Last week, we were one of many startups and small businesses to be gutted by the sudden (and silent) suspension of Investment NSW’s MVP Ventures grant program.
One short email turned our plans for the year upside down.
Just last month, we publicly praised the NSW government’s industry-leading program as a model for the federal budget.
Far from benefiting the economy through cost cutting, this is clearly an inevitable political pawn reaction. It’s a sneaky maneuver to ensure that the New South Wales Treasury and government are more broadly aligned and avoid short-term blows from the opposition over reckless spending. What it did is cause companies to hit a wall at critical moments. The impact will last for years in the local startup community.
catastrophic future plans
As things stand, Australia is losing its future stars due to rising costs and difficulty in obtaining funding.
Our recent seed raise surprised many in Australia, as it is notoriously difficult to get funding from local venture capital. Startups are also plagued with overhead costs. The ‘hubs’ that have popped up in our cities are great incubator spaces, but very expensive. Also, the regulatory hurdles are costly to overcome.
We may be one of the lucky companies with private funding, but that grant was still allocated to implement a hiring plan that would allow us to scale our business more quickly. For others, it would be devastating, as entire lines of work are based on these grants.
money and time is thrown down the drain
Most disturbingly, the suspension applies to existing applicants as well as new applicants. This left many businesses who were literally waiting for their money completely out of money. Worse, the application process is so cumbersome that some companies pour tens of thousands of dollars into accounting firms to help them successfully apply for grants. A huge amount of time and money will be wasted.
Future unicorns won’t cross the ‘Valley of Death’
When I spoke with one of our advisors, they described the road to commercialization for startups as “the valley of death.” It must be remembered that MVP Ventures is aimed at ‘high potential’ startups based in New South Wales and can make millions (or billions) across the valley. . I have no doubt that there are a few “unicorns” among the population affected by this loss who may never cross the valley.
It’s not just MVP Ventures. Other subsidies, such as manufacturing and local job creation, have also been frozen and would appear to be fairly important areas.
A common thread among the startup community is that Investment NSW, which we thought was familiar with the needs and timings of the commercial world, is completely new to it.
Work cannot be put on hold for 6 months while a ‘review’ takes place. The government’s ignorance of important start-ups is short-sighted and deeply regrettable.
- Ben Zyl is co-CEO and co-founder of payments startup Waave