Google Predicts Australia Tech Boom; Technology startups could contribute nearly as much to the economy as the retail and education sectors in two decades’ time

April 22, 2013, 8:32 PM

Google Predicts Australia Tech Boom

By Caroline Henshaw

Technology startups in Australia could contribute nearly as much to the economy as the retail and education sectors in two decades’ time, according to Google Inc. GOOG +0.03%

Google’s study, co-authored by PricewaterhouseCoopers, predicts Australia’s technology entrepreneurs could contribute up to 109 billion Australian dollars (US$112 billion) a year to the economy and directly employ 540,000 people by 2033.

If achieved, that would mean tech startups would make up 4% of Australia’s GDP. That’s almost on par with education and training, Australia’s third-largest exporting sector accounting for 4.2% of the economy, according to government statistics. Retail and trade contribute 4.4% of GDP.Currently, the fledgling tech industry employs just 9,500 people and contributes around 0.1% of the country’s economic output—less than arts and recreation—according to Monday’s report.

“It’s really since 2007 that we’ve gained a tech startup culture,” PwC partner Jeremy Thorpe, who worked on the report, told The Wall Street Journal. “We missed, in a sense, the first tech boom and we’re late for the second tech boom, so we’re coming from a weaker position.

Predictions that Australia’s tech sector will boom in the coming years are nothing new.

Industry participants point out that many of Australia’s best tech minds have returned south in recent years, fleeing the economic uncertainty in the U.S. and Europe in favor of one of the few developed countries not to have fallen into recession.

Banking and mining are siphoning off fewer engineering graduates these days, while the growth of industries like healthcare is creating more opportunities for people to launch innovative new products.

Meanwhile, Asia’s rise and the growing pool of capital in Australia have made it more attractive to international investors. That became clear this month when Twitter bought Australian music start-up We Are Hunted, sparking speculation the U.S. company may be hoping to follow Spotify down under.

Yet there are still key factors holding Australia’s technology sector back.

Part of that is the dearth of skilled entrepreneurs in the country, where less than 2% of domestic graduates have computer science qualifications. Stringent regulations also preclude many small companies from the A$41 billion of contracts the government puts out every year, according to Google’s report.

Venture capital is also in short supply. In 2012 only A$53 million was invested in 62 first-round deals in Australia.  In Silicon Valley and San Francisco, that much went into angel investments in the third quarter of last year alone.

But even more important to jump-starting the industry, it seems, is a sea-change in attitude to entrepreneurship.

While Google and PwC reckon Australia ranks ahead of other developed economies, such as Israel and the U.K., as a favorable environment to start up a business, it languishes in terms of entrepreneurial spirit. On that scale, even Europe’s economic pariahs—Greece, Spain, Italy and Portugal—rank higher.

“We need to act now so that we become a nation of creators,” said Alan Noble, Engineering Director of Google Australia.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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