's going to be much, much too late.

I am astonished at how little scrutiny the coalition are getting as they take a wrecking ball to the most important infrastructure program in the country. Labor is giving them a free pass, as are the media, even the ABC! I am beginning to feel like a lone nutcase raving on a street corner that hey, maybe we shouldn't take $40B, give half to Telstra, then set the other half on fire, which we can watch in shuddering low-res on our 25mbps connections.

I had 100Mbps VDSL2 in japan seven years ago.

I'm frustrated too, that's why we're working hard to win the next election.

Damn I miss Julia G. You better find someone to spearhead your party that has balls at least as big as hers. I hope you, too don't become Gina & Murdock's partners.

How did this honestly happen? Was this poor marketing? A PR assassination? Is this even legal? The fact that every person I know is mortified with what happened in such a short time is mindbogglingly confusing. Nobody who cares about Australia (not their boss' pay check), who is informed, wants what is happening.

How are the government legally getting away with lying about the state our economy & butchering the most important parts of our gov expenditures. How in gods name are they getting away with bloody murder when it comes to disgracing nature's Sistine Chapel AKA the GB Reef. Pointlessly undoing the good preservation work defending linchpin predators in our environment.

What happened?

I feel like our voting system is completely flawed when such injustices can happen. Again, nobody I know voted (at least knowingly) for Tony Abbott or the Liberals. They sure didn't vote for this NBN VDSL deformed monster. When they don't even have to be accountable to their promises. There should be measures be put in place to prevent exploitation of not only politicians but citizens. Which are equally exploited through misinformation and overly emotional, sensational drivel.

Something like voting for national objectives instead of job hoppers working the revolving doors. Accountability would be central to national motives. Instead of registering for mandatory voting, there should be a knowledge and expertise tests that grants you a vote for certain objectives to assure educated outcomes through democracy instead of happy go lucky "democratic" republics. Not condemning republics, but we're in trouble when people are electing nothing but lawyers who find safe energy "offensive" and kids soccer coaches.

>we're going to have a more attractive policy

"Going to" isn't good enough. If the situation doesn't improve by next year we will be relocating to Eastern Europe.

Yes, you heard that right, the post Soviet Kleptocracy my parents left behind to start a new life in Australia now has better digital infrastructure than Australia and looks more business friendly than what we have to deal with here.

Are there any WISPs in your area? They should be able to hook you up in a single day with a direct connection to their network.

> Are there any WISPs in your area? They should be able to hook you up in a single day with a direct connection to their network.

The parent could certainly get a 4G connection with Telstra or Optus, and it'd probably even outperform DSL in terms of raw bandwidth. But the costs are monstrous and typically cap out at ~10GB/quota a month - not really tenable to operate a business on that.

(I'm assuming his issues are due to a lack of DSL ports at the exchange, borne from a lack of rack capacity in the exchange for ISPs to install new DSLAMs into)

or just a stupidly long installation process for ULL lines

If the previous ULL connection wasn't canceled and removed correctly it's 15+ business days till you will get anything connected. (for my last change ULL to ULL it was a 24 day process)

That is what we were using.

But the plans are either ripoffs, 100GB cap with 10c per MB over quota - which resulted in a $500 over charge and a cancellation right away - or the service is terrible when the university students get out of classes.

On our current plan during 3pm-1am we are lucky to get 50 _kilobytes_ per second. This is utterly unacceptable as that is when our clients in Europe need us to be responsive. Getting an email with attachments send is an uphill battle, forget video conferencing. We have to do ridiculous things like plan do major deployments on cloud servers between 2am and 10am because that is the only times we actually get broadband speeds. And we are stuck like this for another two weeks because of "problems with infrastructure".

My vote is for extracting us from agreements with the US that import their broken intellectual property/copyright laws. We don't collect dollars from their movie industry, so why prop them up?

Apart from that, make sure you get the message across that investing in startups now means a greater payoff later - the diametric opposite of Hockey in the article saying that businesses should only stand on the products they make [today]. There is no recognition of overcoming barriers to entry in Hockey's remark. You can even paint startups as individualistic underdogs (which Australia loves) against Hockey's vision of entrenched big players only.

