November 14, 2022
The Group of Eight (Go8) which represents Australia’s leading research-intensive universities welcomes the opportunity to provide this short submission to the Startup Year consultation paper issued by the Department of Education. Please note that this submission represents the views of the Go8 network, and member universities may choose to make their own submissions.
Please also note that we are happy for this submission to be published and have no wish for any of it to be treated as confidential.
The Go8 is highly supportive of the aims of the Government’s Startup Year initiative that acknowledges the importance of startups in creating Australian jobs, commercialising ideas, creating innovative solutions to social and community-based problems and the role of universities in developing and fostering startups.
Indeed, Go8 members are the leaders in startups in the university and publicly funded research sector. According to the 2021 Survey of Commercialisation Outcomes from Public Research (SCOPR)[1] the Go8 had 160 active startups and spinouts in 2021 – more than five times the number of the CSIRO – and the top seven ranked institutions for new startups and spinouts in 2021 were from the Go8. This is part of an overall annual Go8 research investment of $7.2 billion with an estimated economic impact of $33.92 billion in the Australian economy.
Each of the Go8 members also has established and effective accelerator and incubator programs for students and alumni that we strongly anticipate would satisfy any reasonable eligibility criteria to participate in the Startup Year initiative (when finalised). Details of Go8 programs relevant to launching startups and developing the skills to do so (in particular accelerator and incubator programs) are provided in an appendix to this submission.
In this context, the Go8 submission offers high-level recommendations that must be followed to ensure that the Startup Year initiative is a success and avoids the risk of setting up some students to fail.
In doing so, the Go8 is committed to working with the Government to deliver an effective Startup Year initiative.
| Recommendation 1: The Startup Year design must clearly state if the primary objective is to directly increase the number of startups launched through universities, or to develop the skills base of the next generation of potential startup founders and the startup ecosystem more broadly. Recommendation 2: If the Startup Year is to proceed through an accredited course model, then there must be clarity on the nature and parameters of the accreditation, including the expected duration of the course. Recommendation 3: Given the complexity of the initiative and the current lack of clarity regarding key elements of the design, the initiative should proceed through a Startup Year Pilot. |
Discussion
All Go8 members have successful accelerator and incubator programs which provide a mixture of training, mentoring and startup development experiences.
In terms of directly supporting the development and launch of startups, typically these programs admit only the best ideas or “pitches” from students and alumni through a competitive process. Once in the program participants receive advice, training and mentoring free of charge over a short period of time tailored to suit their particular background and the requirements of progressing their startup concept towards launch. The focus is to advance the best ideas with a realistic possibility of success – noting the high level of failure inherent in startups.
The key to such successful programs is the simplicity and flexibility of the arrangements and engaging cohorts of participants that are mixed in terms of background and experience. This reflects the real world experience of operating in the startup ecosystem.
An example of this type of program is the University of Sydney INCUBATE accelerator program[2] which funds and supports students, alumni, and researchers to launch high-potential startups. Participants in this highly competitive scheme enter a 14-week program that supports the development of their startup concept. The program is free to participants, with the program taking a two percent advisory fee if the startup raises investment in the first two years after graduating from the program.
INCUBATE also offers a range of mentoring, training and education services around startups.
In this context, the primary objective of Startup Year must be clearly articulated in the interest of maintaining the simplicity and effectiveness of the program. Specifically, whether Startup Year is intended to directly support the development of startups through accelerator programs or to more generally support education and training in skills related to startups.
Both can be of great value in driving startups and bolstering the ecosystem in Australia but they are different objectives requiring different mechanisms to support them.
For instance, many participants in university accelerators and related entrepreneurship programs require training in ideation – how to generate the key idea that underpins a startup – and the philosophy of lean startup development. These are educational outcomes.
On the other hand, to directly support the development of startups, funding for participants that allows startup founders to formally contract software development services – essential for almost all startups – could be a focus of support. Doing so would enable startup founders to maintain ownership of the underlying IP through paying for software, rather than sharing (or losing) the IP with software developers.
While deciding this focus is a decision for Government, in framing the Startup Year funding as a payment to universities for the delivery of an accredited course, the emphasis is necessarily on educational outcomes.
Formalising short and elite startup accelerator programs through a cumbersome accreditation process is the opposite of the bespoke and tailored student experience that such programs offer in taking startups to launch (or not if the idea fails). Burdening students with a debt – even through an income contingent loan scheme such as HELP – in a highly risky exercise such as developing a startup is potentially setting students up to fail.
Confusing the purpose of accelerator programs with both educational outcomes and startup launch outcomes also places pressure on the operation of university-based accelerator programs which may mean that such programs do not take up the opportunity of this funding.
The National Reconstruction Fund may be a better vehicle for investment in directly supporting startups if the focus of Startup Year is to be educational outcomes.
