Tech start-ups ‘left out of JobKeeper’

Australia’s high-growth start-ups say they’ve been left in the lurch when it comes to the government’s $130bn cash splash.

Fintech Australia boss Rebecca Schot-Guppy. Source: Supplied.

Australia's tech industry has broadly welcomed the government's new JobKeeper payment program, but high-growth start-ups say they've been left in the lurch when it comes to their eligibility.

The new $130bn policy, announced yesterday, gives companies $1,500 per employee every fortnight, if the company has experienced 30 per cent less turnover in March 2020 than March 2019.

Start-ups are concerned they won't qualify however, given they grow month-on-month and in many cases are far bigger companies now than they were a year ago.

Alison Hardacre the chief executive of healthcare outfit Halaxy, said the policy doesn't cater for companies like hers which are focused on rapid growth, and trade off immediate revenue for a greater long-term benefit.

"Start-ups that have taken this path – and it’s a legitimate business strategy to do so given it’s what Facebook, Uber and other big well-known tech companies do – will have been seriously reviewing their business and making some very tough calls," she told The Australian.

"The risks they have taken are what they need to do to scale their business, but when crises such as this come along, they are likely to be more severely impacted.

This announcement is the safety net many of our most innovative companies need to keep going, get to the other side of the crisis and achieve global impact.

"And as an Australian business, it’s in everyone’s interest for innovative companies that could be the next big thing to be supported in this way."

Rebecca Schot-Guppy, the general manager of FinTech Australia, said she expects the policy to help save jobs in innovation industries, but that fintech companies and other start-ups in Australia power job growth during the downturn, and the policy doesn't support that.

"While a safety net is welcome and will help founders sleep at night, we need an additional stimulus that supports innovative companies," she told The Australian.

"That’s why we will continue to advocate for bridging finance for venture capital backed companies and accelerated R & D payments."

Jonathan Jeffries is the co-founder and partner at start-up talent and growth firm Think & Grow:

He said that the package needs to be clearer as well as more accessible for it to work, particularly in the context of technology companies.

"All tech businesses are being affected," he said. "All of our clients are start-ups and the cuts to working hours have been significant for most of them already. The subsidies will help some, but unfortunately not all, unless they are given a view on how long it could run for.

"While $1,500 per week is enough for some workers, it's certainly not enough for those with higher cash burns. In an industry where cash in needed in the bank to help manage a 12 to 18-month runway, start-ups will need more to keep going. It's been well covered, but pressure on stimulus via R & D grants is required to inject cash flow.

"In our UK office, we've activated the stimulus which pays for 80 per cent of our staffs' salary, including backdated pay."

Guy Saxelby, co-founder and CEO of early payments program Earlytrade, described the policy as sensible but said a loss in revenue is a lagging indicator.

"If your revenue is going down, you're going to have to consider cutting staff among other costs regardless of the payment. What could secure more jobs is details around how quickly this subsidy will be paid," he said.

"Overall, the government is doing a good job of managing a fluid situation and any further break to business is welcome."

Yanir Yakutiel, founder and CEO of Australian fintech SME lender Lumi said he agrees with Adam Bandt that there are still large parts of the population that are going to be left out.

“ We work every day with SME businesses, and know first hand the pivotal role short-term casual staff play in making some of those businesses function. These businesses in hospitality, and tourism for exmaple, will really suffer if the current plans aren't extended. Ultimately, someone else's spend is your paycheck. The more people we leave out of the stimulus now will be paid back later in lost revenue, so would urge the government to consider widening the net,” he said.

“We also need to see better allocation of the SME stimulus from the banks to the businesses that need the liquidity right now. The banks are often too slow a conduit for emergency funds. A weakened small business sector will have devastating effects for the wider economy."