What does the government’s new innovation focus mean for the media and marketing industries?

Alan Jones BlueChilliMalcolm Turnbull wants to turn Australia into an innovation nation. Yahoo! Australia & New Zealand co-founder and startup evangelist of BlueChill Alan Jones, looks at what is in it for the media and marketing industries.

On Monday the Federal Government released a raft of new policy initiatives under the umbrella of the National Innovation & Science Agenda. Over four years from mid-2016, the government will invest $1.1 billion hoping to incentivise innovation and entrepreneurship, reward risk taking, and promote STEM (Science, Technology, Engineering and Maths).

Like all the cool government announcements, it has a hashtag #ideasbloom and you can learn more here.

As tech startups would say, it sounds awesome and a billion dollars of industry support seems like a lot of money to anyone who isn’t in the mining industry. But if you’re not the next Mark Zuckerberg, is there anything in this for you, dear Mumbrella reader?

The short answer is: no, not very much, not very soon. The funding will address four priority areas:

● Culture and capital (to help businesses embrace risk and incentivise early stage investment in startups);

● Collaboration (to increase the level of engagement between businesses, universities and the research sector to commercialise ideas and solve problems);

● Talent and skills (to train Australian students for the jobs of the future and attract the world’s most innovative talent to Australia); and

● Government as an exemplar (to lead by example in the way government invests in and uses technology and data to deliver better quality services).

Of these four, the priority areas most likely to affect your business are ‘culture and capital’ and ‘talent and skills’: the latter perhaps only because even more of the best and brightest young professionals will leave marketing and media to risk everything for a chance at The Full Zuckerberg, but the former because maybe some of the capital and risk changes could make it easier for you to raise investment and recover from failure.

The long answer perhaps should begin with a question: are you a startup?

Readers with the time to read will notice there’s not a lot of time spent defining what a startup actually is in the announced strategy.

In the tech startup industry we talk about startups using new technologies to create a fast-growing businesses. But I’ve heard many people describe their new entrepreneurial venture as a startup, whether it’s a new mobile messenger app or a restaurant chain or a legal practice. Who am I to say they’re wrong? Did I trademark the word “startup”? I did not.

If you’re a hard-scrabbling online media business counting on tech to publish news stories and analysis to a growing audience (like, say Mumbrella) is that a startup? Yes, probably. Is it a tech startup? Maybe.

What if I’ve got a hard-scrabbling social media agency using a mix of off-the-shelf and in-house-developed tech to track all our hashtags, emoticons and virals? Is that a startup? Yes, almost certainly, and quite possibly you’re a tech startup if you can show a significant or growing proportion of your revenue is derived from the in-house tech. Definitely if you’ve started licensing that tech to your clients.

The measures detailed in the culture and capital section of the agenda include tax relief for investors in early-stage startups. Those investors will benefit from a 20 per cent tax offset capped at a maximum of $200,000 per year and a capital gains tax exemption on any return on that investment if they hold it for more than three years.

That sounds like something which could make it a lot easier to raise some money from investors to grow your advertising agency, except that the agency needs to have operating expenditure of less than $1 million and income of less than $200,000 to qualify, meaning that it would need to be a very new advertising agency indeed.

Better news if you expect to fail though: the changes will make it easier to avoid total failure, and if total failure is unavoidable, they will allow you to get back on the horse sooner.

The old “same business test” was used to prevent you from carrying forward losses from previous tax years if you change what your business does. It will be replaced by a “predominantly similar test” designed to allow you to learn from a bad year or two. You ought to be able to carry forward your losses from your “Uber for Social Media Strategists” business to your newly-profitable “Uber for Disruptive Innovation Agents” business.

The “embrace risk” theme of the changes will allow your business to skate closer to the edge of disaster without being forced to go over the event horizon. As a company director you’ll avoid personal liability for insolvent trading if you appoint a restructuring adviser to develop a turnaround plan, and contract clauses which allow contracts to be terminated solely due to an insolvency will no longer be enforceable.

If it all goes down the plug hole despite the turnaround plan, and you have to go down with the ship, the Government intends to reduce the current default bankruptcy period from three years to one year, meaning you’ll pop out at the treatment works and be back knocking on doors much sooner.

Learn more about these changes at www.innovation.gov.au.

  • Alan Jones is an original co-founder of Yahoo! Australia & NZ (now Yahoo!7) and evangelist at startup accelerator BlueChilli. Find him on Twitter at @bigyahu

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