Tech leader urges super funds to invest in start-ups

The government should encourage super funds to invest in tech start-ups, says the head of the Tech Council of Australia.

Tech Council of Australia chief executive Damian Kassabgi.

The government should encourage superannuation funds to invest in tech start-ups and scale-ups, says the head of the Tech Council of Australia.

Damian Kassabgi says the funds, which have more than $3.8 trillion on their books, represent untapped capital investment for a tech sector that needs patient, long-term investment.

“This is particularly the case for deep tech,” he says. “Australia is at the forefront of quantum research and development, which has made the need for access to capital even more critical.”

Super funds could be a significant source of funding, especially if investors understand the amazing growth potential afforded by our emerging tech sector, Mr Kassabgi argues in a comment piece in The List: Top 100 Innovators 2024:The Next Wave.

EMBARGO FOR INNOVATORS, 18 OCTOBER 2024. Innovators List cover, featuring William Jeremijenko and Ruby Jones of Aquila. Photo: Nick Cubbin

He says while some government reforms, such as dedicating funds from the National Reconstruction Fund to growing the tech sector, are a step in the right direction, other sources of capital need to be leveraged.

“Government policy should play a role in encouraging super funds to invest in long-term, high-performing sectors such as tech,” he writes.

“Reforms that only measure short-term gains tend to deter investment into tech; however, the long-term nature of superannuation investment is particularly congruent with the ongoing capital and scale-up lead time needed to build successful tech companies.”

Kassabgi, who joined the advocacy group earlier this year, says that while some people baulk at the idea of using super as an investment vehicle for tech development, the example provided by world-leading tech start-ups founded here – companies such as Atlassian, Canva and Paytron – illustrates the ­potential opportunities.

“We know that if just 1 per cent of superannuation was invested in tech and innovation, it would inject more than $30bn into the ecosystem,” he writes.

Kassabgi says there has been a significant increase in venture capital investment in Australia’s tech sector, with an 18-fold increase between 2014 and 2022.

“While Australia lags on early-stage tech funding compared to other countries, we are on track to catch up to the US by 2030 on a per capita basis,” he says. “When it comes to leveraging tech to harness broader productivity gains and the ability to fund our later-stage companies, however, we are in danger of being left behind. While many emerging tech companies focus time and effort in attracting investment at the start-up stage, Australia underinvests in tech beyond Series B funding compared to our global competitors, hampering the ability of emerging tech companies to scale.”

He says raising investment in R&D will require work from business and government.

The Australian’s The List – Top 100 Innovators 2024: The Next Wave was published on Friday.