About three years ago a group of people from the startup ecosystem met with then shadow minster Malcom Turnbull. After the meeting, I blogged about the five things government could do to help Australian startups which were presented and discussed in the 90 minute meeting. Let’s see how we’ve gone.
Make it easier to give people equity – success!
In 2012, ESOP (Employee Share Option Plan) reform was on everyone’s agenda and this was certainly a hot topic for this meeting. We suggested providing a concession for startups with less than $5m turnover. The good news is they listened to the fact we needed change and introduced reforms into parliament in May 2015. The even better news is that they ignored our $5m turnover cap and instead increased it to $50m. Whilst the ESOP reforms don’t go far enough and there are still significant barriers, I’m calling this one a success.
Make government procurement “startup friendly” – in progress
There is a lot of talk about government as a customer of startup services and it has formed one part of the “Ideas Boom” that was announced at the end of 2015. In 2012, we spoke about how early stage startups can’t compete for government services as their risk profiles are far too high. There is still a lot to be done here.
Create a crowd sourced procurement model – in progress
Back in 2012, we presented a model where the government could allocate a portion of funds on major projects to go towards a competition where startups would compete for a prize which would fund their development, and then if successful, enter into a customer agreement. Loosely modelled on the DSTO CTD program in Defence, BlueChilli has itself developed a “reverse pitch” model where problems are presented and solutions are crowdsourced. We call this Disrupt@Scale. This model has been presented to the Government and has made its way in to the “Ideas Boom”.
Provide incentives for early stage capital investment – success!
In my earlier post I wrote “the government should consider a CGT exemption on early stage capital investment” and I’m pretty excited that we’ve actually achieved this, as startup investors can claim up to $200,000 a year in tax rebates which kicks into effect 1 July 2016. It’s worth noting that since 2012, BlueChilli has launched its own fully-funded ESVCLP (Early Stage Venture Capital Limited Fund) to take advantage of the incentives that existed in that fund structure.
Challenge the culture of failing and celebrate our wins – partial success.
This is a hard one to change; the Australian culture is still against people who have tried and failed. However the conversation is changing and the level of activity and approach that startups are receiving now from all layers of government is exciting and positive. So I’m calling this one a partial success.
So 2.5 wins out of 5 is not bad for a conversation held three years ago and perfectly demonstrates that change is made up of three factors: persistency, consistency and time.