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Perth has an opportunity to reshape itself - if we prioritise our most innovative and resourceful sector.
Ninja Software's Leadership Team. Image by: Lightbent Images & Photography
28/08/2020 - 12:27
Western Australia’s mining and property sectors have long been the apple of investors’ eyes, but there’s another emerging industry ready to take the limelight.
Perth’s been calling for economic diversification for some time now, but old habits die hard and it’s easy to get comfortable when you’ve got a good thing going.
We’re incredibly fortunate that we live in a state rich in mineral resources and have a capital city that’s regularly made an appearance on the Top 20 Most Liveable Cities in the World list.
But this is no reason to rest on our laurels, especially in the throes of a pandemic that’s been labelled the worst global public health crisis since the infamous Spanish Flu.
And none of us truly know what’s yet to come as a result of restrictions and lockdowns continuing to impact businesses worldwide.
However, it’s highly possible that reverting to our ‘she’ll be right’ mentality and continuing to put all of our investor eggs in one basket might just not cut it this time.
If COVID-19 has taught us anything, it’s that technology has been essential to keeping business going.
How many of us now use Zoom, Webex, Microsoft Teams, Google Hangouts or FaceTime at least once a day?
Sure, the companies behind these products are multinational giants with offices scattered across the globe’s most renowned tech hubs like Silicon Valley - but why not Perth?
Opportunity stems from diversification
Historically, Perth’s tech and software startup scene has been a quiet achiever, typically overshadowed by bigger sectors.
Take iiNet for example: founded in the early 90s by two Perth university students, the startup became WA’s first organisation to offer dialup internet access to the public, later expanding across the nation. In 2015, iiNet was acquired by TPG Telecom for $1.56 billion.
Similarly, software startup Canva was also co-founded by a Perth university student in 2012, which now hosts more than 20 million users globally. In 2018 the organisation raised US$40 million valuing the company at $US1 billion, receiving the coveted ‘unicorn’ title.
Although iiNet kept its digs in Perth, Canva is headquartered in Sydney, highlighting our state’s perennial issue: the need to reverse the ‘brain drain’.
Leaving in search of better diversified job opportunities, funding or otherwise, just think of the many more founders and startups of varying scales and success that could call Perth home if welcomed with the right support - bringing with them new employment opportunities, appetite for residential and commercial accommodation and of course, kickstarting the ripple effect on hospitality, schools, tourism and more.
More investment could be the missing piece.
Unlocking the potential of our multi-billion dollar underdog
With good direction, a tech startup can start testing their market much quicker than normal startups - a big tick for any business or high net worth individual seeking capital growth opportunities.
In 2020, startups have never been more lean, creating greater potential for profit.
Beyond those upsides, according to Australia’s Treasury there’s also two major tax incentives investors can take advantage of when eyeing these potential opportunities:
The first being a 20 per cent carry-forward tax offset. In simple terms, this means if you invest in a qualifying Early Stage Innovation Company (ESIC) you will receive 20 per cent of your capital invested as a tax refund or reduction in tax obligations.
The second incentive is a 10 year exemption on capital gains tax for investments held as shares in an ESIC for at least 12 months (provided the shares held do not constitute more than a 30 per cent interest in the ESIC) - this means if your original investment increases in value, that capital gain is exempt from capital gains tax. For example, if you made an initial investment of $50,000 and sell it two years later for $150,000, that gain of $100,000 is exempt from capital gains tax.
And it’s worth noting that these tax benefits are not limited to high net worth investors or professionals - the opportunity is available for Australian taxpayers too.
WA also has the added benefit of an imaginative community that’s both resourceful and bursting with ideas.
Investing in innovative early stage companies should be an important consideration for any investment portfolio - who knows, you might just get lucky and invest in the next Canva, now valued at US$3.2 billion.
With a depression touted by top financial experts as “inevitable”, it might be the push we need to take diversification seriously and tap into the potential of WA’s startup scene to create an economy more independent from the often volatile highs and lows of the resources sector.
Innovation drives new possibilities
With more money being poured into the state from online ventures, there’ll be a stronger focus on technology education, driving skills of the future, backed by community ventures better aligned with the digital economy.
And most importantly, WA will have a more diversified, more resilient economy to weather future recessions and pandemics.
But we have a ways to go before we get there.
Ninja Software has the homegrown advantage of being a technical advisor backed by experience in agile development, SaaS diversification, cutting code, idea prototyping, business integration, financing, product joint venture and launching startups.
Our team is able to collaborate on both existing projects and help build software startups from the drawing board to execution.
Living in a world that’s becoming increasingly reliant on apps and technology, Perth has the potential to be at the forefront of this future - we just need the right backing to press launch.
To find out how you can champion more economic progress for WA and help our tech scene thrive visit: https://www.ninjasoftware.com.au
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