WE OFTEN HEAR CALLS for a more entrepreneurial culture. But what does that mean in practical terms? Yes, it is affected by our national psyche, outlook and attitude to risk. We hear that Australians don’t ‘embrace failure’, and that our finance sector is too conservative in its attitude to science and innovation. These opinions might be true, but regardless we also have to get the building blocks right.
The ‘next big thing’ might come from a series of small steps in developing the environment for more innovators and entrepreneurs to thrive. The government has just released an Industry Innovation and Competitiveness Agenda, which features a few of the steps that will improve the situation for entrepreneurs in Australia.
Issuing share options to employees is an important way of attracting talent. New companies have an idea, a prayer and not much cash. But brilliant young people are often willing to take shares or options in lieu of salaries for a year or two to join the startup entrepreneurial adventure. They might take a very low salary, or spend a year couch surfing or forgoing the benefits of deodorant.
The incredible stories of the likes of Twitter, Instagram, Facebook and the rest mean that by taking shares in lieu of salary they may strike it rich. In Australia, rules introduced in 2009 killed off this pathway by demanding that tax be paid on those shares immediately. The government has now fixed that issue.
Removing barriers is another important avenue to increase business competitiveness in Australia. Simple things like vaccine companies undergoing identical audits from different regulatory agencies draws cash – and focus – out of the business. The government has decided to have a serious go at lowering those barriers.
For the Treasurer’s coming tax review, the Minister for Industry has flagged two more innovations: crowd sourcing of equity finance, and patent boxes. Australia is slow on the equity issue, with the USA, the UK, Canada and New Zealand all ahead of us. But the government has received a very comprehensive report detailing the necessary changes, and action is expected soon. The patent box concept, which started in the UK, allows companies to isolate earnings from patents and have them favourably taxed.
Apart from government, financing of innovation is slowly improving. Westpac has provided $50 million to Reinventure, a venture capital company. CSIRO’s new CEO, Larry Marshall, is an Aussie with 25 years of venture capital experience. If the equity-financing model allows self-managed super funds to invest, then who knows the limits?
Firing up the entrepreneurial spirit in Australia is the next big thing. The foundations are quickly being laid – next we need the builders to come in. The gap year has become common after senior secondary school. Wouldn’t it be something to see a ‘growth year’, when graduates or postgraduates gave themselves a year to pursue an idea?KnowHow founder Tony Peacock is the CEO of the CRC Association and 2014 Monash University Churchill Fellow at The Winston Churchill Memorial Trust.