Big future for small ventures
words Luke Griffiths
photography Matt Turner
In launching the budget on July 7, South Australian Premier Jay Weatherill described the economy’s move away from industrial production to innovation as the biggest challenge facing his government. To assist the process, measures were introduced to support the state’s small and medium enterprises, and Adelaide’s burgeoning start-up community. There’s still much to do, but industry groups have welcomed the initiatives.
It’s no secret that the South Australian economy is in transition, but with change comes opportunity. Volume-based manufacturing no longer dominates employment or economic output, with food and wine — incorporating world-leading local produce — tourism, niche technology, and the property and construction sector all playing an increasingly significant role in the state’s fortunes.
Transition does take time, but a raft of new measures have been instigated to fast-track growth in these areas and more, while a number of transactional taxes are to be abolished. Last month’s state Budget confirmed the extension of stamp duty concessions for off-the-plan apartments. Previously covering only properties in Adelaide’s CBD and inner suburbs, the measure has been expanded to cover all of SA. Concessions of up to $15,500 apply, with 585 homebuyers accessing the initiative last financial year. Some buyers will be eligible for reductions of more than $30,000 when taking into account the first homeowner grant. “There is no doubt that the concessions have helped trigger new activity for SA’s building and construction industry, so extending that same concession throughout Adelaide is a welcome development,” Master Builders SA chief executive Ian Markos says.
Earlier this year, Adelaide came out on top in a KPMG international comparison study that looked at the cost of doing business in SA, Victoria, NSW and Queensland. Prior to this report, gold and copper miner OZ Minerals had already sensed an opportunity. In early 2015, the company announced it would move its head office from Melbourne to Adelaide. As part of that process, it entered into a significant research partnership with the State Government. More recently, Ingham’s announced a significant expansion of its chicken business in SA, incorporating a $275 million investment and 850 new jobs. The State Government supported the move with $3.7 million of funding.
Looking to stimulate jobs growth among Small and Medium Enterprises (SME), the state Budget contained $109 million over two years to encourage businesses to employ more staff and help to address unemployment in SA. The scheme offers a $10,000 grant for each new full-time equivalent job created by businesses with a turnover between $600,000 and $5 million, while for those generating less, a grant of $4000 over two years is available.
There is no limit to the number of times a business can access the grant and it is estimated the scheme will provide grants for 14,000 full-time equivalent positions. “This recognises our small to medium sized employer sector has a vital role to play in our economy’s future. It could not have come at a better time,” Business SA chief executive Nigel McBride says. And in a clear sign of the transition towards niche manufacturing and hi-tech jobs in SA, almost $14 million will be spent on leveraging the multi-billion Future Submarine, Offshore Patrol Vessels and Future Frigate contracts. This includes $6 million to attract defence companies to set up or expand in SA, and $4 million for engagement activities with France following the DCNS success as the Future Submarine bidder. US defence giant Lockheed Martin will soon launch a classified training and testing site in Adelaide to complement its submarine combat system laboratory, which opened in late 2015 at Mawson Lakes’ Technology Park. The company currently has 360 employees in SA, most of whom are in hi-tech roles. “As South Australia expands the defence portfolio, we are expanding with it,” LM Australia chief executive Raydon Gates says.
Reaching For new heights
Two years after launching his own company, Dan Ferrone has taken the plunge by employing his first full-time employee.
His architecture firm — Ferrone Architects — has gradually built its client base, solely through word of mouth, which has resulted in the transition of William Cowell from contractor to permanent employee. “I really am confident, clients are ringing us and I think things are looking good so I took the plunge,” he says.
The decision, he said, was made easier because of a new State Government scheme that provides grants of up to $10,000 over two years for each new full-time equivalent position created by SMEs. All things going well, Mr Ferrone now plans to create a second full-time position by the end of the year. “The incentive from the government helps, definitely.”
Fund that favours the brave
A new multi-million venture capital fund fills a much-needed gap in an otherwise “fertile” field for entrepreneurs in South Australia. Contained within the state Budget was $50 million for the fund, which will be managed by a private firm with the mandate of identifying and investing in local, early-stage companies that have high growth potential.
It will provide funds alongside private sector investment, but not necessarily on a dollar-for-dollar basis. Interstate entrepreneurs who relocate to SA will be eligible.
“The venture capital measures are fantastic and exactly what was needed in an otherwise fertile ground for entrepreneurs,” Voxiebox co-founder Will Tamblyn says. “The ability to raise capital in SA has been a limiting factor in growth for some companies, but this should encourage people to take risks by reassuring them that they’re not alone.”
Voxiebox, based at the Tonsley innovation hub in Adelaide’s south, creates 3D holographic experiences without special glasses by layering thousands of tiny light beams inside a clear box. Last year, a $50,000 grant was used for proof of concept. Mr Tamblyn says the money allowed Voxiebox to get to its current stage of capital raising. Also included within the budget was $10 million for an early commercialisation fund and $4.7 million to establish Adelaide as part of the Gig City network, offering businesses internet speeds of up to 100-times the national average. “The State Government is committed to supporting those innovative businesses and industries that will underpin the state’s economy and create local jobs for the future,” Innovation Minister Kyam Maher says.