Australia’s top tech innovators discuss government regulation and tips to secure funding.
David Vitek’s hipages.com.au – a home improvement website that matches consumers with the relevant tradie – is an example of a successful Australian startup. Recently Vitek announced a $6M round of funding from Australian Ethical Investment, Ellerston Capital (James Packer’s former personal investment fund) and KTM Capital.
hipages.com.au attracts just over one million visitors each month and its network of over 40,000 tradies is connected with 500,000 consumer members. hipages Group has been recognised by BRW as one of the “Most Innovative Companies” for several years running.
That’s the sunny side. But the reality is that, in Australia, three quarters of startups fail. There are plenty of reasons for this, including a lack of government support, high taxes and a misunderstanding of applicable laws.
“The government needs to wake up,” says Con Georgiou, CEO of One Million Acts of Innovation, a not-for-profit connecting innovators the world over. “There needs to be subsidy and concessions made for tax. There needs to be government concession because the red tape for a small business is almost the same as it is for a large business.”
The reality is that many talented, entrepreneurial people jump in blind to the demands of running a business with payroll, tax and legal responsibilities.
“The government should get out of the way,” Georgiou says. “One Million Acts of Innovation is trying to highlight that there is a movement occurring towards innovation-based startups and that investors want to get on board. We are trying to inspire a democratised innovation culture. We need to take an industry approach. For instance there are only eight million people living in Israel, but they are ranked number two in the world for innovation in the international market because there are few imposts to doing business and being innovative.”
Australia in comparison is rated 13th in the world for innovation input to the OECD, but its innovation output is rated 107th in the world.
“We have quality input but the ability to execute and the know-how is lacking,” says Georgiou.
Martin Martinez is behind several successful start-ups including The Australian Poker League and current venture Entrepreneur Card. He takes a slightly different approach and says that startups can help themselves by personally investing to show potential angels they’re are serious.
“Investors want to see that you’ve risked your own money – even if you failed at achieving your goals… Your money is ‘hurt money’, meaning that if you lose it, it hurts. And this makes you spend your hard-earned cash much wiser.”
Martinez also believes in the creation of an MBP (minimal buyable product).
“This means you are creating not just a PowerPoint presentation but a working model. By creating an MBP the plan validates the potential.”
There is no reason why start-ups should fail. While there does need to be better support from government for small business owners, those same owners can help themselves. Martinez says that self-funding, creating a roadmap, outsourcing labour to cheaper locations and trying to keep as much equity as you can will put you on the path to security.
Australia’s prosperity depends on those with bold ideas, but they have to take their fate into their own hands and help themselves by utilising a mix of investment support as well as putting their own strategies into place. By doing this, the harsh pinch and grab tactics employed by government departments won’t hurt so much.