First birthday celebration anyone?

It’s a question you often hear from new parents – how should you celebrate your baby’s first birthday, especially when they won’t remember a thing about it? Yet, a first birthday is more a celebration of parenting than an event for the child. It’s a time to congratulate each other, to mark an occasion and say we survived the first tricky 365 days.

This time for celebration extends to our government, as they are the co-parents to numerous policies and initiatives. And 1 July 2017 marked the ESIC investment framework for the early stage innovation community in Australia, a first birthday.

So readers, Happy Birthday!

Much like the impact a newborn can have, there have been many distractions from the magnificent news of ESIC’s arrival. In a period that delivered us the 2016 Federal Election, Brexit, Trump and the like, one could easily be forgiven for not remembering this momentous occasion of a very important policy.  While it won’t be relevant to everyone, it is an important milestone for those in the innovation and investment sectors.    

Why should you be celebrating? Well, it could very well be the difference between success or failure.

The concept of offering tax and financial incentives to encourage investors to direct appropriate flows of capital into the innovation startup community was conceived in December 2015, under the Turnbull Government’s National Innovation and Science Agenda). A first and important step in this conception phase was reaching out to the Australian investment community for help. Their challenge? How to best open up new capital flows to stem the 4500 startups failing each year due to lack of access to early-stage capital.  

Using the power of Australian culture to “save” tax was the carrot, a new investment called an Early Stage Innovation Company has been created as the delivery vehicle for the carrots.

As most people within the startup community recognise, the Australian investment community is relatively small and tight-knit, with limited focus on providing seed capital to ideas and more focused on turnarounds, opportunities and M&As of established businesses. Therefore a paradigm shift occurred when the government took an egalitarian and inclusive approach by opening up the investment possibilities to allow retail, SMSFs and investors not just from the big end of town to participate.  

Whilst the projected $1Billion of new investment over the first 3 years of the ESIC program sounds like a big number, in the scheme of Australia’s saving pool it won’t register a mention. However, the taste sensation is often reserved for the sweet surprises of little packages.  

The enabling ESIC legislation received bipartisan support in the Federal Parliament, delivering a swift piece of tax legislation in record time.  Lengthy delays in the preparation and birthing stages were avoided. Delivered by way of Royal Assent in mid-May 2016, the legislation commenced on 1 July 2016 and provides unparalleled benefits for the early-stage community of entrepreneurs and investors.  

So, this 1 July, raise a glass to both sides of politics for their foresight and boldness to create the framework for Australia’s prosperity through innovation and investment in the 21st century. We are excited by the opportunities in 2018, for new industries to be seeded, early stage ventures to be accelerated and investors to gently shake their portfolio.