Einstein once said, ‘the measure of intelligence is the ability to change’. In these past few months, we have witnessed the harsh reality of how an inability to adapt can result in demise, while innovating means you can survive and thrive, writes Dr Kate Cornick.
As we look to rebuild our economy, there has never been a better time for our nation’s innovators to shine. Productivity leads to economic growth, and this is driven largely by innovation.
Startups and startup ecosystems will therefore be the bridge between the current economic growth path and the creation of a new growth trajectory, as highlighted by the head of Deloitte Access Economics, Dr Pradeep Phillip.
The radical creations and disruptions that come from startups generate new commercial opportunities, a greater variety of products and services and importantly, create jobs.
15,000 new jobs each year
An additional 15,000 jobs each year for the next two decades could be created by startups, as discovered by research commissioned by LaunchVic and conducted by Deloitte Access Economics.
Now is the time to be unlocking the potential of pioneers in AI, advanced manufacturing, green energy, healthcare and education to name a few high-growth industries. It is these industries that will underpin not only our future society but the work opportunities available to both us and our children.
The billion dollar question is who will become this country’s next SEEK, Atlassian or Safety Culture and how can governments support the startup sector that will be crucial to economic recovery?
It is a myth that government has no meaningful role in the development of startup ecosystems. The ‘self-made’ narrative that runs strong in a community where the grit and determination of founders, investors and first employees is make or break, means it is easy to overlook the contribution of government.
Government’s role in the transformation of Silicon Valley
In her book The Code: Silicon Valley and the Remaking of America, Professor Margaret O’Mara from George Washington University details the role government played in helping Silicon Valley transform from an orchard industry into the technology powerhouse it is today. Government supported with immigration and tax policies, it was an investor, but also was a customer of startups.
Another more recent example is the rise of London as a global fintech hub. Entrepreneur friendly visas, tax breaks for angel investments, education programs and the opening of government ICT contracts all contributed to London becoming the globally recognised ‘Tech Nation’ it is today.
Four ways to foster the startup economy
There are four principal ways in which government can play an important role in the development of a globally recognised startup ecosystem.
Firstly, ensuring there are the right support mechanisms in place, including accelerators and other educational support, to help aspiring entrepreneurs develop their ideas into truly global companies.
Access to capital is the next area of support required, across all stages of the growth lifecycle but particularly at early stages of development.
Third is helping startups access customers, both corporate and government. Perhaps a result of a risk averse mentality, but there is an untapped opportunity for governments to be customers of startups instead of solely working with large, recognised brands. There is a lot that governments can learn from startups – and similarly a lot to be gained by the startups themselves.
Lastly, providing a supportive regulatory environment for founders and investors to align incentives that will ultimately create a vibrant, self-sustaining ecosystem. R&D subsidies alone will not be enough if the goal is economic growth. We need to be supporting an entrepreneurial culture and everything that stands for.
If left unexploited, or under-exploited, profits and economic rents will not flow back into the economy, we will see the leakage of entrepreneurs to other startup ecosystems, and economic growth will not reach its full potential. We cannot stand still and create a future whereby we simply become users of global technologies, developed overseas where high skilled jobs are created en masse.
Never has it been more important for government to embrace innovation, foster entrepreneurs and support the role of the startup ecosystem in delivering economic growth and job creation.
*Dr Kate Cornick is CEO of Victoria’s startup development agency LaunchVic
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