The GEN Atlas Country Deep Dive is a monthly exploration of the startup support policy landscape in selected countries, drawing upon entries from the GEN Atlas compendium of entrepreneurship policies. We offer a holistic overview of what each country is providing, identifying success stories, gaps in provision and always looking for insight that can be shared across borders around the world. Our analysis of each nation’s startup support is built around eight overarching themes:
- Finance: New types of capital for startups and scaleups at the right time
- Education + Skills: Embedding enterprise and entrepreneurship into education and providing (both existing and potential) entrepreneurs with mentoring, training and support
- Market Access: Expanding access to markets for startups domestically and abroad
- Inclusivity + Culture: Ensuring that entrepreneurship is a culturally attractive vocation for all sections of society and in particular that people from disadvantaged groups have an equal opportunity to launch and grow a business
- Regulation: Removing regulatory barriers to innovation and startup success
- Ecosystem + Economic Development: Developing and managing local ecosystems to better support entrepreneurs, startups and scale-ups
- Science, Technology and Innovation: Utilizing the latest advancements in science and technology to improve productivity, boost economic growth and solve societal problems through innovation
- Policy Making: Maintaining a data-driven, effective and coherent policy making process that supports entrepreneurs and ensures public awareness of available programs
Entrepreneurs across 200 countries are celebrating Global Entrepreneurship Week (GEW) and telling the world why entrepreneurship thrive in their community. In this edition of the Country Deep Dive we are looking at why entrepreneurship thrives in Australia. The ecosystem in Australia – which is blessed with several impressive startup hubs – is built on a strong foundation of impressive physical infrastructure, strong internal market dynamics and a competitive commercial environment. Sydney, in particular, has consistently been ranked among the world's top 20 strongest startup ecosystems and contains the highest density of startups space in the Southern Hemisphere through the Sydney Startup Hub.
Meanwhile Melbourne, the host of the 2023 Global Entrepreneurship Conference, has become a global success in this year’s Global Startup Ecosystem Report. With a 43% increase in Ecosystem Value – amounting to $25 billion – Melbourne rose six places and recorded a 50% increase in exits valued over $1 billion. This a tremendous achievement that emphasizes the significant efforts made by policymakers and ecosystem actors. In addition to Sydney and Melbourne, other cities like Perth and Canberra have been identified as top emerging ecosystems, and Adelaide has been noted for its high VC funding per capita.
The startup ecosystem in Australia, while promising, faces several challenges, not least of all due to its unique geography which can make expanding into new markets challenging. One of the most significant obstacles is a talent shortage, which can hamper startups' growth and development. This is further compounded by a historically conservative approach to funding, which can limit the resources available to burgeoning businesses. To counteract these challenges, successive Governments have thrown significant resources towards a multifaceted approach to support startup growth.
Finance
Policymakers in Australia have provided multiple strands of funding for startups in the critical early stages of development. From 2014 to 2023, startups could receive grant funding through the Entrepreneurs’ Program which earlier this year was replaced by the Industry Growth Program. This program is backed up with over $250 million, most of which has been earmarked for matched grant funding.
At the core of Australia’s approach to investment is the ESIC scheme which provides tax incentives for Early-Stage Investors. This program provides investors with a 20 percent tax offset on all investments in startups that qualify for the scheme. Additionally, the government simultaneously introduced a 10-year exemption on capital gains tax for investments held as shares in an ESIC for at least 12 months. The incentive is designed to connect innovative start-ups with investors who have both the requisite funds and business experience to assist entrepreneurs in developing successful innovative companies. It is worth noting, however, that take up for this scheme remains significantly lower than similar programs in other countries such as the UK.
Education + Skills
The model of governance in Australia is federalized with significant powers given to state level governments, notably this includes the delivery of educational services. Consequently, programs targeting entrepreneurship education tend to be focused on single states or cities. One such example of this is the Sydney School of Entrepreneurship which is an independent, not-for-profit organization that provides entrepreneurship education to diverse communities with the support of the New South Wales state government.
On a federal level, training for entrepreneurs and expert advice and guidance was provided first through the Entrepreneurs’ Program with much of the services expected to continue through the Industry Growth Program.
