Innovation in a vacuum

Brisbane (and Australia, for that matter) needs more crazy rich people willing to invest in technology startups. Probably mindbogglingly obvious, but that’s the conclusion I’ve drawn after reading another of Paul Graham‘s insightful essays. Brisbane does not have nearly enough venture capitalists to create a critical mass of technology companies. This means that despite the existence of places like UniQuest and inQbator, any innovative ideas produced by universities, CRCs, NICTA and CSIRO (and I’ve seen a few of them) are released into a near vacuum, with the fruits of this labour dissipating according to the second law of thermodynamics. Only a critical mass of startups will have enough gravity to prevent this research fizzling away to nothing or leaping across the Pacific Ocean to the US, where the capital market is far more accommodating of crazy ideas. A critical mass of venture capitalists is required to gain a critical mass of startups, and once this is in place, a chain reaction is started whereby startups beget more startups. When this chain reaction gets going, that’s when we’ve created a sustainable, innovative technology industry.

So, what do we do to get the ball rolling? How do we get rich people to invest in our work? The first step might be to make them aware of what we do, which means inviting them to our workplaces, networking with them at dinner functions (hell, we the researchers should be organising these functions and not simply waiting for someone to do it for us) and marketing ourselves. While some of us might be doing this to some extent, we aren’t doing it nearly enough. It’s important to note that I’m not talking about targeting existing VCs – they’re already doing a fair enough job. I’m talking about attracting those rich people around Brisbane who aren’t currently part of the VC and angel investment scene. Think about all that cash hulled up in Hamilton, Ascot, Fig Tree Pocket and other leafy suburbs. It’s probably going into resource stocks, property and superannuation. The challenge is to convince these people to do something more exciting and potentially much more rewarding with their dollars. The goal is to enlarge the pool of funds available for investment in technology startups. Why will this work? Well, there’s a good chance it won’t. But I’m convinced the way to get more rich people involved in funding startups is not by trying to demonstrate the merits of any particular new idea, but by holding a conversation with them over the long term and getting them to buy into the big picture. Maybe this has been tried on numerous occasions before, but because it failed then doesn’t mean we should cease the conversation. Let’s organise a few functions with the help of organisations such as the AIC, scrape together the dosh to fly the Paul Graham’s and Guy Kawasaki‘s of the world to Brisbane and have them speak at the functions. These are small steps for sure, but they are steps that need to be taken if the Australian technology industry is to improve its position in the world. The other thing that might have to change is rates of taxation, but let’s do one thing at once!

I say it can be done.

Note: This article is covered by the standard disclaimer.