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Tech exodus: what you say about the brain drain crippling Australia's tech industry
ASHER MOSES
May 18, 2012
They are the Digital Dreamers - Australia's best and brightest minds of their generation. But they are being forced offshore by the inability to pursue their entrepreneurial dreams at home. Why is this happening?
Get a foretaste of a new video series starting on Monday 21st May, telling their stories and asking if Australia's future is at risk. Here, we will update reactions to Asher Moses' story throughout the day.
Australia is producing more world-class innovators than ever before, and the startup scene is booming - but many of our most successful startups are leaving our shores to pursue funding and support in the US.
Increasingly entrepreneurs are incorporating in the US from day one. We canvassed some of the leading figures in Australian IT on the tech industry brain drain. This is what they had to say:
Stuart Richardson from Australian venture capital firm Adventure Capital said Australia was way behind the curve when it came to the tech industry's next big thing:
The
Australian scene is at least 18 months behind the froth & bubble of
the Silicon Valley. Singapore is probably 12 months ahead of of us as
well. In terms of the availability of capital and risk appetite we are
in the dark ages.
"Private investors are equally risk-averse taking safety in passive investments such as property and cash wherein they see a risk-free return to be 5 per cent per annum compounding. In the majority of advanced economies cash in the bank provides a net negative return. Into the near future there will be no such thing as double digit (percentage) returns for passive, low-risk investments.
"There is no denying that our 'risk aversion' and short-sidedness is holding us back as a smart country failing at innovation on the grandest of scales."
Kate Kendall, founder of The Fetch, said conservatism was a big factor holding back the Australian market:
I've
spent time working and living in the Australian and the San Francisco
Bay Area startup communities, so feel I can comment on both – especially
from a grassroots perspective. Unless you're building a product that's
completely focused on the local market, you would be naive not to
consider launching out of the latter.
"The proximity to capital, support and repeat entrepreneurs is like no where else in the world. You've also got a place filled with a general population of early adopters waiting to try out new things, allowing a critical mass to be reached for the all-important tipping point to happen.
"I work on a startup that helps other startups and struggle to get the word out there in Oz so can imagine how hard it must be outside our supposed innovation communities. I also feel we tend to more competitive toward each other when at home.
"I think it's funny how I can return to the [Silicon] Valley and ping the likes of Airbnb, Instagram and Flipboard for a coffee yet not know how to navigate who's who in our relatively small scene. I have received more help and insight for what I need to do next as a founder in the two weeks I've been in the Valley during this trip than any time over the past couple of years."
Marcus Schappi, from Ninja Blocks, said the lack of funding was a big issue:
"When
attempting to raise money in Australia, Australian investors scoffed at
our initial valuation. We then [jumped] on a plane to San Francisco and
doubled our valuation, and were told that we were ... a bargain!
"Australia suffers from the tyranny of distance, and it's amplified by our postal service. It's far cheaper to ship gear into Australia from the US/China then it is to send back.
"Tracked shipping to the rest of the world is prohibitively expensive (so much so that we're doing our fulfilment in the US). The federal government should subsidise export shipping, this would do amazing things for Australian ecommerce and manufacturing."
But Anthony Goldbloom, founder of Kaggle, said a lack of available funding in Australia was only part of the story:
Get a foretaste of a new video series starting on Monday 21st May, telling their stories and asking if Australia's future is at risk. Here, we will update reactions to Asher Moses' story throughout the day.
Australia is producing more world-class innovators than ever before, and the startup scene is booming - but many of our most successful startups are leaving our shores to pursue funding and support in the US.
Increasingly entrepreneurs are incorporating in the US from day one. We canvassed some of the leading figures in Australian IT on the tech industry brain drain. This is what they had to say:
Stuart Richardson from Australian venture capital firm Adventure Capital said Australia was way behind the curve when it came to the tech industry's next big thing:
The
Australian scene is at least 18 months behind the froth & bubble of
the Silicon Valley. Singapore is probably 12 months ahead of of us as
well. In terms of the availability of capital and risk appetite we are
in the dark ages.
More below
"Australian super funds hold the keys to about $1.2
trillion of which not even a fraction of a per cent is deployed into
Australian VC [venture capital] - largely this is in equities - and they
fight amongst themselves and are seen to 'outperform' on single-digit
basis points!"Private investors are equally risk-averse taking safety in passive investments such as property and cash wherein they see a risk-free return to be 5 per cent per annum compounding. In the majority of advanced economies cash in the bank provides a net negative return. Into the near future there will be no such thing as double digit (percentage) returns for passive, low-risk investments.
"There is no denying that our 'risk aversion' and short-sidedness is holding us back as a smart country failing at innovation on the grandest of scales."
Kate Kendall, founder of The Fetch, said conservatism was a big factor holding back the Australian market:
I've
spent time working and living in the Australian and the San Francisco
Bay Area startup communities, so feel I can comment on both – especially
from a grassroots perspective. Unless you're building a product that's
completely focused on the local market, you would be naive not to
consider launching out of the latter. "The proximity to capital, support and repeat entrepreneurs is like no where else in the world. You've also got a place filled with a general population of early adopters waiting to try out new things, allowing a critical mass to be reached for the all-important tipping point to happen.
More below
"Just this week, four people separately suggested I try
out the new ride-sharing app SideCar in the US. We don't have
that serendipity in Australia – our market is tiny and we're more
conservative in what products we get behind. "I work on a startup that helps other startups and struggle to get the word out there in Oz so can imagine how hard it must be outside our supposed innovation communities. I also feel we tend to more competitive toward each other when at home.
"I think it's funny how I can return to the [Silicon] Valley and ping the likes of Airbnb, Instagram and Flipboard for a coffee yet not know how to navigate who's who in our relatively small scene. I have received more help and insight for what I need to do next as a founder in the two weeks I've been in the Valley during this trip than any time over the past couple of years."
Marcus Schappi, from Ninja Blocks, said the lack of funding was a big issue:
"When
attempting to raise money in Australia, Australian investors scoffed at
our initial valuation. We then [jumped] on a plane to San Francisco and
doubled our valuation, and were told that we were ... a bargain!"Australia suffers from the tyranny of distance, and it's amplified by our postal service. It's far cheaper to ship gear into Australia from the US/China then it is to send back.
"Tracked shipping to the rest of the world is prohibitively expensive (so much so that we're doing our fulfilment in the US). The federal government should subsidise export shipping, this would do amazing things for Australian ecommerce and manufacturing."
But Anthony Goldbloom, founder of Kaggle, said a lack of available funding in Australia was only part of the story:
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