Market Access
The sheer distance between Australia and the rest of the world poses both physical and psychological challenges to startups looking to expand into new markets on different continents. Likewise Australian companies find themselves competing over limited resources such as talented employees with top level digital skills. We have highlighted two programs introduced to tackle issues of this nature.
Firstly, the Landing Pads program is an initiative by Austrade designed to support market-ready startups in their overseas expansion efforts. With global innovation hubs in cities such as Berlin, San Francisco, Tel Aviv, and Shanghai, these Landing Pads give entrepreneurs a space to in which to find their feet in a foreign market with coaching, mentoring, networking events, workspaces and access to potential investors and customers.
Secondly, the Federal government has introduced a visa stream for talented individuals with skills in high demand from the startup community. The Global Talent – Employee Sponsored (GTES) allows startups to bypass the typical visa restrictions in order to fill niche occupations that cannot be filled by the available workforce in Australia. While the program has only granted a limited number of visas to date, it hints at an approach that could produce dividends in the future if expanded further.
Inclusivity + Culture
Australia has a special but also challenged relationship with the Aboriginal and Torres Strait Islander people who are the historic and original inhabitants of the continent. Indigenous Business Australia (IBA) is a government agency whose sole focus is supporting and funding the aboriginal population to start, grow and maintain their businesses. Backed up with an annual budget of around $6.5 million, the agency provides grants, loans, training workshops and specialized business support for founders and potential entrepreneurs.
Likewise, the Boosting Female Founders Initiative (BFF) is aimed at expanding the number of startups founded by women, improving female earning potential and overcoming the institutional barriers faced by female founders. BFF provides target support on a co-contribution basis to female founders to scale their businesses into domestic and global markets. Grants typically range from $16,800 to $323,000. Overall BFF will provide around $35 million in grants and $1.2 million in mentoring services.
Regulation
Following the limited success of Australia’s first regulatory sandbox, the Australian Government launched the Enhanced Regulatory Sandbox (ERS) in 2020 which is designed to provide a safe testing space for new Fintech business models that have not yet been regulated. The ERS works by allowing businesses and individuals to test novel financial services or credit activities for up to 24 months without the need for obtaining either an Australian Financial Service license or Australian Credit license. Crucially the ERS has expanded the scope of companies that can feature in it from the previous iteration.
Ecosystem + Economic Development
While the Industry Growth Program is expected to fill this space in the coming years, it is the now closed Incubator Support Program and the Entrepreneurs’ Program that have historically provided ecosystem coordination and development from the federal level. The Incubator Support Program was designed to augment the growth capabilities of promising start-ups and burgeoning businesses. In particular it provided funding for incubators to deliver support services with a focus on international trade. Funding for projects typically ranged from around $8,300 to $161,000 providing roughly $19 million in grants from 2016 to 2021. The program also orchestrated the linking of entrepreneurship experts with incubator programs to share knowledge and best practice.
Policymaking
The Digital Economy Strategy is a comprehensive plan set out by the Australian Government to transform the country into a leading digital economy and society by 2030. This is a far-reaching program that covers building skills through digital training, expanding digital infrastructure and digitalization of services, and promoting international trade through digital services. This ambitious plan sets the goal of placing Australia as a world leader in digital economy and digital society by 2030
Science, Technology and Innovation
Innovation and technology features heavily in the Digital Economy Strategy with initiatives focused on nurturing transformative technologies like AI, quantum computing and blockchain. Moreover it includes a platform to connect the rural and remote Australians with digital networks and services.
The Australian government has also invested heavily in R&D through the Research and Development Tax Incentive (R&DTI) with a projected investment of roughly $2.1 billion in 2023. The program targets the smallest firms in particular with a rate of 43.5% for their refundable tax credit, offering them predictable support that is critical for their R&D activities. This has led to a doubling of R&D tax support as a share of GDP between 2012 and 2019.
The case studies covered in GEN Atlas reveal a comprehensive network of startup support offered in Australia across the 8 key policy themes. In particular, the government has taken proactive steps to improve the access of international markets for Australian startups and shown an impressive level of ambition in positioning Australia as a world leader in digital services and innovation. Nevertheless, access to finance remains a point of comparative disadvantage for Australian startups compared to their peers in Europe and USA.