The federal government’s 2020 budget provides welcome certainty to the start-up community.
Changes made to the R&D tax incentive will provide that vital confidence for innovative companies and start-ups to make long-term investments to fuel their future growth.
More broadly, while the budget’s focus on jobs is positive, there’s a strong case for more programs like the RDTI or those run by Victorian start-up agency LaunchVic, that back the ambitious people that create multiple jobs rather than those that just fill one. 'JobMultiplier' programs can super charge start-up growth and create the jobs of the future.
Start-ups in their very nature are job multipliers led by founders that catalyse job creation, through their unyielding ambition to build innovative, technology companies with global reach. Yes, it’s often a personality type, but it is also a mindset which can be acquired.
While not all early stage founders will be successful, the odds show that if you invest wisely in ten promising start-ups, one should go onto create hundreds or even thousands of jobs.
Atlassian, Airwallex and Afterpay are just three of around 20 Australian start-ups that achieved valuations in excess of $1 billion. Referred to as ‘unicorns’ in the start-up world, these Australian companies have collectively created more than 20,000 jobs both locally and internationally.
The potential is enormous. Deloitte Access Economics research shows that start-ups in Victoria alone have the potential to create the equivalent of seven new Carlton & United Breweries every year with increased support.
In 2000, when Rob Phillpot and I co-founded Aconex – a software-as-a-service platform for the construction industry – we had the good fortune of financial backing from Victorian investors. We built a company that grew from my kitchen table to employ nearly 1000 people globally and several hundred in our Melbourne head office.
As the company scaled, it wasn’t just the Aconex technology team that grew. We created high-value jobs in business development, marketing, sales and customer service, along with human resources and finance jobs, as well as external professional service providers. We had first-hand experience that start-ups are job multipliers, in multiple ways.
But the impact of the job multiplication extends beyond the business itself. Research by Enrico Moretti, professor of economics at Berkley, found that each high-value job created in a new technology-based start-up led to the creation of five more in associated service sectors in the broader economy.
He also found that the jobs multiplier effect was three times larger in the technology sector than in extractive industries such as mining, or traditional manufacturing. COVID-19 will create opportunities. Economies that emerge strong will be those that look to the future and support their innovators to harness the opportunities and recreate economies.
Now is the time for entrepreneurs, corporates and governments to embrace and value Australian innovation. LaunchVic is proactively supporting, promoting and growing the Victorian start-up sector, but like the UK’s £250 million ($451 million) Future Fund, New Zealand’s $NZ300 million ($277 million) Elevate Fund or South Korea’s massive $US10.6 billion ($14.7 billion) scale-up fund, sustained and committed government investment, leveraged with private sector investment, is crucial to building our competitive edge.
Australia needs more programs that support entrepreneurial Australians to ‘fish’, rather than pulling out the status quo playbook that gives them fish. Now is the time to support our entrepreneurs, invest in our home-grown start-ups and start fishing for more high value jobs.
Homegrown heroes like Afterpay, Culture Amp or Judo Bank are proof that there’s immense potential in start-ups to revitalise the economy by creating new jobs and sectors. It might also surprise some people that they employ twice as many Australians as the jobs we have imported from Facebook, Twitter and Slack.
As we find ourselves in a global recession, what is the smartest way to secure a strong economy?
The answer is simple – we need more 'JobMultiplier' programs that invest in the founders and teams that are building the future economy, through the next generation of Australian start-ups.