Government’s Innovation Focus Positive for Social Startups

While for-purpose businesses were not specifically mentioned in the Federal Government’s $1.1 billion Innovation Statement or the mid-year budget outlook, the sector remains positive that it will also reap the benefits of the innovation focus.

In releasing his 2015-16 Mid-Year Economic and Fiscal Outlook (MYEFO), Treasurer Scott Morrison flagged innovation as one of Australia’s key economic drives.  

“As the recent national accounts data demonstrated, our transition from the investment boom in the mining sector to a more diversified, innovative and people driven economy is underway,” Morrison said.

“This transition is creating a new and emerging momentum in our economy.”

The MYEFO also focussed on Prime Minister Malcolm Turnbull’s recently announced National Innovation and Science Agenda.  

“The Government’s National Innovation and Science Agenda backs Australians to generate and capitalise on ideas that will grow the economy and create jobs,” it said.

“Encouraging innovation is a key part of the Government’s strategy to build a stronger, more competitive and more dynamic economy.”

President of the G20 Young Entrepreneurs Alliance and CapitalPitch CEO, Jeremy Liddle, met with the Prime Minister after the four-year innovation plan was announced.

“It’s amazing – the fact that we’ve got a leader who actually gets it and is looking into the future is massive for Australia,” Liddle told Pro Bono Australia News.

“It’s not perfect, there’s lots of room to improve, but at least it’s a first step and the Prime Minister and Minister Pyne and Wyatt Roy have all been very vocal about the fact that it is only a first iteration and that they’re very, very open to… removing things that aren’t working and growing things that are working.”

Liddle highlighted the legislation for crowdfunding as an area that needed improvement. Pro Bono Australia recently reported that current laws left out for-purpose organisations

“The crowd-sourced equity funding legislation is a shambles, but at least they’ve done something with it instead of it just sitting being talked about like it has for the past two years,” he said.

“There needs to be crowd-sourced equity funding for private companies, not just public companies.”  

He said that the government’s overall stance on innovation would benefit for-purpose organisations even if it took time to garner specific focus.

“I think it’s going to be a long-term play, it’s not going to be immediate. I didn't see anything in there [the Innovation Statement]… that specifically catered to social enterprise yet or business for purpose yet,” he said.

“But if businesses are created for purpose then the statement will support them inherently because it’s created for new enterprise.”

However, Liddle said the greatest challenge was encouraging society to recognise the value of business first.

“The whole reason I got into entrepreneurship was because I believed social enterprise was the future of solving problems all over the world,” he said.

“But unfortunately social enterprise is still a bit of a leap for people who don’t even get entrepreneurship and how important businesses are in general.

“I think the step we can take now is educate the world on how important startups and businesses are to creating jobs and creating opportunities to solve really big problems.

“Once we get the culture at large to accept the fact that entrepreneurship is critical and it does create our future industries, hopefully then we can take the next step and start educating everybody about how important social enterprise is and how businesses actually solve problems that the world needs solved.”

Liddle, who is also from Not for Profit financial technology incubator Stone & Chalk, said he expressed to Turnbull the needs of support organisations.

“We spoke about how there’s a real need for support organisations… to make sure there’s not just more investment flowing into the startup sector but that that investment actually makes it to businesses that are able to grow and succeed and create a return for investors, so if we don’t do that then it’s all for nothing,” he said.

“The incubator accelerator sector needs a lot more support. $8 million out of $1.1 billion is barely a drop in the ocean.

“The support organisations that ensure that startups actually grow and succeed need more support… innovation needs to be commercialised, not just created and left on the shelves.”  

Co-Founder and CEO of The Difference Incubator, Bessi Graham, welcomed the Innovation Statement and said it was up to social purpose ventures to ensure they advocated for a piece of the pie.  

“We are certainly excited by the focus and the attention that is coming to that broader area of a need to take some risks and be innovative,” Graham said.

“I think this is a moment of opportunity in Australia, generally around innovation, but particularly for the social sector to step up and say ‘we have the added benefit in the social space of being able to take any of this catalytic type grant funding and government funding, and not only create wonderful advances and financial returns but also to start to crack some of society's big social and environmental problems.

“That, to me, is far more appealing than simply pumping money into new innovative angles that just make people consume or look better or be trendier. How do we actually use this focus on innovation to get that double benefit… of an opportunity that delivers social or environmental return, and financial return.

“This focus on innovation has that potential if we can connect the social side into that rather than it just being seen as a mainstream startup or tech based play.”  

Social Ventures Australia (SVA) was also positive about the innovation Statement, but called for innovation in social as well as economic policy.

“If we are to be a truly inclusive and prosperous society we must make sure everyone in our community can participate in social and economic life. Persistent inequality and disadvantage in Australia is extremely costly not just to our economy, but to our community, and to the more than one million people who are stuck in the cycle of entrenched poverty,” SVA CEO Rob Koczkar said.

“With an estimated $420 billion spent on social programs in Australia each year across welfare, health and education, it’s time to invest in the architecture that will enable social innovation to flourish and for this investment to make a real difference towards solving the social challenges we face.”

Liddle said the next challenge was ensuring that the promises in the Innovation Statement were backed up by legislation.

“It’s yet to be determined whether they actually get drafted quickly and implemented on time, that’s the biggest worry, is that they go out and make this great statement and nothing happens.

“The biggest milestone now is actually to get it through Parliament and get it implemented, get all these points actually operating.”