Fix the tax mess for employees who receive stock options. There's lots of room for people to be stuck paying tax on "income" that they're years from being able to turn into cash. If things turn south, they may end up having paid tax on money that they will never actually see!

(From Perth, currently working in San Francisco)

Cheers Andrew - both Bill Shorten and Chris Bowen have flagged re-examining our position on employee share schemes. I'll add your voice to many that I've received on this issue.

> I'd be interested in hearing your views on what a future Labor govt could do to support startups in Australia.

Fix immigration by bundling a startup visa with a permanent residence permit like Canada [1]. Canada is strongly promoting this program, even directly advertising to employees in Silicon Valley who are fed up with US visa problems [2].

I think Canada's program isn't too attractive for immigrants because of the harsh weather (-45°C winters, anyone?), and the insistence on being funded from a specific list of Canadian VCs. Australia doesn't have the former of these problems, and could mitigate the latter by relaxing the restrictions on investors a little.

Bundling a permanent residence card with a startup visa will make this an extremely attractive proposition for several non-American software developers who are currently in a painful, bureaucracy-ridden situation as regards visas and permanent residency. Also, Australia is a more attractive location for people from Commonwealth countries since there is far less of a culture shock.

If you have any more questions about these programs, or just about my experiences in this regard, email me at [my username]@gmail.com.

[1] http://www.cic.gc.ca/ENGLISH/immigrate/business/start-up/eli...

[2] http://www.bloomberg.com/news/2013-07-10/canada-tells-geeks-...

Parennoob - thanks, the idea of a startup visa was flagged by Chris Bowen in his press club budget reply yesterday, check it out if you're interested.

NBN. Without a doubt. I'm sick and tired of very very slow ADSL2+ internet speeds. My area was in the scheduled area for NBN and I was really looking forward to it until Tone came aboard. Ugh

Tax breaks while nice, isn't as essential as having really good high speed internet.

A startup visa might be nice (since I DO have a overseas partner I'd like to bring in), but I think both parties are quite xenophobic so, I'm not counting on it.

Return funding to NICTA (I understand it's a small part of NICTA whose funds got cut, but still) and CSIRO.

Copyright law reform would be really great too, but again, pretty unlikely.

Hi Tom

I'm the author of the StartupAUS Crossroads report. It sets out 23 actions to grow the Australian tech startup sector by addressing market failures relating to entrepreneurial culture, talent, tech skills, access to capital and regulatory barriers. http://startupaus.org/crossroads/

The report includes a detailed review of government initiatives that have been implemented in other countries. I don't think there's much call for us to come up with radical new ideas in Australia - there are many examples of government initiatives that have been effective in growing the startup ecosystems in other countries over the last 10-20 years, and that could be readily translated to the Australian context.


Disclaimer: I work in the library industry, with public libraries. Fund public libraries. Fund the hell out of them.

As we're moving towards the future, the disparity between those who have grown up alongside x, y or z technology and those who haven't grows wider and wider. Four hundred years ago it didn't much matter one bit if you knew everything your father knew and nothing much beyond that. A hundred years ago it didn't much matter whether you had your public education and then no education after that.

With this government determined to raise the retirement age to 70, there's going to be a huge imperative for re-education of sorts. And there is hardly a more suitable place one can think of this than public libraries. Maybe, to a certain extent, Khan Academy, maybe TAFE. But there's just such an enormous gap between what these facilities can do over a public library it's incredible.

While Google may well answer your question, what Google isn't going to teach you is what questions to ask it. It won't ever do that. The facilities and sessions and materials that a public library makes available to one in an ontologically intuitive and relevant defined hierarchy - How do I use the Google - that's important.

When you have the 55-year-old bricklayer with a back that's shot and not much support to speak of from his family, that's someone who can make a valuable contribution to society. And retraining at some TAFE is going to be one part of the equation, sure. But it's far from everything.

Frankly, this concerns me probably even more than the startup scene in Australia.

You embellish an ingrained primal desire, deep within every damn person in this country to want to know more and if they don't know run out and get the tools to know how to learn more, and this whole startup stuff solves itself.

