Why Mick Liubinskas is wrong about centralising startup funding.

Today, Mick Liubinskas was quoted in a piece in StartUpSmart about an annoucement of $28m in startup innovation funding by Labour, to a Sydney incubator program. 

http://www.startupsmart.com.au/government-and-regulation/labor-pledges-28-million-in-co-funding-to-make-sydney-hub-for-innovation.html

Mick was quoted as saying “What hasn’t worked in the previous programs has been spreading the funds out too widely. It’s much better to put this money all to work in say Hobart or Sydney."

 

“I’m really passionate about fighting fragmentation, even if we can put it all to work in one industry and location, that’d be a breakthrough,” Liubinskas says. “If they have the courage to make it focused and local, it’s great.”

He's flat out wrong. 

My response comment to the article was 

"Last time I checked my citizenship documents, I distinctly remember them saying that I am an Australian citizen, not a Victorian or a New South Welshman. 

I understand what Mick is saying about focus, but since when did we as enrepreneurs, start buying into or accepting, the philosphy of scarcity?"

"Sydney is not the 'centre' of Australia (nor is my home town, Melbourne). And governments should not be in the business of 'picking winners' (especially based on their recent track record). "

"If we truly want Australia to be a force in the world startup ecosystem, governments need to encourage the whole ecosystem, not just one part of it. Governments know this better than any one, which is why we have a senate system which recognizes the rights if all states equally."

"I respect Mick's view & track record, but here, he is flat out wrong in buying into the typical pre-election pork-barrelling."

And here is why.

The recent PWC report (sponsored by Google) into the possible future of the Australian startup ecosystem, and the subsequent benefits to the Australian economy & new job creation in the sector, highlighted the immense opportunities that Australia will have over the next 20 years. 

If the last 20 years of Australian politics are anything to go by, namely 5 prime ministerial changes, 3 changes in government (with a 4th looming), a minority government, the rise of independents & minor parties controlling government policy (from Sen. Harradine etc), we will likely see those trends accelerate in the next 20 years.

If that is the case, the opportunities for Australian startups to emerge & thrive will be squandered as various factions & viewpoints sqwabble & scramble for meager funding opportunities offered by each of the major parties when each election period comes around. Worse, post-election, there will be (as there has always been), the traditional watering down & pandering to minority political interests, of pre-election promises. 

Direct personal experience tells me that changes to government policy can & will have a devastating impact on the success of many yet-to-envisaged startups across Australia.

My case in point is the NBN - which as a result of partisan politics in Australia -will likely become the largest fiasco in Australian political & technological history -against which the 'pink batts' disaster will pale into insignificance. 

We need a better plan than that -a plan that makes sense for those many thousand of professionals & startup entrepreneurs, most of whom will forgo traditional businesses & corporate roles, to invest 3-5 years of their lives in ventures that have an unforsee-able likelihood of success. 

So in our world of uncertainty, the one thing that we should ask for -no, demand -from our governments, is certainty of policy, and an ongoing commitment to consistency of approach - a bi-partisan long-term plan, free of pork-barelling, picking winners, and agenda-driven quotas.

Only then will we be in a position to create the opportunities of excellence that we can each imagine in our own spaces.

There are looming question of the 'funding gap', as well as equity-share taxation issues that will obviously need to be addressed, preferably sooner rather than later- but these are secondary. Without certainty of policy & committment, how could any government expect to get the funding initiatives right over a 20 year framework. 

I read a report recently that listed the top 25 startup locations in the US. Interestingly, 4 of the top 10 were in one middle-of-nowhere state called Colorado, which with just over 5 million people, is ranked 22nd largest state by population (roughly the same size & land area as Victoria). I'll venture that it didn't just happen by accident. 

So if Colorado can have 4 of the top 10 in the US, why can't Australia have 4 (or 6) of the top 10 in the world?

My dad used to say "A rising tide lifts all ships", but thats only true if there isn't an artificial dam put right in the middle of the harbour. 

So my request to Mick is simple - irrespective of the party elected, now and in the future, we need a plan from Government that helps, not hurts, our eco-system. Our best efforts should be directing to encouraging that to happen, rather than pitting one city against another. 

PS my original blog posted as "Mark Lubinskas" - which requires a direct apology to Mick (Sorry Mick) -I'm guessing I owe him at least a coffee.