Google and PricewaterhouseCoopers are predicting that Australian tech businesses will be worth $109 billion by 2023, employing 500,000 people and contributing as much to the Australian economy as the retail and education sectors.
The new report, Startup Economy, examines the current state of Australia’s technology sector and looks at how this can be nourished to build a strong tech industry for the country, an area that’s increasingly under scrutiny due to the positive effects it can bring.
Small, but growing fast
The technology sector in Australia currently accounts for 0.01% of the national economy and employs 9,500 people.
There are around 500 tech startups, 64% in Sydney and 24% in Melbourne, putting the country ahead of both Israel and the UK when it comes to the preferred location to launch a technology-based business.
Alan Noble, Engineering Director at Google Australia, says that the sector is growing fast, with the majority of startups founded less than five years ago.
He also believes that if nourished correctly, the tech sector could bring future jobs and wealth to the country.
The tech startup has the ability to grow into an important part of Australia’s economy, providing a significant number of jobs to the future.
PwC found that by 2033, the industry has the potential to reach $109bn or 4% of the economy and employ more than 540,000 people.
The report also stresses that accelerating the use of technology in industry will ensure that Australia maintains its global economic position.
The internet and computing power are allowing technology companies to disrupt the global economy, leading to a redistribution of industry revenues (and wealth) across geographic borders.
The plan for the future
To move down the path to success, Noble says that Australia will need to encourage over 2,000 additional tech entrepreneurs each year to join the industry from the existing workforce.
He also emphasises that doing this will take some effort:
A successful Australian tech sector will take a concerted effort that includes entrepreneurs fostering a more open and inclusive culture, boosting the number of people founding companies, increasing success rates and ensuring students are taught computer science at an earlier age.
My hope for the long term is that success will breed success.
If we get things right, the opportunities that a high school graduate will have in 2023 will be vastly different – indeed, better – than today.
For this tech boom to occur, the report suggests five steps be implemented, including:
1. Enhance culture and community engagement.
Culture is key to accelerating the growth of a technology community and the report stresses that Australia’s tech startup community needs to continue to build a culture that promotes participation, success and angel funding.
The report also suggests that Australians work on their fear of failure, saying that it is a huge impediment to success, constraining the growth of our tech startup sector.
2. More entrepreneurs with the right skills.
Australia needs to rapidly increase the number of tech entrepreneurs, to 43,000 by 2033, and the report says that promoting the sector is key to growing the entrepreneurial community.
Currently only 54% of the Australian adult population considers entrepreneur to be an interesting career path, a figure which is well below other countries, and long term the report stresses that more Australians need to study computer science at university.
Only 2% of domestic graduates each year have this qualification but introducing computer science education into the K-12 curriculum may help solve this problem.
3. Open up markets to Australian tech startups.
The report highlights that Australia needs to open up their markets and provide a way in for tech startups because our domestic market of 23 million is considerably smaller than the US (314 million) or UK (63 million).
4. More early stage funding.
Funding for the Australian tech startup exists, but is in short supply.
Because of this there is considerable competition for funding at all stages of the startup cycle.
Currently Australia invests approximately $US7.50 per capita in venture capital per annum, compared to the United States ($75) and Israel ($150).
5. Improve the regulation environment.
The report acknowledges that Australia’s regulatory environment is relatively supportive of startups, but says there is always room for them to do more, such as bringing in an Employee Share Option Plan like the US and UK.