You're from a left-wing party... "From each according to his ability, to each according to his need". There's an inherent principle in Marxism that says let people do what they enjoy creating. As we've seen manufacturing disappear overseas and the cost-effective exhaustion of our resources drawing to a close, what else do we have left but an information economy.

You make 'from each according to his ability', some mythical spirit of mateship towards helping each other out and creating a better place a more overriding priority in the consciousness of whatever shit is on the front page of The Daily Telegraph, then you'll be closer towards that light on the hill. You have an election platform that somehow subverts that 45-year-old with no programming knowledge into going on Github and creating his thing - even if there's not a line of code per se to be seen in what he does - and we may end up with a better place all around.

And, yes, the NBN too. I'm sure you've seen, on reddit or Delimiter or wherever, me rambling about this before. I've just complained with a work mate about how, over distances of even 1600 km a carrier pigeon with a MicroSD card would beat the coalition's even more exhaustive supposed rumoured upload promises. Half of our customers are in Europe and with us, even within Australia, having half our staff telecommute the upload speeds are a pain in the butt. Seriously. The average upload speed in Russia is 22 Mbps. The best connection any of us have is 2 Mbps, some are on 300 kbps and less.

Sorry for rambling, especially in such an abstract preachy way. It's just that I, and I think pretty much everyone else, has had it up to here with the state of politics in Australia these past few years.

In all honesty, start-ups per se are the last thing the federal level of government should really be worried about. Because all you guys are going to do is throw money at some project about IT sales software for hair salons and some primitive system about keeping track of sheared sheep with barcodes or something.

Also: Immigration. Europe managed to open up near enough all internal borders and I'm not seeing much chaos. Sure, it's not going to make much sense to open up our borders to China or whatnot. But just allow people from Schengen to come to Australia, no questions asked. Restrict social security payments until a stay period of 5 or 10 years. What's the worst that could happen, honestly?

It would be awesome to see libraries offering free courses like Lynda and Udemy (we tried it at our university in my senior year.)

I don't know about Lynda, much of what I've seen on it is just ridiculously reliant on Adobe products.

But in any case, while the content on these is great and all, what happens is that often you're then tied to a specific platform and there's no natural ecosystem at play here. You get what's currently promoted by the gatekeepers and you're getting there by somebody else paying for it.

While there's a great amount of value in these services, the sheer property of having a simple URL for a tutorial that can be shared across the world with nothing but a copy and paste is, in my opinion, greater than the additional value these services provide.

The value of being able to go on to any computer in the world, type in something random, as a suggestion from a librarian or a workshop in a library or whatnot, and clicking on the first YouTube video and knowing how to pick a YouTube video... that value is so utterly gigantic.

And yes, Lynda and Udemy are important too, I agree. We've actually been working on making services like these (but not these, because not many public libraries subscribe to them) more discoverable for library patrons. But they're going to be much more specialised and deliver much less of an punch to the face in terms of impact on everyone than blah.html on joelsblog.freesites.info or youclue.com/watch?v=anrmAOL901mRC could. With monetisation instead through Google ads or funding from random sources, including government institutions, or YouTube ads, why not - if your potential audience is going to be something on the order of billions of people instead of millions?

Do I disagree with you? At a good price point for library subscriptions, never. But I think there's more to it than that.

I just listed Lynda as it has a fair variety of topics and would be something I, personally would be interested in.

I was just thinking about what could get me to go to my local libraries more, I know that they can't afford the books I want to read as they are all too new and specialist.

Hey thanks for taking the time to write such a detailed comment, it's not my job to publicly defend the ALP so I'll just note your views/criticisms but I think the libraries idea is a good one.

And if I worked for freaking Sinodinos, the coalition counterpart here, that response would bore me stiff.

Not to be read as a criticism of the response per se, mind you.

Glad to see you here and taking feedback. Take a look at this and then copy it: http://www.startupchile.org/

This would require spending money on not mining companies. And if there's one thing Australia is overwhelmingly against, it's doing anything which might cause us to behave more like a first-world economy then a third world one.

