The Missing Pieces of Early Stage Startup Support
The growth capital picture in Australia has never looked better for startups ready to scale: in 2018-2019, Australian startups raised more than $2.2 billion in private funding. At the same time, both the number and the value of investment deals for early stage startups have fallen for the past three years. Murray Hurps, Director of Entrepreneurship at UTS Startups, explains the missing pieces of early stage startup support.
Q. Walk us through what you think it’s like to be a founder just getting started with their startup in Australia right now. Where can you turn to for support?
MH: When I started out 20 years ago there really was nowhere for entrepreneurs to go. All the people I worked with were overseas, and I remember spending time working from libraries and cafes just to get out of the house.
Compare that to today, when a new startup founder can walk into the Sydney Startup Hub and work alongside 3,000 other people who are either people just like themselves, or are people who want to support people like themselves. It really is an incredible contrast.
While there’s a lot more support available today for startups, this support tends to either be:
- Competitive processes where only a small number of high-potential startups are supported, such as accelerators, VC funds and angel groups, or
- Service providers that can be paid to provide some level of support, such as incubators and education providers.
What doesn’t tend to be prioritised, and I think needs to be prioritised, is a third category of support to inspire people to pursue entrepreneurship, who may not currently see it as a viable path.
This work needs to enable entrepreneurs to take their first steps before they can (or are willing to) pay for support, and before they are compelling enough for competitive processes to recognise and support their success.
Q. Why is early stage support of startups so essential?
MH: The critical part in any success is starting on the path to that success, and if we want more successful Australian companies, we need more Australians starting on that journey.
The high growth companies that are pursuing new opportunities will be started somewhere, and we need more people working to make sure they are started in Australia, creating jobs in Australia, exporting from Australia, paying taxes in Australia and contributing to our future success.
I believe anyone can be an entrepreneur, and that every great entrepreneur started out as a terrible entrepreneur, figuring out what they needed along the way.
I also believe that every entrepreneur gets something valuable from what they are pursuing, even if the company itself does not succeed. Not everyone will be able to grow something, but those who do will be creating new opportunities for those who don’t.
Q. Are you surprised that StartupAUS’s research, published in 2020 Crossroads, shows Australian angel and seed investment falling for the last three years?
MH: From my perspective I’ve seen a burst of enthusiasm for Australian startups four years ago and a slow decline since then.
For a time, the national conversation was around innovation and the potential to be unlocked, and I think that enthusiasm really did bring a lot of new people in as both angel investors and founders looking for angel investment.
A lot of these founders have gone on to have growing startups populating our incubators and accelerators, but I wonder what the future looks like if we can’t continue to generate new startup founders and new supporters.
Q. The analysis in Crossroads focused on the capital situation. Is solving that issue enough to resolve the challenges facing early stage startups?
MH: It is a critical part of the equation, but it is only one part of it.
People always talk about the need for more funding, talent and customers for startups, partly because that’s what startups ask for.
What startups don’t ask for is more startups, but Australia as a whole should see the opportunity in that, and should be asking for that.
We need to ask how more young Australians will see the opportunity in entrepreneurship. How will people with an idea be inspired and empowered to see what that idea can become?
I would love to see more focus on solving this part of the equation.
Q. Australian universities such as UTS are stepping in to support the creation of early stage startups. What can we learn from that experience to develop a better cross-sector approach to the challenge?
MH: What I’ve seen at UTS has restored my faith in Australia’s potential to fix this problem.
Not only are students of all types at UTS surprisingly receptive to the idea that they could be creating their own job through entrepreneurship, they’re going on to be some of the most collaborative, hard working, original and genuinely impressive entrepreneurs I’ve ever known.
We kicked off UTS Startups with an idea that maybe what was missing wasn’t entrepreneurial support, but rather the inspiration to pursue entrepreneurship, and in our first year we grew the largest community of student-launched startups in Australia.
We are working to inspire all UTS students to see entrepreneurship as normal, desirable and accessible, and to help them find what they need to continue growing whatever they have started, and I’m continuously amazed at the results this focus is achieving.
Our work and learnings here can be applied elsewhere, and we are very happy to support anyone who wants to apply what’s working here at a larger scale.
Q. Out of all the options on the table to improve the future of the early stage startup ecosystem in Australia, what would be the change in policy you’d most like to see a year from now?
MH: The #1 change in policy I would love to see in Australia is a credit system to reward organisations for inspiring new, technology-enabled, high-potential companies to start.
I don’t think there will be a single solution for the whole country, or that a single agency should design the perfect solution, but I think support needs to be available for organisations that can prove their approach works, and that people they have helped to take their first steps are going on to do impactful things.
We need to feed the top of our entrepreneurial funnel in Australia to have any chance of seeing more successful companies emerge.
There are no unicorns without the inspiration to start. StartupAUS’s 2020 Crossroads is a comprehensive analysis of the startup ecosystem. For more information and the full report visit: www.startupaus.org/crossroads2020