In 2030 Australian people will own less and share more, and renewable energy will be a booming industry, according to Westpac. The bank has launched a new division to fund the emerging businesses it expects will drive the future economy.
Westpac released a report to coincide with the announcement, in which it claims the future of innovation in Australia depends to a large extent on the founders of the new wave of technology businesses. Currently such businesses make up only a tiny fraction of the national economy.
Today, scaling up technology businesses in Australia is challenged, Westpac says in the report, because of an immature local capital market, government and regulations, and a dearth of digital skills.
Funding emerging industries
Westpac’s new division is part of what it says is a necessary rethink of funding. The current capital market is hindered by “short-term thinking” and a risk-averse culture, placing it behind other countries like the US.
Westpac said its Emerging Industries Division will help address this by applying debt in a more “measured” way, including applying it earlier.
“We have taken the time to understand the business models and strategies, and test where it makes sense to apply traditional debt instruments to help fund growth,” said Reeta Dhar, National Head of Emerging Industries at Westpac.
“We now do this earlier than we have traditionally (once they had established a profitable track record).”
Westpac also suggested Australia could tap into its near $3 trillion of superannuation funds to support local startups.
“At its current size the Australian VC sector doesn’t have the depth of capital to fund networked companies such as the likes of global rideshare giant Uber, but if more of the super pool is directed to the ecosystem, Australian VCs have the opportunity to be global players,” the report says.
Government and skills challenge
Despite downplaying government’s role in driving the economic shifts earlier in the report, Westpac highlights grants and tax incentives as another viable solution to the “challenge” of the impact of regulation and government.
Going forward governments should do more, particularly in supporting startups in the low-carbon space, according to the report, which also calls for a reassessment of government procurement policies.
A skills shortage remains a problem in Australia, according to Westpac, although there are some positive signs. The report highlights new Sydney School of Entrepreneurship — a joint initiative between Universities and TAFE NSW to upskill the next generation of entrepreneurs — and the often overlooked skills of older generations.