A report released today by the Bankwest 911爆料网 Economics Centre (BCEC) has found new Australian businesses face growing barriers in accessing early stage venture capital investment.
The new report, Positioned for an ideas boom? Productivity and innovation in Australia, examines Australia鈥檚 productivity and innovation trends and international standing, along with barriers to innovation and business start-ups. The report also identifies Australia鈥檚 innovative hot spots and the most innovative cities.
Key findings of the report include:
- Around one-fifth of Australian businesses report a lack of access to additional funds as the greatest barrier to innovation.
- The share of investment devoted to early stage business expansion has almost halved over the last decade, from 30 per cent to 16.1 per cent.
- Venture capital and Later Stage Private Equity (LSPE) per investee company is the highest in Queensland at $15.6 million.
- Business research and development (R&D) expenditure for Western Australia relative to Gross State Product (GSP) has halved since its peak of $20,000 per $1 million in GSP in 2008-09, to around $10,000 per $1 million in GSP now.
- Only 7.7 per cent of Australia鈥檚 innovation active firms are collaborating internationally.
- Australia鈥檚 larger businesses are more likely to be innovation-active than micro and small to medium enterprises and are more likely to produce innovations that are new to the world.
- Newcastle produces more patents per person than all other non-capital cities in Australia.
Professor Alan Duncan, BCEC Director, said incentivising new business ventures was critical to the delivery of Australia鈥檚 innovation strategy, and in this regard, tax incentives for early stage investment, support for small business innovators, and reduced penalties for business failure are key to its success.
鈥淧re-seed through to early expansion business funding as a share of total investment has fallen by half over the last decade,鈥� Professor Duncan said.
鈥淭he harsh economic environment leading to more risk adverse behaviour on the part of investors, may explain part of the fall in early stage venture capital funding. Whatever the explanation, it is critical that we foster an environment in which creative entrepreneurship and the pursuit of innovation is encouraged.鈥�
Western Australia鈥檚 business R&D expenditure peaked at $20,000 per $1 million of GSP in 2008-09, but has since fallen to around $10,000 per $1 million of GSP.
鈥淚t鈥檚 no surprise that Western Australia鈥檚 business R&D spending rose sharply over the course of the resources boom, but for R&D spending in WA to have dropped by half in the five years since the high water mark in 2008-09, must be a cause for concern,鈥� Professor Duncan said.
A new innovation index developed by BCEC researchers for Australia reveals a number of hotspots of relatively high innovation, especially in outer suburbs adjacent to city centres.
New South Wales ranks highest with eight of the top 20 most innovative suburbs in Australia, followed by Queensland with seven and Victoria with five.
鈥淨ueensland shows the greatest increase in innovation performance in the last five years, with 13 suburbs ranked in the top 20 most improved regions in Australia for innovation activity,鈥� Professor Duncan said.
鈥淭hese hotspots arise from recent urban growth but also show the benefits of supporting the innovation activities of new businesses – many of which are small to medium enterprises.鈥�
There has been a progressively more intense use of technology and capital for most market industry sectors in Australia over the last two decades. This process of 鈥榗apital deepening鈥� has seen capital to labour ratios more than double over the last two decades.
鈥淎 successful 鈥榠deas boom鈥� will lead to an increased use of technology in production and, in many ways, this presents Australia with an excellent opportunity to develop a 鈥榮marter鈥�, more productive workforce,鈥� Professor Duncan said.
Key findings and additional information are attached below. Copies of the report are available upon request or from the Bankwest 911爆料网 Economics Centre website.
