Innovation is a game everyone should play

As a startup founder it was fantastic to see David Coleman put the abolition of capital gains tax on startup investments on the radar of the federal government.

It’s something I’ve been speaking with representatives from state and federal government about throughout the year. Since his announcement a few articles have discussed how great this will be for startups and small business – no doubt. But to really foster innovation we need everyone on-board, people need to know why it can be great for them as individuals. I think a couple of parts of the narrative are missing to achieve this.

If we want to continue to enjoy high standards of living and a wealth of opportunities then getting society on board with innovation is imperative. But it is a challenge – not everyone wants to run a startup. More to the point, many people don’t know they exist – not everyone reads Startup Smart, BRW or even the business section of the Herald Sun. By making investing in startups more attractive, it raises the profile of startups and gives more people the opportunity to benefit from the burgeoning innovation economy.

Encouraging investment in startups is obviously great for startups but the benefits can spread much further. We have an opportunity to change the way our society views innovation and risk and to increase its appetite for both. Let’s explore the benefits of doing this.

Startups

Raising funds is one of the major challenges for entrepreneurs. With an increased investor pool, a startup founder will have greater access to funds, which means more time focusing on growth instead of chasing money. There is also another benefit for founders: investment would be from multiple investors, meaning less dilution of control for the startup.

Society

Encouraging investment in startups will help make society wealthier. By encouraging more people to invest in startups, more will profit from the growth of the innovation economy. At the moment the only people doing that are sophisticated investors, some accelerators/incubators and the startups themselves. This spreads the wealth beyond the already wealthy, giving everyone the chance to get richer, which turns innovation from a buzzword into something tangible that people want to get involved in.

Innovation stimulus

There has been a lot of talk about increasing STEM training, which is great, but so far it has all been about top down measures. There’s no point creating resources and quotas if people don’t want to study the subjects. To get uptake of the government programs, people have to want to do it.

With more people literally invested in the ecosystem, we’ll see more talk and encouragement of children/grandchildren of investors to enter the tech field. This will happen via osmosis and directly. Instead of hearing their relatives talking about rental properties or blue chips, they will hear them talking about startups and innovation. Kids will grow up wanting to be entrepreneurs or engineers or data scientists.

Having tasted success through their investments, relatives will actively encourage children along these career paths. We will see a bottom up increase in demand for STEM training. Coupled with the government focus on providing this training we will get the next generation of innovators that we need.

The challenge is changing people’s investment mindset. With global markets in flux, a possible property bubble and a buzz around innovation, now is the perfect time to introduce new measures to shift people’s investment focus.

With the right checks and measures, David Coleman’s suggestion could act as a much needed catalyst for societal transformation. A transformation that would see Australians become more supportive of innovators, more excited and more engaged about what is happening around them – hopefully this would lead to higher levels of happiness.

Let’s encourage smart investment, which leads to innovation, greater wealth, future jobs and a happier population. A wealthier, happier future sounds like a good one to me.

Luke Hally is the chief executive officer and founder of Victorian-based payments startup DragonBill.

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