The technology industry has evolved from a loose network of fringe businesses to a profitable powerhouse within a decade, and Australia is set to reap the benefits.
A quick comparison of the most profitable businesses listed on Wall Street in 2008 and 2018 shows with remarkable clarity just how rapidly stock markets were taken over by technology companies.
In that time oil giant Exxon has seen its value drop and its market capitalisation shrink, falling from the top spot to clinging to ninth, while 2008’s 15th biggest business Apple – the first company to reach a $1 trillion valuation – now rules the roost.
In Australia, the likes of Canva, Afterpay and the unlisted Atlassian are on track to repeat the successes of technology giants in the US, and according to StartupAUS CEO Alex McCauley, that’s great news for the Australian economy.
“I’m not going to say we’ll overtake Silicon Valley, but I think we can be one of the top five countries for technology in the world in pretty short order,” he told The New Daily.
We’re probably already in or just outside the top 10, so there’s absolutely a possibility for Australia to capitalise on this wave of economic opportunity – if we play our cards right.”
Recent research conducted by StartupAUS – an advocacy group representing young technology companies – suggests that a new job is created for every $300,000 invested into the sector.
By that measure, around 4500 new jobs were created by the sector in the past 12 months alone.
And with the volume of venture capital being invested in the sector currently accelerating, that number is expected to increase in coming years.
“You can think of those big fund-raisers as an engine for new jobs in the economy – and not just any jobs but jobs in tech,” he said.
“These are really good, future-facing jobs. For the mums and dads out there, these are the jobs your kids want.”
Strategic approach is needed
A report by the CSIRO’s data science division, Data 61, estimates that digital innovation will deliver “$315 billion in gross economic value to Australia over the next decade”, but so far Australia captured a third less of the value other comparable countries have generated through digital innovation.
While these technologies represent on average 11.2 per cent of most advanced economies’ GDP, they accounted for only 7.4 per cent of Australia’s when the report was published in September 2018.
“Countries around the world are engaged in a global innovation race to cement their competitive advantage in the next wave of digital innovation,” the report said.
“Whilst Australia is likely to remain outmatched on the quantity of available investment for emerging technology, we can compete by developing scale in strategic areas.
“This means identifying technical and domain research strengths in the areas that are necessary to the industries where Australia has a competitive advantage, and then directing funding to them.
Education, talent, and hunger
Though Australia’s technology start-up sector has fared well in recent years, it still faces an uphill battle to advance further.
Mr McCauley cautioned that policy settings need to be supportive of the burgeoning sector to ensure it keeps growing.
YBF Ventures chief executive Farley Blackman, whose business runs two technology-focused co-working spaces for startups, told The New Daily the space faces the same challenges as all Australian businesses.
“There is generally a low appetite for risk when investing in new industries and technologies,” he said.
But Mr Blackman remains optimistic about the sector’s future.
“Challenges can be overcome through a combination of education, a mix of homegrown and foreign talent, a global mindset and a hunger and drive to succeed,” he said.
“Tech can be seen as a disruptor. But if leveraged, it is the single largest enabler to companies large and small.
“The mindset shift from tech as a disruptor to tech as an enabler is at the root of innovation, and it is that innovation that grows industries, grows jobs and grows the economy.”