Despite resources devoted to entrepreneurship, the lack of qualified local IT professionals is slowing Australia’s progress towards technological innovation.
It’s a tough time to be an entrepreneur in Australia. The recently published IMD Directory of Global Competitiveness 2023 placed Australia 19th out of 64 nations for overall competitiveness. That’s not such a bad ranking, which suggests it’s not too bad to do business here. However, in terms of entrepreneurship, we were second to last.
According to a AFR report on the subjectThe underlying reason for this was the lack of economic complexity: the number and complexity of exported products are simply not up to global standards.
This is not to say that Australia lacks entrepreneurs or visionaries. Australia has been the home of several technological unicorn startups, including Canva ($40 billion valuation), Immutable ($25 billion), SafetyCulture ($1.6 billion), LinkTree ($1.3 billion), and Pet Circle ($1 billion). Australia is also the home of Atlassian, the iconic example of Australian technological ingenuity.
Search by big bank NAB found that four in ten people would like to own their own business, but only one in ten had been able to do so. There is clearly a disconnect between Australia’s entrepreneurial spirit and the country’s ability to facilitate and support these attempts.
Australia has the resources to support entrepreneurs
Although it can be difficult to launch startups, data shows that despite Australia’s poor ranking, people want to give it a try. The State of Australian Startup Funding The report shows that although 2022 saw a decline in overall investment in pre-seed and seed funding stages to $7.4 billion (from $10.6 billion in 2021), 2022 was even more than double the next biggest year (2020 at $3.1 billion).
The venture capital industry also remains optimistic. Late last year, Blackbird Ventures was able to close successfully a billion-dollar venture capital fund – the largest on record – with backing from pension funds and wealthy private investors.
“I really feel like super funds now fully understand venture capital and are doing very thorough due diligence, which takes a lot of time for us but is a fantastic development for the sector” , fund partner Rick Baker said at the time. .
But the problems are elsewhere
However, Australia will likely continue to produce relatively few unicorns and remains a challenging space for entrepreneurship for reasons beyond available venture capital funds.
“We cannot triple the amount of funding and triple the success”, JF Gauthier, CEO of Startup Genome noted in a 2021 report. “You need to triple the talent pool, you need to triple the number of entrepreneurs, and you need to triple the number of customers who are interested and want to buy the innovation. »
Australia has an expanding pool of funds, but it faces enormous IT skills shortagemaking it both difficult and expensive for a startup to quickly scale its business as needed.
SEE: Australia debates whether implementation regulation for AI will help address the challenges caused by the lack of qualified AI talent.
Australian businesses also face difficulties when it comes to expanding into other markets, and entrepreneurs therefore tend to focus on the domestic market, which is relatively small and difficult to tap into to set up a business of a billion dollars.
This has led to an entrepreneurial brain drain, with many Australian innovators feeling the need to travel abroad to work on their vision.
Why it matters
Beyond the cost to the Australian economy, when a billion-dollar company locates offshore rather than in a local industry, the ongoing struggle to build an entrepreneurial class in Australia contributes to several challenges social and economic.
Firstly, low levels of entrepreneurship make it difficult for Australia to attract and retain top talent. The feeling that there is a clear ceiling to personal and professional development is significant in this country, and the “brain drain”, observed in the Australian IT sector for over a decade, will continue until technologists talented people feel that their career potential is expanding. to join a unicorn project.
Second, this lack of entrepreneurship hinders Australia’s ability to build a knowledge-based economy and move away from its current reliance on resources, agriculture, tourism and real estate . The technology is also an export-friendly product which, with the right opportunities, could result in a lot of foreign money being injected into the local economy. Former Australian Prime Minister Malcolm Turnbull recognized the value and innovated at the heart of his mandate as Prime Minister. Unfortunately, Turnbull failed to get through this and subsequent prime ministers allowed the agenda to quietly take a back seat.
Australians have created many technologies that have changed the world, from Wi-Fi to the black box flight recorder. However, the country has historically struggled to convert this ingenuity into sustainable technology and entrepreneurial sectors. Unfortunately, it appears that as the economy continues to weaken, the weakness of the country and its economy is only becoming more pronounced.