Singapore already has an (unjustified) superiority complex about Australia, articles like this don't help. I don't mean to diminish what Singapore has accomplished over the last fifty or sixty years - it could have turned out very differently - but the reality is that Singapore's civil society and democracy isn't robust. The human rights issues are a big thing, but even if you write that off, then politically Singapore still has all its eggs in one basket. If the ruling party ceases to be competent, it's difficult to say what will happen: any viable opposition parties are sued into oblivion and there hasn't been a peaceful transfer of power in over 50 years.

I don't know about superiority complex, if anything, a lot of Singaporeans view Australia as an attractive immigration destination because they feel cities there have a better quality of life.

The elephant in the room here is immigration. I built a data science team in Singapore for a two year old company, and out of the 6 people here, we have 5 nationalities (FR, UK, US, DE x 2, VN). All the visas were approved in a day or two. No Singaporeans - the whole team was imported (5 more work remotely). No Australians, either - 2% of applicants came from there but none made the cut so far.

Now let's imagine that I, as a non-Singaporean citizen or PR, wanted to start a business and was choosing between Singapore and Sydney. Both countries have an entrepreneur visa of sorts. That's my primary consideration - all the talent I know is foreign as far as both countries are concerned. I'm an entrepreneur, so I don't care that much for tax rates (if it was absolute dollars I wanted, I'd stay in corporate). From a quality of life perspective, Sydney wins. SEA and Australia are similar markets in terms of potential revenue - only 60 million people are connected in SEA (10% of the population) and order values are much smaller, so potential balances out.

In Singapore, I just need to raise 75,000 SGD and then apply for matched SPRING funding with a 7 page form. If I get it, my newly seeded company is now eligible for an EntrePass for anybody with > 30% equity. In Australia, for a Business Talent (subclass 132) visa, I need to raise... 1 million AUD. Or have a net worth of 1.5 million AUD. How many first time entrepreneurs do you know with that kind of net worth? How many not-yet-incorporated companies do you know who get a term sheet for a million?

And of course, the US is out. Of the people we interviewed, only 20% were American. I'm not going to restrict my talent pool to 20% of the market, or take a punt on the April H1B circus. But that discussion is for another day.

The Australian government is technologically illiterate and will do no such thing. If we're to have any real competition between countries to improve their governance, entrepreneurs have to vote with their feet and actually move to the countries with the best policies. Only then, when governments realise that they're missing out on tax revenue, will they be motivated to change for the better.

And entrepreneurs should look very carefully at the human rights records of any countries they move to, including Singapore, regardless of how clean the streets are.

How clean are the streets on Manus Island? Mopped up the blood there yet from the last time one of our asylum seekers was shot dead?

We haven't got standing to criticise anyone about human rights.

When the government is hacking at education and slashing essential infrastructure for a services-based future (like the NBN), I hold no hope for Australia supporting startups.

Australia has an awesome tax incentive program for R&D that most startups will qualify for. We've recovered about 30% of our initial seed money from this:


This incentive has been reduced by 1.5% under the 2014-15 budget.

The problems for Australian startups are cultural more than anything, I feel. There's such a strong off-the-shelf culture here that it is near impossible for a small player to get local traction even with a demonstrably better product. Sadly IT is seen by parties on all sides - government, business, consumer - as something Australians are just not very good at and should be left to others. This is a bit of a catch-22, the attitude is justified by the lack of really big, high profile Australian IT companies doing anything useful. If a few companies had big exits (as Atlassian may do soon) then local investors might start to take an interest in funding early stage startups. But it is really more about attitude and culture more than anything and that is so deeply rooted (tall poppy syndrome, etc) that I don't think much can change it and startups with genuinely innovative ideas are far, far better just to move to the US and get started there.

The Australian government is a bunch of luddites.

Yes and no. We see things like the NBN and tech-related stuff as not being the best they could be, but there's also plenty of policies where we're either first in the world or in the first dozen or so who implement it. One example is the MRRT, which was a pretty innovative idea. The current government is horribly backwards overall, yet even one of their policies is fairly new in global terms (very generous maternity leave welfare).

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