Labor’s proposal to spur innovation through loans to young entrepreneurs has received strong backing from the Australian startup community and technology universities, who expect the program would be oversubscribed and are frustrated innovation policy is being led by the Opposition.
Last week, Opposition leader Anthony Albanese put innovation and startups at the centre of his budget reply, pitching a “Startup Year” policy.
Under the program, 2,000 graduates would be able to access more than $11,000 in a HELP loan to cover the costs of university or private accelerators to develop their ideas into startup companies.
The financial assistance is welcome and will be an effective boost, according to StartupAus chief executive officer Alex McCauley. But it also serves as a long overdue boost to the “vocational prestige” of the startup path for Australian graduates.
“It feels a bit like a startup scholarship, a nod from political leaders that actually this is something that’s important and worth doing,” he told InnovationAus.
Labor says it wants to back young entrepreneurs at a time when capital is hard to attract and the economy would benefit from new companies and new ideas.
“We do think we’re going to rebuild the economy, we need to fire up people’s energy to be able to pursue their ideas and back it up with investment that will create those future firms and jobs,” Shadow Minister for Industry and Innovation Ed Husic said.
Mr McAuley said there is a growing appetite among young Australians to start their own business, with many launching a startup while still studying. But too often young entrepreneur’s success is tied to their access to resources, with many reliant on a wealthy family.
“This helps overcome that [barrier]. It’s significant resources really for a very early-stage business to help kickstart it,” Mr McCauley said.
He said even with limited places there is significant job creation potential from up to 2,000 new companies.
“If you’ve got 2000 new companies, the chances that you get a couple of really successful ones out of that actually pretty good,” McCauley said, pointing to local startup success stories, Canva and Safety Culture.
“Those are companies that are pushing upwards of 500 people employed in under 10 years time. Lots of businesses now are really rocketing along, employing a lot of Australians who started from roots just like this.”
Sydney-based Fishburners is one of the startup accelerators that would hope to be involved in the program should it eventuate.
Fishburners Chair Clive Mayhew welcomed Labor’s Startup Year as “innovative” and “excellent” but said it was disappointing innovation policy was again being led by the Opposition and did not feature more heavily in the government’s budget last week.
“When are we going to wake up and the government have an innovation policy that really drives the agenda forward? Rather than just leaving that to the Opposition and not really giving it the amount of focus we need at the government level,” he told InnovationAus.
Mr Mayhew said Labor’s proposed cap of 2,000 is “a couple of zeros” short and will be “snapped up”. But he agrees it sends an important message about the validity of startups for young Australians.
“It’s another avenue forward, and it’s encouraging people, particularly at the university and college level, to think this is a valid way for them to go,” he said.
The Australian Technology Network of Universities (ATN), which represents Deakin University, Curtin University, RMIT University, University of South Australia, and University of Technology Sydney – each with their own accelerator programs – has backed the policy and says they look forward to consulting on the details.
ATN Executive Director, Luke Sheehy, told InnovationAus Labor’s startup proposal can be thought of as an “entrepreneur and business honours year” because it would likely see many graduates staying with the universities’ accelerator programs.
“From the outset, [it is a] really great idea because what we know is that with young entrepreneurs, they need that safe space to be able to test ideas, they need to be able to kind of rapidly prototype some product ideas, and we’ve got the tech and capability to do that [at accelerators], so that’s fantastic,” Mr Sheehy said.
There are still questions on how the loans would work, according to Mr Sheehy, including if the universities could provide them as capital in a co-investment, how they could apply to international students, and whether more HELP loans are enough of an incentive for students who may already be concerned about their debt.
“There’s always this gap between learning university qualification or post-secondary qualifications … and then getting into the workplace or launching a business. So if it gives them more opportunity to get ready for that, then that’d be great.”