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Published 14 March 2013 07:06, Updated 15 November 2013 07:44
Google Australia’s engineering director Alan Noble says to grow a tech company to the global scale of Google or Facebook is the ‘holy grail’ for Australia. Photo: Quentin Jones
Google has launched a project to document Australia’s entrepreneur community and examine what is holding the nation back from developing the next global technology giant.
The company has commissioned accounting firm PwC to gather information on every Australian start-up company and compare local trends with what global companies are doing. Google Australia’s engineering director, Alan Noble, says he hopes an Amazon or Google or Facebook could one day emerge from Australia.
“That’s the holy grail for Australia – to grow its own highly successful company of that ilk,” Noble says. “A successful company of that scale would create more success.”
He says Australia’s start-up ecosystem has come a long way in the past five years but he wants to increase awareness of the opportunity this presents to Australia’s economy. Greater awareness could lead to a more accommodating policy environment, greater willingness of investors to put money into new companies and a greater recognition by society that it was a valid career path to become an entrepreneur.
The full report is due in April following a Silicon Beach summit held this month involving 50 key players in the sector. A small snap-shot of preliminary findings from about 1500 Australian start-ups shows 29 per cent of founders had a computer science degree, followed by 23 per cent with a degree in commerce and 16 per cent with a degree in management.
At the other end of the scale was arts and law, with a 5 per cent showing among founders, engineering at 4 per cent and health and medicine at 2 per cent.
By encouraging more people to study computer science, the start-up ecosystem could be expected to grow, Noble says.
Among the entrepreneurs contributing their views is Matt Barrie, the chief executive and founder of outsourcing website Freelancer.com. He says the Australian government and public are “blissfully unaware the economy ... is heading into an absolute crisis”.
Rather than relying on commodities, Australia should look to industries like the technology sector, which have huge flow-on effects to productivity.
“The biggest marketing company in the world is a software company, it’s Google,” Barrie says. “The fastest growing telecommunications company in the world is a software company, it’s Skype. The biggest book seller, the biggest shoe seller in the world is a software company, it’s Amazon. I can’t think of a single industry that’s not turning in some way, shape or form into a software business,” Barrie says.
I can’t think of a single industry that’s not turning in some way, shape or form into a software business.
“If we don’t develop our own, we’re going to be eaten. We’re 100 per cent asleep at the wheel.”
He says venture funds in Australia have dried up, forcing companies to relocate overseas to grow.
“Last year the entire venture capital industry in Australia raised $40 million in total across three funds,” Barrie says. “A company like Atlassian, its last raising was $60 million. The entire venture capital industry in Australia didn’t raise enough money to even do that one round.”
Shoes of Prey co-chief executive and co-founder, Michael Fox, said one of the biggest challenges his company had was hiring good software engineers or graphic designers, because fields like law and medicine were still seen as more desirable, particularly among parents of students.
“What they don’t understand is if you are a good graduate in computer science we’ll hunt you down, we’ll pay you a small fortune and provide an office environment that’s way better than working as a doctor or lawyer,” Fox says. “I’m an ex-lawyer, I can vouch for that.”
The other challenge was raising funds locally.
“We bootstrapped our business for the first three years ... but to really ramp up and be able to compete on global stage we wanted to do a $3 million series A round. We got there but it took us 18 months from start to finish, it was a hugely lengthy and distracting process for us. To raise $3 million as a tech start-up in Australia we had to put together a group of nine investors.”
While there was some advantages to businesses developing overseas then coming back with money and experience, all three men believed it would be much better if more entrepreneurs grew their businesses from Australia.