Australian innovators are responsible for innovations and discoveries which service over 1,000,000,000 every day. These innovations include the Black Box, IVF, penicillin, WiFi, Cervical Cancer Vaccine, Ultrasound and the Bionic Ear. These innovations were developed by individuals, companies and research groups through the support of funding. However, the potential for more of these incredible innovations to be developed could come to a grinding holt.
It was recently reported that Australia is experiencing a venture capital drought which is forcing Australian companies to either look overseas for investment or reduce operating costs. The concern is that if the Australian government doesn’t lead the way through initiatives to encourage investors to invest back into Australian start-ups and innovation companies, that many of these businesses will go overseas – or worse, will have to close down altogether.
Although Australia does offer an early stage venture capital tax concession program, it is has not been enough to entice the number of required investors needed to sustain early stage businesses. The tax concession available through the Early Stage Venture Capital Limited Partnership offers eligible local and foreign investors tax advantages for investing in start-ups and innovation companies.
This scheme alone has not been enough to excite Australian investors to part with their money which is interesting considering Australia is usually seen as one of the leaders when it comes to economy and business. We dodged a bullet throughout the GFC and have a world class superannuation and medical scheme for our residents. However, it’s the innovators and new businesses which are needed to sustain our economy and encourage growth over different industries.
Industries such as IT and medical research are being hit the hardest with many projects looking overseas for investment. Some companies have even relocated their entire operations to other countries who are willing to invest and support them financially.
This is detrimental to Australia in many ways causing:
• Loss of employment opportunities
• Industries loosing potential evolutionary products and services (such as cancer research)
• Loss of skilled workers and experts to other countries who receive adequate funding
• Start-ups and innovators having to leave Australia to find funding for their business
• Loss of talented innovators
The big sting comes from the release of investment figures in America which compared to Australia’s efforts, puts it into perspective how bad we really are at investing in start-ups and innovative companies. This year, the United States of America is forecast to inject $84 billion into early stage business. Australia sits at an unimpressive $250 million for the same time frame. Irrespective of the population and economy size, Australia is still behind.
This is why foreign investment could potentially be the answer. Currently Austrade is the main governing body behind the push for foreign investment into Australia. The Government agency offers many facilities and resources for foreign investors to research investment opportunities within Australia. Austrade offers an extensive Australian Foreign Investment Guide which encompasses investing in Australian business and the support programs available. It is also advisable to go through a registered migration agent to ensure the process of applying for an investment visa to Australia is conducted efficiently and legally.
Australia needs foreign investors to fill the void that Australian investors have left to help sustain new companies and innovations. There are several different options available to international investors who are interested in investing in Australian companies. If Australia wants to keep it’s innovators and skilled business owners in the country, the answer may be to look out of the country.