The lack of business media coverage of the Rudd government’s utterly irresponsible decision to dump the Commercial Ready program last May has been disappointing, to say the least. While a few IT journalists at News Corporation pointed out the program cancellation – with one even running with Innovation Minister Kim Carr’s alleged lack of prior knowledge of the decision – the business pages should have wailed on the shortsightedness of it.
Today’s Australian IT picks up the war cry again, with some gentle prodding from the University commercialisation sector, but I fear it is now too little, too late. While I have some considerable empathy with the good folks inside academia who try and “create” spin-off companies, I think that their crying poor now is really only the tip of the iceberg – and the Titanic may have already sunk.
There are dozens, if not hundreds of innovative Australian companies who are right now in commercial distress. At a time when times are pretty tough anyway – you might have heard of the global financial crisis – having a program which created jobs, and helped level the playing field for companies competing against well-funded international competitors be canned with absolutely zero business media scrutiny is appalling on many levels.
Again, we only see the iceberg’s tip when we hear the University sector crying poor. To suggest that Australia has a well-rounded venture capital sector is just untrue; yes there are several large funds quietly, and slowly, investing big dollars in a few companies. But there are few rounds in the $500k to $2 million range; programs like the AusIndustry BITS funds ran out years ago, and well-intentioned angel investors are currently keeping hands in their pockets (and cash safely in their bank accounts). There’s no incentives for superannuation funds to allocate holdings towards venture capital as an asset class, so the likelihood of man new funds emerging is low. To be fair, the Early-Stage Venture Capital Limited Partnership (ESVCLP) program now has one “active” licensee, and several more have been provisionally approved , but are yet to initiate investment activities – symptomatic I’d guess of their inability to raise the necessary funding commitments themselves.
What’s even more despairing is that the Australian attitude towards entrepreneurship or even early-stage innovation companies as a career option seems to be non-existent; I spoke today with a G8 university lecturer who suggested again that he’d a poor response rate in calling for internship candidates for early-stage companies. Like less than 10%. And this is from a postgraduate business class. In entrepreneurship.
I’d recommend those interested in this topic read this month’s excellent column in Fortune magazine by Glenn Hutchins:
So, the real question is “what’s next”? The answer resides where it has always been – in innovation and entrepreneurship. Lost in the fog of today’s economic storm is the fact that this is an exciting time to be a technology investor and entrepreneur. The way out of the doom and gloom of the seventies – which was a period much like today – was a wave of technology innovation that spurred a generation of company formation, job creation, productivity gains, wealth accumulation and GDP growth.
At a time when Australia should be nurturing and supporting competitive innovation companies, encouraging a wave of wealth-creating entrepreneurs and the jobs that get created as a result, we’ve instead cut one of the last life-support systems the venture ecosystem had in this country. Other countries from our region – Singapore being a prime example – are leveraging soverign wealth funds to create waves of startups which, if you believe Mr. Hutchins, will spur a generation of wealth accumulation and GDP growth.
And the business media of this country couldn’t really care less.