Recommendation 1: The Startup Year design must clearly state if the primary objective is to directly increase the number of startups launched through universities, or to develop the skills base of the next generation of potential startup founders and the startup ecosystem more broadly.
Related to the discussion before Recommendation 1 are questions around the details of the accredited courses that are the focus of Startup Year in the consultation paper. Fundamental questions remain unanswered/unconsidered in the consultation paper:
- What is the accreditation process that will be required, who will run the process and what regulatory oversight and reporting requirements for universities will accompany accreditation?
- What are the parameters around course content, delivery and duration that will underpin accreditation?
The consultation paper (page 6) states that the Startup Year initiative funding is to “allow students to take a business-focussed capstone year, working with an accelerator to develop their innovation ideas” (emphasis added).
It also specifies that the funding amount available per student in the initiative is $11,800 – benchmarked at the maximum student contribution amount for Band 3 in 2023 for a year of study (1 Effective Full-Time Student Load – EFTSL). It should be noted that without a concomitant Government contribution this level of funding would represent less than three-quarters of the lowest amount of funding available for any course under Job Ready Graduates for universities to deliver 1 EFTSL in 2023.[3]
Recommendation 2: If the Startup Year initiative is to proceed through an accredited course model, then there must be clarity on the nature and parameters of the accreditation, including the expected duration of the course.
Given these issues it seems clear that there is much work to be done in fleshing out an effective design and implementation for the Startup Year initiative and to that end the Go8 recommends further consultation and a pilot exercise.
Recommendation 3: Given the complexity of the initiative and the current lack of clarity regarding key elements of the design, the initiative should proceed through a Startup Year Pilot.
In closing, I reiterate the commitment of the Go8 in supporting the Government in pursuing a boost to startup activity generated through established university accelerators and incubators. In doing so, I hope that the comments in this submission have been helpful in framing a Startup Year initiative that can deliver on this objective.
If you would like to discuss any aspects of the Go8 submission further or engage in further consultation with the Go8, then please do not hesitate to contact me directly on 0417 808 472 or chief.executive@go8.edu.au.
Yours sincerely
VICKI THOMSON
CHIEF EXECUTIVE
Appendix: Summary of Go8 programs relevant to the Startup Year initiative
Australian National University
- Cicada Innovations (co-owner): Incubator
- CBR Innovation Network (Foundation members): Other startup support
- Summer Founder Pilot Program: Free two-month program to help early-stage student-led ventures fast-track their growth.
- ANU Makerspace: A community available to ANU staff and students, providing users with resources to experiment, investigate, prototype, and solve problems.
- Square One: Student co-working space available to ANU students working on startups or freelance projects.
- TechLauncher: A course from the College of Engineering & Computer Science that enables students to use their theoretical knowledge and computer science skills and apply it to a real-world research project.
- Capstone Project: A course from the College of Engineering & Computer Science that exposes students to an authentic engineering-based experience through an industry project.
Monash University
- The Generator – central startup hub
- The Accelerator – 12-week program for early-stage startups
- Monash food incubator – support for food and agriculture startups
The University of Adelaide
- Thinclab business incubator – entrepreneurship, commercialisation and innovation centre
The University of Melbourne
- Melbourne University Accelerator – startup accelerator
- Wade Institute of Entrepreneurship – centre for entrepreneurial training
The University of Queensland
- Ventures Incubator: A startup community and support program based at UQ’s Long Pocket campus.
- iLab Accelerator: During the three-month program (December to March), each startup team receives $10,000 equity-free funding to help get you ready for the market and become attractive to investors.
- Startup AdVentures: Learning experiences specialising in innovation and entrepreneurship with local, regional Queensland and global startup communities.
The University of Sydney
- INCUBATE – startup program
- ProtoX: free part-time mentoring program
- Sydney Knowledge Hub: on-campus research commercialisation and industry engagement hub.
- Genesis: University of Sydney Business School’s startup support program.
- Sydney Innovation Network: Supports the commercialisation and launch of startups and scaleups from the University of Sydney community.
The University of Western Australia
- UWA Innovator Clinic: supporting startup development and commercialisation activity.
- UWA Startup Pre-Accelerator: entrepreneur-led program to validate early-stage ideas.
- Venture: student innovation centre
UNSW Sydney
- Cicada Innovations (co-owner): Incubator
- UNSW Founders: startup and entrepreneurship support
[1] https://techtransfer.org.au/wp-content/uploads/2022/09/KCA_SCOPR_2021_survey_report_DIGITAL.pdf
[2] https://incubate.org.au/[3] According to the 2023 Funding Clusters published by the Department of Education the lowest total of the (un-grandfathered) Maximum Student Contribution Amount and Commonwealth Contribution is $16,289 for Fields of Education largely across the Humanities, Arts and Social Sciences. The $11,800 Startup Initiative funding amount represents 72 per cent of this figure.