It’s been a big fortnight for innovation and budget in Australian politics.
Last week was full of the #InnovationStatement, a government initiative that was personally championed by Malcolm Turnbull PM. More details below and at: http://innovation.gov.au It focuses on the theme that many corporates are realising and some countries, specifically US (Silicon Valley) & Israel have known for a while. In a world of shaky commodity prices and a focus on resource and waste reduction, better than digging stuff out of the ground or making more of the same stuff (that other people can make just as well), the one resource we should all be digging up furiously is human capital.
Innovation is the new black. Corporate Social Responsibility (CSR) has in the past focussed on being Green, recognising Indigenous Australians or harnessing the power of Diversity (and dealing with gender issues). These are all old news and most larger companies have had policies and practices in place in these topics for a number of years. Now it’s innovation. It’s trendy, but it needs to be part & parcel of overall business as well.
Yours truly was at one of the roadshows to discuss the new Innovation Statement at Blue Chilli, the startup incubator/accelerator that now has offices in Sydney, Melbourne & New York. Wyatt Roy, innovation’s political poster boy (and for good reason too – check out http://wyattroy.com.au) brought small business minister Kelly O’Dwyer to Blue Chilli. Interesting to note that minister O’Dwyer is also assistant treasurer and therefore responsible for superannuation in this land. With one of the innovation announcements being that ESVCLP’s (tax-free venture capital funds, investing in startups – you can Google the acronym) can now be up to $200m, there should be more interest from the super funds in investing in startups – the supers tend not to get out of bed to invest unless they can write cheques in the 10’s of millions at least.
There was other good news from the innovation statement, including promises that the government would lead by example (read, get more services online and make government data more available to 3rd parties, e.g. public transport realtime data that would help transport/traffic apps). Also good to see is that there will be ongoing oversight of the innovation proposals by a cabinet committee which will be chaired by the PM. But, as Wyatt Roy said at Blue Chilli – we live in a democracy so all the changes still have to get passed by the parliament. And while the end goal is good, the transition might produce some undesirable behaviours, not the least of which is investors holding back cash to see if they really will get the tax breaks in the package.
And then we had #MYEFO this week, the update on the national budget. While it showed that things aren’t so rosy – national debt will be climbing for a while (>$600 billion in four years time), it’s a case of no news is good news on the innovation front. Not that they would have peeled back any of the innovation statement initiatives just announced, but the status of the ESVCLPs was thereby enhanced and no change to the R&D tax incentive scheme was mentioned. Although the R&D scheme will be reviewed, it’s unlikely to be scrapped or even reduced for legitimate startups – just a focus on the corporate expenditure on R&D. The ESVCLP structure and the R&D scheme were the two things identified earlier this year by Scott Farquhar of Atlassian / successful IPO on Nasdaq fame, that have driven the renewal of startup activity in recent years.
So, given it’s such an uncertain world out there at the moment with share markets falling, ‘blue chip’ stocks in resources being at 10 year lows, and who knows what in property markets, it’s probably as good a time as any to get involved in the #startup game … or get a job in the innovation department of your local corporate.
Have a safe and relaxing holiday season,
Jono Herrman,
Chairman, Shoeboxed Australia
P.S. Okay, okay … ESVCLP = Early Stage Venture Capital Limited Partnership 🙂
