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How might Advance Queensland improve our startup ecosystem?

It’s early days for Advance Queensland, but the response from the state’s startup community has been overwhelmingly positive. Championed by Minister for Science and Innovation Leeanne Enoch, shown above at an Advance Queensland Budding Business Brains Workshop, Labor’s $180 million job package has attracted endless media coverage and has already created some fellowship programs.

Throughout all this, one question emerges: how might Advance Queensland realistically improve our startup scene?

Reception from startup stakeholders

Passed last month as part of Labor’s first budget, Advance Queensland will invest $180 million over four years and take a holistic approach at creating jobs: $50 million for the education focused Best and Brightest Fund, $46 million for the research/industry focused Future Jobs Strategy, $76 million for the startup focused Business Investment Attraction package, and $8 million set aside for flexibility purposes.

While there was some early skepticism over the funding getting “trapped by red tape or in universities or research institutions,” the program has been welcomed by accelerator representatives such as QUT Creative Enterprise Australia’s CEO Anna Rooke and ilab director Bernie Woodcroft.

“Certainly there’s a lot of detail that needs to be worked through, but I think what it does demonstrate is that we’ve never had this level of funding in Queensland to support the soft infrastructure, the actual mechanics of how you become an entrepreneur and a startup,” Rooke said. “Previously funding either hasn’t been available or it’s been more directed at infrastructure projects.”

“And I think that the way that the budget has been announced certainly gives a strong indication that they have really taken on board industry feedback and tried to customise kind of a product and resource mix that reflects all those priorities,” she said.

Of course, we should be wary of cheerleading any government program. The major concern so far is that we aren’t sure where all the money will go, because Advance Queensland is in its early stages, but there’s also a broader question about the role of government and public money in startups, especially when it comes to funding accelerators.

American entrepreneur and Foundry Group venture capitalist Brad Feld says it best in “Government Shouldn’t Be In The Accelerator Business,” but the fact that good accelerators can turn a profit from even modest investments means that, ideally, they shouldn’t need government funding. While I’ll leave the libertarianism-socialism debate for another post, it’s good to remain skeptical about any government involvement within an industry as ideally sustainable as startups.

“If entrepreneurs can’t figure out how to fund it, why should the government do it? That just seems like a situation where capital is going to be allocated poorly and the incentives won’t be tightly aligned.” – Brad Feld

But the Advance Queensland program undeniably looks impressive, and will hopefully be both a good job creator and support system for local organisations. DSITI’s ongoing collaboration with the Startup Working Group, an industry-led group which came from a Queensland Startup Summit 2013 recommendation, has meant that common complaints about startups and government have been heard.

Spike Innovation’s Colin Kinner has spoken about the atypical distinction between startups and small businesses (SMEs) in the Business Investment Attraction package, and River City Labs’ Steve Baxter appreciated that the program does not assume that startups come from universities.

Labor has already started implementing some initiatives, having opened applications for the Research Fellowships last week and run a Queensland Startup Workshop yesterday, but where will the majority of the money end up, and who will benefit from the program? Let’s take a crack at the crystal ball, and look at what we can divine from the announcements so far.

Business Investment Attraction Package

While there is definitely room for startups to benefit from all the programs, the Business Investment Attraction package has the most potential to impact Queensland’s startups, at least in the short term.

The $76 million package is aimed at encouraging a new wave of startups, supporting proof-of-concept projects, and attracting co-investment through the Business Development Fund.

“Under this package, we will establish a $24 million Startup Queensland program, to increase startup formation and attraction,” Enoch said. “There are a number of options we’re looking at, including working with existing incubator and accelerator programs to provide an integrated suite of seed funding, co-working spaces, mentoring and connection to customers and markets.”

“Startups and SMEs (small to medium sized enterprises) will benefit from our $12 million Queensland Commercialisation Program, $40 million Business Development Fund and up to $8 million allocated to the [Best and Brightest Fund’s] Knowledge Transfer Partnerships program for SMEs,” she said.

Startup Queensland

According to a presentation by the Minister to the Startup Working Group, amongst the Startup Queensland initiatives being considered is a Start-Up Chile-style program, an equity-free seed accelerator funded by the Chilean government. Since launching in 2010, the program has succeeded in attracting over 1000 startups, which received $40,000 in return for relocating to Chile.

However the lack of investors in Chile became problematic for graduate startups, which could easily relocate to America after graduating (the need for proof-of-traction for Latin American venture investors has reportedly also driven local startups abroad). This forced the creation of a follow-on fund, Start-Up Chile SCALE, in January this year.

Hopefully, Labor can learn from the five-year process and implement similar long-term programs with any new accelerators; the Business Development Fund includes follow-on funding, so again it looks like they have covered their bases.

Other possible Startup Queensland initiatives include a small business innovation research program, innovation vouchers, a QPitch business consulting initiative, the aforementioned support for incubators/accelerators/precinct, and review potential for matching R&D credits.

Queensland Commercialisation Program

The $12m Queensland Commercialisation Program program will “encourage proof of concept funds to convert innovations and discoveries into investable propositions for early stage VC”.  How exactly it will work to commercialise concepts has yet be specified, but it can be assumed that initiatives would include include commercialisation guidance, grants and networking services.

