My best budget: James Cameron, partner at Airtree Ventures
This week SmartCompany is speaking to key members of the SME and startup communities to find out what they want to see in next week’s budget.
This week SmartCompany is speaking to key members of the small business and startup communities to find out what they want to see in next week’s budget. This is the fourth instalment of the series, which will be published throughout the week.
Boasting some of Australia’s fastest-growing tech startups in its portfolio, including Canva; likely Australia’s most valuable private company, and Linktree; one of the country’s freshest unicorns, AirTree’s engine has powered some of the most successful tech companies launched in recent years.
And since its founding in 2014, the venture capital firm has picked 23 companies that went on to eclipse valuations of $100 million. Another eight have achieved unicorn status.
Most recently, AirTree Ventures has bet big on Web3, amid hype that has seen VCs globally clamour to get in on the ground floor of the new raft of companies engaged in blockchain and crypto technologies.
In 2022, it launched a new fund with $200 million dedicated to seed stage companies and $50 million to Web3 projects.
AirTree partner James Cameron wants to see even more growth within the Australian tech sector and says the company’s biggest challenge is helping founders “solve their biggest challenges”.
So as the federal budget approaches, Cameron shares key areas where the government can accelerate Australian innovation.
What are the biggest challenges for the startup sector?
Speaking to SmartCompany, Cameron says one of the biggest hurdles for startups continues to be “accessing the talent” they need to grow, followed by chasing capital and customers.
Cameron says he takes a “realistic” view of the impact any government can have on the startup ecosystem, pointing to the majority of a company’s success coming from “the talent and ambition of the founders themselves”.
“Startups don’t wait for anything in the budget announcements to give them the green light — they go out there and make their own luck,” he says.
However, the federal government in particular has the ability to pull policy levers that make for a smoother path for growth.
The government’s role is in “removing roadblocks and creating an attractive playing field for all startups,” he says.
Taking the handbrakes off
In terms of policies he’d like to see enhanced to better serve the startup ecosystem, there are three areas Cameron sees as having the greatest impact: changing the definition of sophisticated investors; improving employee share scheme rules; and fixing paid parental leave.
The current definition of who is a “sophisticated investor” for the purpose of early-stage investments is a huge roadblock to encouraging a broad and diverse ecosystem of angel investors in Australia, Cameron says.
“The current rules exclude a range of informed and experienced individuals who would otherwise be willing to make angel investments, particularly early-stage startup employees and senior leaders across the startup ecosystem,” he says.
“This is a handbrake on the startup ecosystem and needs urgent attention.”
In contrast with similar schemes in the UK and elsewhere, Australia’s angel investor tax incentives (ESIC) are very narrow and only apply to a small number of very early-stage companies.
As a result the take-up hasn’t been strong and it needs to be re-evaluated, Cameron says, to encourage a broad and diverse ecosystem of angel investors.
Globally competitive employee share scheme
Employee share schemes (ESS) offer employees benefits including shares in the company at a discounted price, and share options.
While some tweaks were made to the ESS rules in last year’s budget, it’s still “a long way off being competitive internationally”, Cameron said, and this is hurting startups’ ability to attract and retain great talent.
Diversity through parental leave
“Improving paid parental leave is not just an issue for startups,” Cameron says.
More generous and equitable parental leave schemes have been a major topic of conversation in recent months, with Linktree just one of a raft of companies expanding parental leave and introducing miscarriage leave policies.
“It would also encourage more diversity among the founder community which is sorely needed,” Cameron says.
“Improvements to childcare subsidies and changes to encourage parents to jointly access paid parental leave would be a great start.”
What keeps you awake at night?
While Australia’s international borders have now reopened to skilled migrants and visa holders, the conversation about how Australia’s burgeoning tech sector can meet its hiring needs locally isn’t going away.
“The rise of Australia’s flourishing tech scene — now the country’s third largest contributor to GDP after mining and banking — could be hamstrung by a shortage of great talent,” Cameron suggests.
He hopes to see a greater government role in creating talent pipelines to power the sector.
“We need to be able to train homegrown STEM talent to help build the creative and innovative firms of the future, and a constant flow of high-quality skilled talent from overseas,” he says.
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