Startup sector budget cuts were inevitable: Nick McNaughton
The massive funding cuts to Australia's startup sector that were handed down in this year's Federal Budget were inevitable, according to the CEO of the Australian National University's Connect Ventures investment fund program, Nick McNaughton.
The Australian Federal Budget, delivered by Treasurer Joe Hocky in May, saw the government slash AU$845.6 million over five years from at least eight programs that had been designed to support local startups, emerging business, and research projects in Australia.
On the chopping block were Commercialisation Australia, which had provided over AU$200 million in funding to local startups, and the Innovation Investment Fund, which connected startups with venture capital.
For McNaughton, however, it was only a matter of time before the federal government cut funding to the startup sector, given the burgeoning range of inexpensive and powerful tools now available to startup hopefuls in today’s market.
"These [cuts] were going to happen anyway, the key driver now is the mobile internet," McNaughton told ZDNet. "For the first time in the history of humanity, we have incredibly powerful computers in the palm of our hands all connected to a single, common platform — the internet.
"This reach has provided an incredible opportunity for entrepreneurs to come up with valuable applications and sell them to billions of consumers around the globe," he said.
McNaughton's comments come after five Canberra startups were selected last week for the inaugural Griffin Accelerator program, itself supported by the ACT Government, along with ANU Connect Ventures, Australian Capital Ventures, Capital Angels, the CSIRO, and NICTA, among others.
The program, which was launched by ACT Chief Minister Katy Gallagher in March, is driven by a group of mentors who provide the capital to invest up to AU$50,000 in each startup. The mentors provide advice, targeted education, networking and more to enable the startups to succeed.
NICTA is providing space for the five teams over the initial three month program, which received over 40 applicants, and it is being run with the collaboration of Ignition Labs and ATP Innovations.
The five finalists include Made for Me, an online 3D printing marketplace; Quizling, a mobile educational quiz platform; Symberra, a big data platform designed to aid with business decision making; Enabled Employment, a recruitment site; and Snapknock, a mobile-enabled marketplace.
A demo day will be held at the end of September where the five companies will present to investors hoping to secure additional capital to continue their journey.
According to McNaughton, organisations within the education and private sectors that support the three elements of the early stage startup ecosystem — co-working spaces, accelerators, and incubators — combined with the readily available technological tools for startups, lessen the requirement for large federal financial support.
In fact, the Griffin Accelerator program is providing AU$25,000 and 10 percent equity for each of the five startup finalists, with the potential for them to receive another AU$25,000 for those startups that make it through to the next round in the program.
For Jinjing Li, co-founder of business analytics startup Symberra, even if he and his other co-founders had not been approached by the Griffin Accelerator program, they would likely have found support from other players in the private sector.
"Griffin came along when we were still working on various prototypes," Li told ZDNet. "However, if you have a good business idea and a sound business model there will be always investors keen to invest in your startup.
"If not in Australia, then there are always overseas opportunities for seed investment — it's a global marketplace for startups too, and Symberra's strategy and offering targets many different markets anyway," he said.