Dealing with a constantly changing regulatory landscape, startups will often find themselves having to contend with a vast number of policy issues that directly affect their business. This article outlines some of the most pressing public policy roadblocks and opportunities for startups currently facing startups in Australia.

1. Access to Talent

Issues of human capital have long been a predicament for startups, impacted by the difficulties that come with attracting local talent in the face of a technological brain drain.

The current visa system is not appealing enough to attract foreign founders to relocate and establish themselves in Australia, given it does not take into account entrepreneurial traits when assessing applicants. This can only negatively affect Australia’s reputation as a destination for innovation.

However, pleasing news on this front has been the announcement of a new entrepreneur visa, provisional on the capital backing of that entrepreneur by a third party. This scheme, provided for under the national innovation agenda also encourages the immigration of those with research qualification in STEM (science, technology, engineering, mathematics), awarding bonus points under the Points Tested Skilled Migration programme to those looking for permanent residency.

Similar visa programs have led thriving startup ecosystems like the US, where 60 percent of startup founders are first or second generation immigrants. As such, this new visa scheme has real potential to herald similar successes if implemented in November 2016 under the Innovation Statement’s proposal.

2. Directors’ Liabilities

With startups already a high-risk venture, a voiced concern of the startup industry in Australia are the company director liability rules, which increase founders risk exposure and disincentivise prospective board members from joining to advise and mentor founders.

Presently, there is the potential for company directors to be liable up to the value of $340,000 and face up to five years imprisonment. These are, to cite an AICD study, some of the world’s most stringent insolvency laws and ones that detract from positive investor and entrepreneur sentiment.

The system more preferrable to startups is similar to that which exists in the UK. This framework would allow companies to continue to trade even if insolvent, so long as the directors believe that there is a reasonable likelihood the company’s finances may improve.

3. Open Government

Open government presents significant opportunities for startups to capitalise on Big Data. Since the finalisation of Australia’s commitment to the Open Government Partnership (OGP) in November 2015, the Department of Prime Minister & Cabinet (DPMC) has prioritised increasing access to searchable and non-proprietary public data in the OGP action plan.

A recent successful example of how open government principles have been implemented innovatively by the Department of Prime Minister and Cabinet is DataSmart, a public-private partnership designed to source and incubate business looking to leverage government data.

A much-lauded venture to emerge from the Datastart program has been CohortIQ, a platform which aims to minimise the estimated 235,000 avoidable hospital admissions per year. Other participants were Gemini3 a job sharing platform, and Comployment, a small business startup intended to help SMEs check the compliance of their employment arrangements.

As the government engages in further consultation with stakeholders, it is expected more initiatives such as these will follow suit in line with its the commitment to tailor the OGP to maximise the availability of science, research and other technologies to the private sector.

Key Takeaways

While these are by no means the full extent of public policy priorities for startups, they do encompass three main areas where startups would benefit from more favourable legislation. Speak to one of our startup lawyers to find out how your startup can best make use of and navigate the regulatory schemes currently in place.

Anthony Lieu

Next Steps

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