Catalysing globally-minded startups: the key for Australian job creation (By Dr Peter Beven)

Entrepreneurship is the ‘lifeblood of the economy’, as has been proven in the example of the US start-up scene. In fact, a 2010 study conducted by the Kauffman Foundation showed that without start-ups there would have been no new net job creation in the US economy since 1977! [1] Just think of the implications of this for one minute.

Another well-documented fact is the disruption faced by a range of traditional industries. This is leading to a redistribution of industry revenues across geographic borders to an extent never seen before. Only 14% of Fortune 500 companies that existed in 1955 still exist today, and the speed of failure is increasing exponentially – this means enormous opportunity for the disruptors, and that innovative startups can become wealth creation vehicles that address large scale and global markets.

However, what happens in economies that have smaller scale, a narrower industrial base, and immature venture capital markets such as that of Australia? For example, in a recent report by PriceWaterhouse Coopers and commissioned by Google Australia expressed the view that the Australian technology startup sector “has the potential to contribute $109 billion or 4% of GDP to the Australian economy and 540,000 jobs by 2033 with a concerted effort from entrepreneurs, educators, the government and corporate Australia[2].”

While that sounds fantastic doesn’t it, the reality is that the Australian context is totally different to that of the US. In Australia, the vast majority start-ups remain a microbusiness. In a three-year study of nascent and young firms by the Australian Centre for Entrepreneurship at Queensland University of Technology, the most likely number of employees hired by any firm at any time, is zero[3]. Although there are occasional instances of firms taking off on a growth trajectory, the general pattern of this distribution for employee numbers changes little in subsequent years. Most new Australian ventures start off very small and stay that way.

So how can our entrepreneurs maximum their chances of being one of the very few who do manage to get on the growth trajectory? One part of the answer lies with being better networked – with both large the markets and the money. Never before has it been more vital for startup founders to both think and act globally. Budding entrepreneurs need to benefit from the networked world – engaging with all the players in the startup ecosystem; learning from past successes (and importantly failures); linking with those able to influence and importantly exposure to the money.

Just as importantly, starting a new venture is hard!  Driving your business to success when things are tough is the difference. When things are going well, when you have money in the bank, sales are moving along nicely – well that’s the easy part. What we don’t tell you is the downside – when you have sleepless nights trying to pay the bills – well that’s hard. Drawing inspiration from those that have been there done that and despite it all have come out the other side…. that’s where those with tenacity and focus will still be standing.

That’s why the importance of initiatives such as Startup Catalyst, of which QUT is a supporter, cannot be underestimated. By putting young Queenslanders directly into the heart of the global startup movement in Silicon Valley, we can help inspire them to think and act globally. QUT has been instrumental in supporting entrepreneurship from our Australian Centre for Entrepreneurial Research through to programs that link our Executive MBA students, most of whom are senior executives in industry to work directly with entrepreneurs on their business plans. Since 2010, some 70% of projects taken through this process have gone on to raise funds. Being connected, and being able and wiling to see the global picture for your business is often the secret of success for entrepreneurs, and we hope that the young Queenslanders return from their mission to Silicon Valley ready to take on the world, and create jobs and wealth here in Australia.

Dr Peter Beven teaches in QUT Graduate School of Business’ Executive MBA program and delivers executive programs for the Department of Defence. He is also a Board member and co-owner of four technology ventures, and an investment advisor to a Hong Kong based private investment fund.

[1] Kaufman Foundation Research Series, The Importance of Start-up and Job Creation and Job Destruction, 2010

[2] Price Waterhouse Coopers The startup economy; How to support tech startups and accelerate Australian innovation, (2013)

[3] Davidsson, P., Steffens, P. R. & Gordon, S.R 2011, Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE): design, data collection and descriptive results in K. Hindle, K. Klyver (Ed.), Handbook of Research on New Venture Creation, Edward Elgar, Cheltenham.

smitec

I'm Co-Founder and CEO of HSK Instruments, a Brisbane startup looking to change the way kids with Cystic Fibrosis do Respiratory Physiotherapy using games and mobile tech. I'm also a PhD candidate at The University of Queensland working on the future of Magnetic Resonance Imaging (MRI).

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