In the start-up ecosystem, the world generally looks towards the youth for disruptive ideas that transform the way we do things. Australia, however, bucks this trend, giving rise to a new term — seniorpreneurs.
According to last year’s Swinburne and Queensland Universities of Technology study, Senior Entrepreneurship in Australia, 34 per cent of all young firms in Australia were led by seniorpreneurs, with an average age of 57. Furthermore, with an entrepreneurship rate of 8 per cent among people aged 55-64, Australia was 3 percentage points above the average for innovation-driven economies.
These seniorpreneurs typically had double the industry experience and invested, on average, over A$1 million (about Dh2.6 million) more in the business compared to their younger counterparts. More than a third were also serial entrepreneurs who had floated multiple ventures.
“Promoting start-ups of the ageing population may be able to, in the short-run, offset expected labour and skill shortages in certain regions in Australia and facilitate a transfer of human capital between generations,” the study says.
So don’t be surprised if a few Australian unicorns — start-ups worth A$1 billion or more — emerge in the near future, led not by the young and green, but by the grey and wise.
Tough game to play
In the world of start-ups, where an estimated nine out of ten fail, a few stand apart and embody the fundamental tenet of any business — to be profitable. Atlassian, an Australian enterprise solutions firm, is among that rare breed. Set up in 2002 with a A$10,000 credit-card loan, it is now raking in cash, and currently claims more than 51,000 corporate customers, including the likes of Facebook, eBay, Salesforce and Citi Group. This isn’t lost on investors — Atlassian recently went public with one of the largest tech IPOs ever, and the company is now valued around $5.8 billion (Dh21.3 billion).
Atlassian is a rare example of an Australian start-up that has become a global hit. But overall, the country’s scorecard has been less than stellar. PwC and Google Australia’s Start-up Economy report reveals the country had just 1,500 start-ups in 2013, half that of Israel. However, PwC notes “great potential” for growth and estimates that by 2033, the Australian tech start-up sector can contribute $109 billion or 4 per cent of GDP to the economy, creating 540,000 jobs. But there is a big caveat — this will take “a concerted effort from entrepreneurs, educators, the government and corporate Australia”.
At the crossroads
The Crossroads 2015 report notes Australia has one of the lowest rates of start-up formation and venture capital investment in the world — the country’s per capita investment in start-up capital stands at $4.5, compared to UK’s $15 and Israel’s $120. The report, released by Start-upAUS, a not-for-profit organisation formed to tackle the big challenges facing Australia’s start-up sector, claims to be the most detailed review ever undertaken of the country’s ecosystem.
Crossroads 2015 has “grave concern” about the government’s decision to abolish the A$300-million Innovation Investment Fund in its 2014 budget because it doesn’t propose “any replacement programme to drive the creation of a viable venture capital industry in Australia”.
In the report, Adrian Turner, the author of Blue Sky Mining: Creating Australia’s Next Billion Dollar Industries, says, “It is hard to over-emphasise how important this moment in time is for Australia. Accelerating technological disruption is coming hard, fast and mercilessly to every industry with no regard for societal consequences. Industries that today account for almost a third of Australia’s GDP are in the line of fire.”
He adds that without action, these shifts have the potential to stall economic growth, render whole industries uncompetitive and lead to rising long-term unemployment across the nation. “It sounds alarmist, but it’s not. It is reality. The choices we make right now will affect our generation and the ones to come. They will define our prosperity and place in the world.”
According to the Department of Industry and Science, for every 100 existing jobs in a given year, start-ups will, on average, add five jobs within the following three years. The Employment Dynamics of Australian Entrepreneurship report states firms under two years old added 1.44 million full-time jobs to the economy between 2006 and 2011.
However, the report says 96.8 per cent of micro start-ups — new firms with up to nine employees — either exit or grow very little. Those that grow do so “dramatically over five years” and account for 77 per cent “of total post-entry job creation of all micro start-ups in their cohort”.
Good news and bad
Encouragingly, Crossroads 2015 highlights an increase in activity in recent years, accompanied by more incubators and accelerator programmes, and a more enthusiastic environment.
That said, brain drain remains a key concern, with some of its fastest-growing technology companies leaving Australia in search of “talent, capital and more favourable regulatory environments”. Atlassian is a glaring example — the Aussie tech poster child relocated its headquarters to London in 2014.
SmartCompany, an online publication for Australian entrepreneurs, said this move by one of Australia’s few high-tech start-up success stories “illustrates a deep malaise in the nation’s business and political cultures”.
Start-up Muster’s survey of 602 Australian start-ups found 12 per cent had planned to relocate overseas in 2015, while 18 per cent planned to do so from this year onwards. Key internal challenges were customer acquisition (59 per cent), funding (41 per cent) and product development (34 per cent), while availability of technical talent (42 per cent), lack of government scholarships and grants (41 per cent) and lack of non-government funding (37 per cent) topped the list of external challenges.
