Startups: We need better metrics
Sydney Startup Hub: Let's run a ruler over the funding commitment
Australia’s Startup Muster is in the market for a new CEO following the departure of Julian Tol less than four months after being appointed to the role in June.
The change in leadership, which is understood to have been amicable, comes in the middle of the company’s busiest period as it verifies and validates startup ecosystem data from its latest survey.
The Startup Muster 2018 report has a hard publication deadline of October 19, according to founder and director Murray Hurps, timed to coincide with the start of the Spark Festival in Sydney.
Why do we care? Because there are three levels of government spraying money at the startup sector through a firehose with little serious national effort given to measuring the impact of the taxpayers’ effort.
This is a somewhat dangerous place to be. The potential for insane levels of wastage gets bigger as the bets using public money get bigger.
This is not a commentary on Startup Muster, which is by far the best quick and dirty snapshot of the sector we have in this country. It has provided valuable insights into startup trend lines since the first Muster report was published in 2015.
Incidentally, Startup Muster has been a great example of industry self-help. Mr Hurps and co-founder Monica Wulff have done the sector an enormous favour. The industry needed better data, and these founded the mechanism to bring that data together via the Startup Muster.
So bravo and hear, hear. Well done. Startup Muster has done an excellent job. And now it is surely time to move that effort to a next level.
Because the bets are now getting bigger.
In New South Wales the government allocated $35 million over five years to build a Sydney Startup Hub. And now the fact of that investment of public is being used as evidence of the success of the startup ecosystem – and as a justification for an order of magnitude larger investment into the proposed Tech Precinct.
That’s just weird. There is no evidence whatsoever that $35 million was money well spent. Unless we are all living in Crazytown, we don’t know yet.
Which brings us to the Tech Precinct in Sydney. This is the somewhat audacious real estate play that brings together the powerful interests of the property, startup, education and research sectors. It’s a powerful idea with even more powerful backers.
But that doesn’t mean it’s good for everyone. And it certainly doesn’t mean it won’t be viewed cynically by a broader cross section of the community. Without better data about the public’s return on investment, it becomes a harder sell.
Next Monday is the last opportunity to submit your input into a very, very weird online survey (are bars and restaurants important to you as a startup founder?) and to put forward your own more detailed submission to that this precinct should look like.
The Tech Precinct proposal is likely to be at least a 10x bigger commitment of taxpayers money toward the sector than the Sydney Startup Hub. And probably much larger. Which is starting to look like real money.
The point is that we need to measure stuff better. Better metrics will deliver the twin benefits of underpinning better, more targeted policy – whether it is in relation to skills, or the taxation of capital, or even the allocation of prime real estate – and provides the evidence-based justification to demonstrate to the rest of the population that there is something in it for them too.
People will chuck rocks at me for saying it, but surely there is a case for a system of mandated data collection across the ecosystem to get a better understanding of core metrics.
Any company startup company that receives a government grant or government subsidy – including those warehoused in incubators, accelerators and co-working spaces that receive public funding – should be required to provide data across a set of simple, useful metrics.
And any company that has received venture backing should be required to do the same. If not quarterly, then half-yearly.
Yes, it might sound like the People’s Republic of Numptiness. But it would hardly be the first time government has sought to run a ruler over a strategically important part of the economy.
Talk to anyone in the startup sector and they will agree furiously that “investment” in the front-end of entrepreneurial activity is a no-brainer. Outside of the sector, opinions are somewhat more diverse.
Where an incubator and its startup tenants might see government money as an ‘investment’, others outside of the sector might just view it as public dollars being pissed up against a wall.
And rightly or wrongly, some people just see a bunch of entitled elites being conspicuously fabulous with other people’s money.