Updated: Nov 2, 2021
Access to a broader ranger of capital which allows smaller investments from more people will increase innovation whilst reducing risk.
Recently the AFR's Michael Bailer reported that the Australian Federal Government had passed amendments to the Federal crowdfunding legislation, initially passed in 2017.
If I read it correctly, it will free up both smaller investors who might like a particular investment and allow them to invest small sums of money into start ups, which otherwise may not have fit into the current Australian Investment Framework, removing much of the inhibiting red tape.
Although there has been movement in the outlook of VC investment in Australia in recent times there still is a lack of maturity in how investment in early stages supports founders and entrepreneurs and enables their success. Compare this to what is happening in California, Texas and Israel not to mention the recent strides made out of London, Berlin and more broadly in China. Australia needs to get its skates on.
The government has tried to stop the off shoring of resources via its continued support of the RD Tax Incentive, and so it should. In reality by keeping jobs in Australia it actually provides a tax uplift, whilst delivering opportunities in industries, which will in turn future proof Australia.
That's right the Aus Industry Tax Incentive program, on balance, actually increases tax revenue via PAYG contribution at a greater rate than the government pays out to organisations. This is a true win win.
Aus Industry Link: RD Tax Incentive
In the Innovation Agenda sparked by the then Prime Minister Malcom Turnball in 2015, was a start in the right direction and various progressive programs such as Aus Industry's RD Tax Incentive and incentives to investors for Early Stage investment, ensured platforms for the creation of exportable business, whilst delivering jobs. And as a positive consequence increase the Tax revenue for all Australians.
ATO Link: Early Stage Investment Scheme
The combination of government support for small innovative risk taking businesses, and now unlocking more options for capital via this announcement are key building blocks to Australia being part of the economic revolution that has emerged through technology based businesses.
I just hope the government continue this direction.
About the Author
Adam Ryan is a Professor of Practice (Adjunct Professor) at Monash University and is a principal at Watkins Bay. He has over twenty years of start-up experience in Australia and the USA. An expert in company structuring for innovation, high growth strategy and capital for early to growth stage businesses.
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