The technology sector in Australia is thriving, and it's an exciting time to see the growth and potential of the industry. With the increasing demand for cybersecurity and the shortage of cyber defenders, the sector is expanding rapidly, attracting new players and investments. However, this is just the start of the growth potential for the Australian tech industry.
In a recent interview with Wyatt Roy, executive director of the Technology Council, and Lawrence Patrick from Zirilio, the future of the Australian tech sector was discussed in depth. It was an opportunity to analyse emerging trends and developments in the tech sector and the role of government in supporting and fostering this growth.
“How can we increase the speed of capital deployment in early stage companies? In comparison to Silicon Valley, Australian investors tend to wait for more traction and proof in the market before investing”. - Lawrence Patrick
According to Wyatt, one of the sectors where Australia is doing exceptionally well is B2B software, particularly large scale enterprise software. This sector is expected to continue growing, and the fintech space has also seen great success in the country. In addition, Australia leads the way in mining tech startups, and the climate tech and energy tech spaces also hold great potential for growth.
“When compared to Silicon Valley, which has an enormous amount of capital and deal flow, we need to focus on a per capita comparison. Israel, for example, has the highest amount of VC per capita and the highest number of startups per capita. When compared on a per capita basis, Australia is already punching above its weight in terms of global GDP share and venture capital investment.” - Roy Wyatt
When it comes to deep tech industries, Australia ranks high in terms of research but low in terms of commercialisation. This presents a great opportunity for growth in these areas with the right support from the ecosystem. For instance, last year, $50 billion in sales for solar products used Australian IP, but very little of it was captured in the country. With proper support, these industries can grow and capture valuable resources, making the most of everything that the country has to offer.
Wyatt emphasised the important role of government in supporting the growth of the tech sector. He noted that a stable macro environment, the right tax policy, innovation policy, and immigration policy are critical in attracting people to come and work in the country and create these companies. Government investment in deep tech and early-stage companies is also vital, and the regulatory environment should be favourable to allow these companies to thrive while protecting consumers. Finally, the government can play a role in education and skills, ensuring a pipeline of skills, particularly in STEM areas, to continue to grow these companies.
Regarding the possibility of having a Tesla Gigafactory in Australia, Wyatt spoke about the opportunities that the country has, considering its abundant natural resources and minerals required for manufacturing. With the cost of solar panels increasing by 50% in the last year due to COVID and shipping costs from other countries, there is a great opportunity for manufacturing to take place in Australia, where resources and talent are available. Additionally, labour costs are becoming higher in China, making Australia a more attractive option for advanced manufacturing industries. Automation is also improving productivity outcomes in the country, making it a prime location for such industries.
“In the US you will often see highly specialised VC around particular verticals because of scale. We're beginning to see parts of that in Australia as these funds are getting bigger and bigger, new funds are raised. Rather than just being a generalist, you're seeing more specialisation in the investing environment and I think that will deploy more capital in certain areas quicker and faster.” - Roy Wyatt
The future of the tech sector in Australia is bright and full of potential. With the right support from the government and the ecosystem, the country can seize the opportunities available and continue to grow and thrive in the tech industry. With the potential for growth, it's exciting to see what the future holds for the tech sector in Australia.
Investment Outlook in 2023
In terms of investment outlook for 2023, the cybersecurity sector is expected to continue to grow, driven by the increasing demand for cyber defenders and the shortage of skilled professionals in the field. In addition, the B2B software, fintech, and mining tech sectors are also expected to grow, as well as the climate tech and energy tech spaces.
Artificial Intelligence (AI) is also expected to continue to grow, with increased investment in deep tech industries and the development of new technologies and applications. The government is expected to play a crucial role in supporting the growth of these industries, through investment, favourable regulation, and education and skills development.
Furthermore, pivotal technologies including advanced manufacturing and automation are predicted to expand in Australia. Given the country's extensive natural resources and mineral wealth, combined with a developing automation sector and escalating labour costs globally, there exists considerable potential for sophisticated manufacturing to emerge within Australia. For instance, the rising costs of solar panels and escalating labour expenses in China present new opportunities for home-grown Australian manufacturing to address sustainable energy needs.
“automation is helping to deliver. Better productivity outcomes here. So I'm quietly very optimistic that there's an amazing opportunity for us as a country to seize these more high impact advanced manufacturing industries, drawing on all everything that we've already got. I think it's really up for us to seize that opportunity.” - Roy Wyatt
Overall, the future of the tech sector in Australia is bright and full of potential, and it will be exciting to see how the industry continues to evolve and grow in the coming years.
As the technology and innovation landscape continues to change and develop, it is important for the government, private sector, and ecosystem to work together to support and promote the growth of the tech sector in Australia.
In conclusion, the tech sector in Australia is poised for growth and success, and it is important for the government, private sector, and ecosystem to work together to support and promote this growth. The future of the tech sector in Australia is full of potential and exciting possibilities, and it will be fascinating to see how it continues to evolve and develop in the coming years.
