‘The fundamentals are there’: Three factors which make Australia’s tech scene unique
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For many external market observers, Australia’s economy is dominated by two key industries; building, buying and selling houses (residential property) and digging minerals out of the ground (mining and resources).
It’s served us pretty well — to the tune of 27 years and counting without a recession. But on some levels, it may have left Australia slightly behind the eightball compared to other developed economies. (Australia isn’t exactly considered a tech hub by global standards).
More recently though, economic growth has slowed sharply. And pretty much every leading economist in the country now expects further declines ahead, as the housing downturn remains ongoing while the mining and construction booms have come to an end.
But according to global VC fund Antler, Australia’s economic makeup — defined by big industry — also presents a unique value proposition for a local tech scene still looking to fully find its feet.
The fund has just launched its Australian arm, and company partner Andreas Birnik says he’s on the lookout for innovative B2B platforms.
“I have a feeling there will be a lot of really interesting B2B opportunities here,” Mr Birnik told Stockhead. “Because you have the likes of BHP and the other big miners, you’ve got agricultural businesses, you’ve got a commercial wine industry”.
“So with oil, gas, resources, agriculture, your economy is to quite a degree heavily influenced by some sectors that have a relatively low level of digital adoption. These aren’t the cutting edge of digital technology. And that presents a good opportunity for tech startups to offer a service that improves efficiencies in those areas.”
It’s already an area of interest for other local VCs such as Equity Venture Partners — an Australian-focused fund which primarily invests in B2B software startups.
In addition, Mr Birnik said Australia’s cultural history and geographic location leaves it uniquely positioned for tech companies to exploit international growth strategies once they establish some success at home.
“I think there will be a lot of businesses that will be serving customers in the US and Europe, due to your cultural proximity. So ideas and products that work in Australia will also work in the UK and America,” he said.
“And then I think there’s a number of businesses here who will look to Asia, due to its geographical proximity. So I think there’s a lot of opportunities for businesses coming out of here.”
Lastly, there’s a silver lining to the fact that Australia hasn’t established itself as the Silicon Valley of the Asia-Pacific — significant room for growth.
Australia is an advanced economy with an educated population — both important pillars for the eventual transition to a tech-focused economy.
“Due to the sophistication of the economy, there’s a high level of talent here,” Mr Birnik said.
“At the same time, we believe the technology scene is underdeveloped — which in turn presents an opportunity in itself.”
“That’s why we’re moving early from Australia instead of late is because we think the fundamentals are there. A lot of people stuck in full-time jobs which they may find unfulfilling — they just need the right catalyst to grow their new business idea.”