Denham Sadler
December 20, 2017

LaunchVic still a troubled target

StartupLand

LaunchVic still a troubled target

Philip Dalidakis: Still drawing fire over LaunchVoc governance issues

The Victorian state opposition has fallen short in its bid to force an inquiry into problems at LaunchVic, the organisation overseeing the deployment of state government’s $60 million innovation fund.

Shadow investment minister Craig Ondarchie moved a motion last week in the Victorian Legislative Council for the Economy and Infrastructure Committee to inquire into the operations of LaunchVic after a number of controversies involving the organisation over the past year.

But the motion was rejected by the Victorian government with the help of the Greens, with a final vote delayed until next year.

The opposition wants an inquiry to focus on LaunchVic’s governance, business activities, recruitment, funding and criteria, the appropriateness and use of funding provided by the state government in the context of its objectives and innovation minister Philip Dalidakis’ involvment with the organisation.

The inquiry would have also looked at LaunchVic’s relationship with tech conference StartCon – which fell apart in acrimonious circumstancesand the “contract, funding and integrity between LaunchVic, 500 Startups and its former CEO”.

Mr Ondarchie told Parliament there were many questions to be answered about LaunchVic.

“In the absence of any answers, in the continuing dodging and weaving by the minister, we have to take it through this process because Victorian taxpayers need to know what has happened to their money. With LaunchVic, something does not seem right,” Mr Ondarchie said.

Shadow innovation minister David Southwick had been scheduled to have a briefing with LaunchVic chief executive Kate Cornick earlier this month, but this was cancelled at the last minute.

While Mr Ondarchie said no further communication had been received from LaunchVic, the government has said that this briefing has been rescheduled for January next year.

LaunchVic’s troubles this year began with revelations of sexual harassment allegations made against renowned 500 Startups founder Dave McClure.

The independent government body had earlier announced a near-$3 million grant to the accelerator to run a localised version of its program in Melbourne. Mr McClure had attended the launch of the local program as a guest of the state, after he had already been stood down by 500 Startups in light of the accusations.

The Victorian government and LaunchVic were not informed about Mr McClure’s activities or his demotion until after they were published in the media.

LaunchVic initially stood by the funding decision and announced that the program would go ahead, but eventually decided to pull the plug when it lost its local head of the program.

“What has happened is it has sent a terrible message to conference organisers and the startup community, the innovation community, right across the world that Victoria just cannot get its act together,” Mr Ondarchie said in Parliament.

LaunchVic has also lost several members of its board, with nine directors departing in the last year.

The organisation’s initial 11-person board was reduced to five following the resignation of chair Ahmed Fahour at the start of this year, while Elana Rubin, who served as acting chair for most of this year, left the organisation last month.

LaunchVic has now dished out $11.4 million in funding to 28 projects across three funding rounds. There are also five funding rounds that have closed for applications but still waiting a decision, with several well overdue.

The opposition also zeroed in on LaunchVic’s funding of tech conferences this year that didn’t end up running.

The Girls in Tech Catalyst conference and Above All Human were both provided funding to run their events in Melbourne in 2017, but neither was held – both have been postponed.

While Mr Dalidakis did not speak on the motion, government MP Jaclyn Symes confirmed said the inquiry would place an unfair burden on the LaunchVic team of 11.

“Mr Ondarchie just not liking the answers he is getting is not a reason that we should implore a parliamentary committee to use its resources to seek the answers that Mr Ondarchie wants to hear,” Ms Symes said.

“Victoria’s startup community has never been more important and visible, and LaunchVic continues to be the force behind its success.”

Ms Symes pointed to a recent review of LaunchVic by the Victorian Auditor-General’s office, which produced only two recommendations: that the organisation’s general journals should be prepared by someone other than its chief financial officer, and that minutes of board meetings should be signed by the chair.

“These were very minor areas, and the recommendations have been accepted and implemented by the organisation.

“LaunchVic is an organisation that has considerable governance reporting processes in place, and importantly they have already been independently reviewed, as is standard in any government business enterprise,” she said.

The Victorian Greens opposed the inquiry motion, with MP Nina Springle saying she had a briefing with LaunchVic earlier this month to outline their work and governance structure.

“In my view LaunchVic is a much-needed initiative that aims to support Victorian startups and entrepreneurs and in turn develop a wider startup culture and ecosystem in Victoria,” Ms Springle said.

“I could see that the role they play is really critical in how we are advancing technological innovation in Victoria. It is quite surprising that it has already caused so much anxiety within the Coalition ranks, and there has been so much attention on it.”

But she did say that the concerns surrounding key appointments at LaunchVic and its governance structure are “legitimate”.

“We should all be concerned about how organisations that are funded by the government are structured and about their accountability and transparency mechanisms,” she said.

“I think that is a really valid concern. What I think I am more concerned with is if this is the right structure to get the outcomes that the government is looking for in this particular sector.”

Ms Springle did say that the Greens would be open to supporting an inquiry if Mr Ondarchie did not get sufficient answers from a briefing with LaunchVic on the issues outlined in the motion.

“I suspect that a lot of the questions that you are saying you have not had answered could be answered in a session like that. That being so, I think from my perspective this motion is premature,” she said.

“If Mr Ondarchie brings back a motion in six months after he has had briefings with LaunchVic and other bodies that can give some more substance to what the allegations are, then we would be prepared to look at it again, but at this point in time the Greens will not be supporting the motion,” she said.

Australian Sex Party leader and Victorian MP Fiona Patten said she had also recently met with LaunchVic to discuss these issues, but that she still has concerns surrounding how it measures success.

“I certainly think that LaunchVic is a great idea. I think helping incubate startup companies in this 4.0 time of technology is something that the government should be supporting and something we should be doing, and it is great,” Ms Patten said.

“But I just coul not get a handle on how we were measuring the success and how we could understand that $11.4 million that we invested in the startup ecosystem. I do not think my concerns about the measurability of LaunchVic were met.”

“I think this is actually a larger issue. There just seems to be this general avoidance in getting transparent and clear information.”

The debate pushed back a final vote on the motion, meaning this won’t be done until next year when Parliament sits again.

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