On a federal level, similar work is being done by Accelerating Commercialisation, which was introduced by the Liberal government last year as part of the Entrepreneur Infrastructure Program as a replacement to the Commercialisation Australia with half the previously allocated funding,

Business Development Fund

Finally, Enoch said the $40m Business Development Fund, which was announced as part of Labor’s election platform and was discussed during the Startups in Parliament event, will, “provide seed co-investment to match and encourage greater angel and venture capital investment in Queensland businesses.”

According to the presentation, this will include a minimum of 1:1 matched co-investment, direct investment alongside co-investors as part of seed, early-stage or follow-on funding.

Best and Brightest Fund and Future Jobs Strategy

The Best and Brightest Fund will offer $33 million in fellowships and scholarships, which are aimed at innovation, indigenous people, women, and PhD scholarships. As of last week, available grants include:

  • early-career Fellowships – $180,000 over three years (excluding GST)
  • mid-career Fellowships – $300,000 over three years (excluding GST).

The fund will will additionally offer Global Partnerships Awards, which create international business and university opportunities, $8 million in Knowledge Transfer Partnerships, which will encourage post-graduate work with local SMEs, and a future schools review of STEM led by the Department of Education.

While these initiatives might not have as immediate an impact on the startup community as the Business Investment Attraction package, they could definitely help secure the long-term health of the ecosystem, and the schools review is especially promising for future entrepreneurs. And as Enoch said, SMEs with post-graduate opportunities can directly benefit from Knowledge Transfer Partnerships.

Likewise the Future Jobs Strategy is focused on new industry/research collaboration, and will include three major innovation partnerships designed to commercialise our “biggest and best discoveries”: UQ and Emory University (Atlanta, US), Siemens and Translational Research Institute, and Johnson and Johnson and QUT.

The strategy will also create innovations challenges, to incentivise researchers and entrepreneurs to “tackle the world’s biggest challenges”, and 10 year roadmaps for emerging industries with global growth potential.

Enoch said these industries could include “medical technology and biotechnology.” “This will ensure we identify the right policy settings, the best regulatory framework as well as any red tape that needs removing, to help Queensland achieve growth and prosperity.”

Who might benefit?

While it’s impossible to say who will benefit the most out of the startup community, we can make some educated guesses, and Labor has already announced their intention to collaborate with local accelerators and incubators.

Even if they create a new, Chile-style accelerator program, we can assume places like ilab, River City Labs, QUT Creative Enterprise Australia, and SEQ groups like Sunshine Coast’s Innovation Centre will be involved through collaboration, consultation and, possibly, separate programs.

“I think the timing of the policy and the design of the policy detail merging with ilab’s own strategic planning activities is very good,” ilab’s Bernie Woodcroft said. “I can only think this will be good of ilab either directly or indirectly through the maturing of the ecosystem, which will lead to better entrepreneurs coming into the likes of ilab.”

Hopefully, the Startup Queensland and educational opportunities will extend to our growing number of regional entrepreneurs, and programs won’t be too SEQ-focused. We’ve been seeing a rise in regional initiatives from places like theSPACEToowoomba Startup Group and Townsville Startups, and their representation at June’s Startups in Parliament would suggest they’re at least a part of the discussion.

It would be shame if an opportunity like this left regional Queensland by the wayside.  

But from all appearances, Labor has done of a good job of sharing the funding around: everyone from primary school students to entrepreneurs to researchers to investors to artists will get something from Advance Queensland, although to what extent remains to be seen.

“What’s fantastic is that they’ve taken a holistic approach at what are the successful components you need to build a viable entrepreneurial ecosystem, and they’ve targeted investment in those area,” Rooke said. “We at QUT Creative Enterprise Australia are in a fortunate position, where we operate in the creative and technology world, we bridge the gap between both, and therefore, from my point of view, there’s some great opportunities across all the programs that benefit the types of companies we work with.”

Rooke here refers to Labor restoring funding cut by the previous government as part of a $173 million arts program. Because QUT Creative Enterprise Australia sits at the intersection of Queensland’s artistic and entrepreneurial communities, it’s especially well placed to work with companies that could benefit from Labor’s budget.

“If I can say, frankly, it hasn’t been covered as much as the startup stuff but certainly the announcement of $130 million into the arts area was also announced as part of the government’s budget decisions, and again that’s really important for supporting the broader creative industry’s ecosystem.”

Final Thoughts

Still, Labor’s focus on startups is extraordinary, and it’s okay to hope that the holistic intention will result in better educated, funded and connected entrepreneurs. The funding hasn’t come from nowhere: entrepreneurs have been calling for better government support and collaboration for years, but it looks like the public pressure has successfully entered our broader political discourse.

“The world continues to evolve and the issues around tech disruption become more and more closer and understood, at least at a macro level,” Woodcroft said. “I think there’s been a range of publicity and more mainstreaming of the startup sector that just has occurred incrementally over the last couple of year, that it bringing it to this level of political importance.”

“I think the Premier has recognised that and has crafted at a high level a desire to make this a key play, and do it in such a way that there is a continuum of engagement that recognises STEM education, schools entrepreneurship, and startups in the same line as research and industry benefiting from research,” he said. “She’s kind of trying to create a framework across all of those sectors at once and the pleasing thing is that startups are part of that continuum front and centre.”

“It’s important to know they’ve broken that $180 million into sections and one of those sections has startups in the name, which would not have occurred in the past.”

About Chris Woods

Chris Woods (@tophermwoods) is the Tech Street Journal's Editor-in-Chief. He lives in Brisbane, has worked in places like Sydney and New York (State of), and will someday update his media-news blog.