Australia enjoys a reputation for a healthy talent pool of creative and innovative entrepreneurs in the country – yet many small businesses move offshore to make it big, claim some of the nation’s most prominent economists and business owners.
According to the pundits, a big reason some of our best and brightest leave is to look for support from overseas investors
Economist and research associate at the Australian National University Eric Knight will be hosting the event ‘What’s killing Australian innovation?’ as part of the Festival of Dangerous Ideas at the Sydney Opera House next month. Hosting a panel made up of a handful of Australia’s brightest entrepreneurs and industry experts, Knight will discuss how small businesses can be given more support for their ventures.
Another topic on the agenda will be manufacturing opportunities as well discussion of the recent changes to the research and development funds from the government and its impact on small businesses.
Joining him will be Alan Noble, who was previously a small IT business owner in Silicon Valley and is now the engineering director of Google Australia & New Zealand, and Martin Rogers, CEO of Prima BioMed, a once-small Australian biotechnology company that specialises in cancer treatments and has grown to $200 million in equity.
Rogers and his team say they are in the final stages of creating what will be the world’s first ovarian cancer vaccine. According to Rogers, one of the biggest problems many entrepreneurs face is the lack of commercial government support.
“A lot of early stage innovation companies particularly around biotech get snapped up for cheap prices in the US. It’s the US companies that end up profiting and ultimately the tax dollars and jobs go overseas,” Rogers told Smarter Business Ideas.
“Innovation is an essential component of creating a smart nation. It's an essential key to a smart future for our nation. It creates science and research jobs and it provides a benefit for patients, whether it's preventing a patient getting cervical cancer or it helps a couple having a child.”
As Rogers explained, when a manufacturing job is created to produce a product or device, there is a flow-on effect felt throughout the community. One of the biggest immediate benefits is increased employment, as new jobs are created for workers in factories and service positions.
“That’s where Australia could be good at solving its manufacturing crisis,” he said. “We could be looking for high innovation businesses that provide skilled jobs and create high levels of manufacturing. You can’t compete with Chinese low-cost labour to create steel jobs, but you can compete with creating world class medical innovation.”
Your small business counterparts overseas
Knight went to Oxford University as a Rhodes scholar to complete his PhD. While at Oxford he investigated the economics of finance and innovation, and focussed on small businesses within the clean technology and energy innovation spaces. He says one of his most interesting observations about overseas entrepreneurs was their openness to connecting with others in the industry, including their competitors.
“In general, the entrepreneurs I met were extremely good at networking locally with people in their industry or related industry, even if they were direct competitors,” he said. “They had cocktail events, parties, speeches at each others' offices etc. It seemed strange to me, but I suppose the competitive instincts to keep quiet were more damaging than the benefits they got from sharing information.”
He also noted a cultural difference between American and Australian entrepreneurs when it came to experimenting with new ideas.
“I think it's got to do with a willingness to fail,” he said. “What's striking in America is entrepreneurs and small businesses are willing to fail and it won't stop them from trying, but we're more cautious here. It’s not that we lack ideas or don't have smart people, it's often we're a bit reluctant. We have to be willing to fail a bit more.”
For more information on government grants, check out the following sites:
R&D Tax Concession
(This will be replaced with the R&D Tax Incentive, with applications accepted from 1 July 2012.)
Export Market Development Grants (EMDG)