How will Australian start-ups weather 2009?

Summary:Opinions are mixed as to how Australia's start-up community will weather 2009 as the global financial crisis continues to make its presence felt.

Opinions are mixed as to how Australia's start-up community will weather 2009 as the global financial crisis continues to make its presence felt.

According to some local start-up luminaries, such as RedBubble executive chairman Martin Hosking, the community has lost some of its momentum.

"What's happened is that there was this (relatively brief, in retrospect) period where people were talking about 'freakonomics', or free economics," he told bootstrappr in an interview last week. "You'd just launch something without any economic model at all, and there was a lot of hype and a lot of noise about this, trying to get to a million members, and worrying about the economics later."

That period, according to Hosking, is over.

"There is just far less appetite for that these days, and I think that means that few things will be launched," he said of the freakonomics model. This, taken with the fact that it was hard to attract venture capital for consumer-focused internet ventures in Australia, meant start-ups would have to think closely about their business model.

"That's not a bad thing at any stage of a business," said Hosking.

Despite these issues, Mick Liubinskas, co-founder of Australian start-up consultancy Pollenizer, is optimistic about 2009, believing the global financial crisis will stimulate new businesses being formed due to redundancies and a general lack of opportunities for expansion in existing businesses.

People are going to have to stay lean for longer, stay focused.

Pollenizer co-founder Mick Liubinskas

"What we'll see this year is a lot of people starting slimline businesses; there won't be as much news of companies getting serious funding, or getting huge, but there will be a lot of companies being started," he said in an interview. "People are going to have to stay lean for longer, stay focused. Probably a good thing anyway."

Despite such issues, however, Liubinskas said the local start-up community was still vibrant. "If anything, in a difficult time, the community comes closer together," he said. Pollenizer is planning to launch a co-working space for start-ups in March, and events such as the Silicon Beach Australia Friday night drinks in Sydney's Grace Hotel were proving popular, he said.

Many start-ups are using micro-blogging service Twitter, which recently hit an all-time high in terms of Australian usage.

One likelihood this year is that some Australian start-ups will close their doors. "People are dropping out, I'm certainly seeing that," said Hosking. Liubinskas said he hasn't seen any close yet, with most still having capital reserves, but it could change towards the end of 2009.

"That's the natural way of high-risk businesses," he said. "You give it a strong go for nine months and then you have to pack it up and try something else."

"One positive thing that will come out of it this year is that the Australian start-up scene will become less worried about failure. Failure is really just a part of being in this business. We should start respecting it and even cherishing it."

Topics: Start-Ups

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