Reservations over changes

Prime Minister Malcolm Turnbull has previously dismissed the idea that his government is retreating from aspects of its high-profile Innovation Agenda, but start-ups have already expressed reservations about recently proposed changes to R&D policy, which appear to be aimed at shifting the scheme to a broader range of established businesses.

Entrepreneur and investor Steve Baxter, who is founder of technology start-up hub River City Labs and a Shark on the TV show Shark Tank, said it was hard to argue against the thrust of Mr Husic's speech.

He said the National Innovation and Science Agenda (NISA) had initially benefited start-ups, due to their higher profile, but that the post-election environment was "very changed".

"Let's face it, NISA did very little for start-ups in comparison to the support the already over-supported and under-delivering uni and research sector received from the policy ... it was never a great program for start-ups unless you count the culture change it brought forward, where all of a sudden innovation was good," Mr Baxter said.

Labor MP Ed Husic (right) says Innovation Minister Greg Hunt (left) has diverted attention away from start-ups through a lack of enthusiasm, which Mr Hunt rejects. Alex Ellinghausen

"That is the crux of the problem with the retreat post election, it is even worse now that there may be a commodity price correction, to think that focus may be placed back on slow growth rather than high growth start-ups."

Co-founder of one of Australia's largest tech VCs Blackbird Ventures, Niki Scevak said he viewed the statements of politicians regarding start-ups as being of little importance to the success or otherwise of the local start-up community.


'Let garden grow'

However he said the actions of government, such as the move to reduce the R & D tax grant for early stage start-ups risked causing significant damage to emerging companies.

"This is completely insane, the R & D tax grant is literally 99 per cent of the positive help the government gives to start-ups. All the other hundreds of programs are a red herring. The R & D tax grant is the only thing that matters and they are reducing it," he said.

Entrepreneur and investor Steve Baxter said it was hard to argue against the thrust of Mr Husic's speech.

Mr Scevak's view that the words of government ministers are less important than their actions were echoed by AirTree Ventures' co-founder Daniel Petre, who agreed there had been a change of tone, but said it was time for start-ups to stop looking for government policy to make things happen for them.

He said there were still areas that required more investment, but believed other recent policy changes should be left to play out before more moves were made.

"I do think that all of us in the start-up ecosystem need to start delivering and stop bleating about how the government needs to fix things," Mr Petre said.

"Overall the ecosystem garden has had a good dose of water and fertiliser and we now need to sit back, for a short while, and let it grow without more intervention."


Co-founder of Blackbird Ventures Niki Scevak said proposed changes to R&D tax rules were "insane". Jessica Hromas

Meanwhile co-founder and CEO of start-up generator and investor community Investible, Creel Price, said he had been disappointed that having a prime minister in The Lodge, who is supposedly a champion of innovation, had not resulted in policy action and momentum since the election.

He said courage was needed in cabinet to make decisions based on what is good for the long-term interests of the country, rather than what played well in the latest short-term poll.

"The close fought election has spooked the cabinet away from their much-trumped innovation agenda," Mr Price said.

"Just because innovation didn't resonate with the average voter as the most appealing core election platform doesn't mean it is bad policy in a broader mix of reforms."

Airtree's Daniel Petre said it was time for start-ups to stop looking to the government for help. Brook Mitchell

Community scared

Founder of social media start-up Local Measure Jonathan Barouch​ said it was a shame that the national dialogue around start-ups had cooled, and attributed it to the government being unsuccessful in explaining to the electorate why it was making innovation a national imperative.


He said many people in the community were scared by notions of companies like Uber removing jobs from taxi drivers, rather than seeing the potential for the creation of new jobs in the future.

"I do agree with Ed [Husic] that the conversation needs to be about the incredible job creating and nation building aspects of building up our start-up ecosystem," Mr Barouch said.

"I'm all for encouraging existing firms to be more innovative but I think the engine room of growth will be around driving early-stage start-ups to grow and do their R & D in Australia hiring our best and brightest ... The whole idea of the rebate is to incentiv[ise] companies to undertake the most risky research in Australia which is inherently going to be done by earlier stage firms."

Innovation Minister Greg Hunt, meanwhile, rejected the idea that he was not engaged with the start-up community, telling The Australian Financial Review he had met with over 100 start-ups, incubators, industry associations, scientific research organisations, innovative businesses and venture capital providers since taking office.

He said the government wanted to encourage innovation right across the economy, and that included start-ups.

"Innovation is crucially important to start-ups, but it's also important for existing companies to continue to find new ways to improve, change and expand," Mr Hunt said.

"It's disappointing Mr Husic has such a narrow view of the importance of innovation to the Australian economy."