Australia's start-up scene needs to move beyond city hubs

Defining and implementing effective industry policy for regional Australia is difficult. Look at any government’s regional development policies in the past 30 years and you will find a mixed bag of results. More underwhelming than overwhelming.

As for building tech companies in the bush, or even tech-enabled start-ups, forget about it.

Well, almost. Because as challenging as it might be, perhaps this is changing? Surely if there has been a moment when smart and innovative tech entrepreneurs of the “Real Australia” can succeed and grow to scale, that moment is now.

In ‘Start-up land’, anyone with a decent broadband connection can build a global business, right? In the new world order, Start-up land is supposed to be everywhere.

Spread the wealth or shut it down?

Well, it doesn’t quite work that way. Growing a tech start-up in Australia is difficult, and the challenge is greater outside of capital cities. This has led to questions about the sanity of government decisions that keep pouring industry assistance into regional areas.

Australia’s entrepreneur du jour Mike Cannon-Brookes from Atlassian says government should focus on a single city, Sydney, in order to build critical mass in the tech and tech-enabled start-up ecosystem.

If government support is spread out across the regions (and other capital cities), it is diluted and counterproductive, Cannon-Brookes recently told the SydStart conference.

The comments are a bit silly (and unlikely to get support from anyone living outside of inner-city Sydney.) However, his underlying recognition of the value of ‘critical mass’, of co-location, and of a free-wheeling ecosystem of a size that can generate its own momentum are important and well made.

The value of tech-based entrepreneurialism to the community goes far beyond the building of tech companies, although that is one benefit. There is also great value in what entrepreneurial innovation in tech has on the mainstream businesses it touches (and this might be through a simple process of an entrepreneur moving between mainstream businesses and new ventures through the course of a career.)

The direct and indirect economic benefits of a strong start-up sector to the national economy are also measurable at the local level. For a regional community, it is arguably more important.

It’s not all about Sydney

Building a tech or tech-enabled start-up in a regional centre is challenging, but it is certainly possible. How else do we explain companies like 365cups.com from Wagga? Or Cooma’s Birdsnest? Or even eWay from Canberra?

One way to explain it is this: As hard as it is to believe, none of the founders of those companies wanted to live in Sydney.

My favourite current favourite success story is 365cups. And it is important that we celebrate the successes.

Founded in late 2010 by Simone Eyles and Mariusz Stankiewicz, this company started as a coffee ordering app but is now a highly elvolved platform-as-a-service to the hospitality industry.

365cups has customers all over Australia, New Zealand and the US, including national chains. Its growth trajectory is getting steeper. It is still owned by the founders, and has self-funded its growth. And it has no intention of leaving Wagga.

But Eyles acknowledges the very real support of federal and state industry support initiatives. These are not region-specific programs, but were generic business support programs available through the Wagga offices the NSW Department of Trade and Industry, and the Australian Government’s Industry department.

Commercialisation Australia was incredibly important, Eyles said, in assisting with business planning to cope with growth and expansion, and in protecting the company’s intellectual property. Eyles says the $50,000 Commercialisation Australia grant paid for IP lawyers - and the company last week received confirmation of its Madrid Protocol trademark protections.

This would not have happened without that support. And right now, when the company is enjoying international expansion, it could easily have found itself in great difficulty.

Local council has been “incredibly supportive, very creative and forward-thinking” about engaging with a new this new breed of company that is emerging in Wagga. A community of entrepreneurs and startup aspirants has formed.

Eyles started a meetup group of entrepreneurs with two others from the town. That first meeting was just the three of them. But a recent meeting where Ruslan Kogan was presenting attracted about 200.

When Mike Cannon-Brookes was talking about pouring all government’s tech support efforts into Sydney rather than the regions, he did allow that some companies whose might be in agriculture or other regional focused industry may be better off outside of Sydney.

Which of course makes sense, and Eyles says many of the entrepreneurs in Wagga are looking at eco-tourism or agriculture-related businesses. There is also strong collaboration between the Charles Sturt University campus, including its excellent agricultural programs.

Living the start-up dream

The point, I think, is that generic programs work (and Commercialisation Australia was one such program. We eagerly wait details of its replacement).

No-one knows where the next well executed business idea is going to come from, and industry development policy must avoid having entrepreneurs try to shoehorn their company to match the constraints of a funding program.

For Eyles, the assistance programs have been critical. Commercialisation Australia in particular, despite long and painful application process, was crucial. She is extremely grateful.

365cups has won a bunch of awards. It’s currently the subject of a short documentary film about the journey of a start-up born on the banks of the Murrumbidgee. Eyles says when they founded the company, “ were a start-up before we knew what a start-up was.”

The company has a slew of new features and product entering beta. It has developed highly-evolved systems and processes to grow. Eyles says, 365cups is - as the saying goes - a very big company that is starting small.

Right now the founders are happy to have total control of their direction. A few potential investors and partners have flown to Wagga for a coffee and a chat. But none of the conversations has been interesting enough to change the current structure.

To hear Eyles tell it, the founders are living the start-up dream. And being in Wagga is a big part of that.

“We are not at the mercy of anyone,” she says. “We love what we do. We love the people we work with.”

“It’s not a hobby, and it’s not a lifestyle, but the creative freedom that we have is incredibly powerful. It’s hard to see the amount of money that could buy that,” Eyles said.

James Riley has covered technology and innovation issues in Australia and Asia as a writer and commentator for 25 years. Read more from James Riley at www.InnovationAus.com or follow him @888riley on Twitter.