Creating jobs a national imperative: Seek’s Paul Bassat

New jobs will need to be created at an ‘unprecedented rate’ to combat the fallout from the COVID-19 crisis.

Paul Bassat, co-founder of Square Peg Capital, at his office in South Yarra. Picture: David Geraghty / The Australian

New jobs will need to be created at an unprecedented rate to combat the fallout from the COVID-19 crisis and long-term technology disruption, Square Peg and Seek co-founder Paul Bassat says.

Speaking at a CBA technology update on Tuesday in which the bank committed $US10m ($14m) each to Square Peg and another venture capital firm, Zetta Venture Partners, to support local fintechs and the development of emerging artificial intelligence, Mr Bassat said it was “a national imperative” that Australia produce more companies like Atlassian, Canva, CSL and Cochlear.

“As a result of COVID, we‘re going to need to produce new jobs at an unprecedented rate to ensure all Australians have employment opportunities,” Mr Bassat, whose Melbourne-based venture capital firm has more than $1bn in funds under management, said.

“But it‘s not just COVID impacting the economy. We’re also witnessing the long-term impacts of technology disruption, which is creating both headwinds and opportunities for Australia. We are living in a world where being the best in your city or your country isn‘t always enough. Frequently, you need to also be the best in the world. And that’s both an exciting opportunity and a scary prospect for Australian companies.”

More Australian companies would need to evolve to become global leaders, he said.

“Both in Australia and globally, it‘s these high-growth companies, both younger start-ups and established growth businesses, that are producing the bulk of the new jobs in our economy. For Australia to maintain its prosperity as a nation it needs to be a global leader in innovation,” he said.

Commenting on the whether he thought there was a bubble in the valuation of listed companies, Mr Bassat said low rates were driving valuations higher in a number of asset classes. He also pointed to the pace of digitisation as another factor pushing share prices of certain companies higher.

“That underlying trend of the last 25 years of the digitisation of everything has really accelerated and there are some permanent long-term benefits of that. And that impacts both early stage unlisted companies as well as listed companies,” he said.

Mr Basset said he was excited about the opportunity to partner with the bank, in particular its start-up incubator X15. It would provide a platform for Square Peg’s portfolio companies to partner with CBA and potentially have it as an investor, he said.

At the same update, the bank announced the launch of a new app, Backr, to help small businesses get up and running. Backr offers a digital approach to starting a small business using a step-by-step process, from registering a business name and ABN, to creating a business plan and trading, the bank said.

“Through Backr, we hope to help thousands of new digitally enabled small businesses get off the ground. This is now more important than ever given the need to drive the economic recovery,” CBA chief executive Matt Comyn said. To support the initiative, the bank will deposit $500 into the account of any eligible business launched through Backr, until the end of 2020, he said.

On the bank’s partnership with buy now, pay later operator Klarna, Mr Comyn said the Klarna app had been downloaded by more than 270,000 Australians since its launch in January and more than 80 merchants are now live on the platform. The numbers were “broadly in line” with the bank’s expectations, he said.

“We see them as a really important partner in the context of our overall payments offering. But we‘re also continuing to invest in the payments offering that we’re doing exclusively in the CommBank app and hopefully towards the end of this year we’ll have a couple of new innovations in that space to bring to market.”

The bank laid bare the explosion in trading activity in recent months as new investors enter the sharemarket. Out of CommSec’s 50 busiest trading days ever, 49 took place in fiscal 2020 as market volatility spiked through the COVID-19 crisis, general manager for product and customer experience, Soraya Alali, said.

CommSec opened 400,000 new accounts in the year through June, 2.5 times its typical average, as investors rushed to take advantage of the 35 per cent drop in the market in February and March.

A quarter of those new accounts were opened via CBA’s micro investing app, CommSec Pocket.

The trading app, which allows customers to invest as little as $50 into ETFs, has proven particularly popular with Millennials, with 80 per cent of those using it aged between 18 and 41.

Since launching a year ago, $180m has been invested through the app by its 100,000 users, with the average investment coming in at $2800 for any one trade.

Each ETF in the pocket app has a theme, with its ‘‘Aussie top 200’’ and ‘‘Tech savvy’’ options the most popular, Ms Alali said.