Will a 'Landing Pad' help your start-up overseas?

Azadeh Williams

With the Federal Government’s Global Innovation Strategy about to launch, experts are beginning to discuss what the initiative means to Aussie businesses and start-ups serious about attracting international investors and boosting global market reach.

The $36 million initiative announced in the 2015-2016 Budget will see the formation of five ‘Landing Pads’ across Israel, Germany, the US and China that are designed to help Australian entrepreneurs bring their ideas to market and build high-growth, high-return enterprises. The Landing Pads offer workspace, access to expertise and mentors as well as introductions to networks in the five regional hubs for Australian start-ups to evaluate the potential of their product offering in the market.

Does it suit everyone?

Claire Mula, co-founder of connected shopping platform, Sprooki, supports the initiative and believes kick-starting a culture of innovation and investment in R&D is a positive step towards encouraging Australia’s competitiveness and to grow businesses both locally and internationally. But she stresses that you need to be a “start-up” and capable of covering your own travel and living expenses for the up to 90 day period.

“The scheme is targeted at the incubation or start-up phase of a product or company lifecycle, so may not be relevant for all SMEs,” she says. “And having to cover your own expenses for the 90 days may be out of reach for some Australian start-ups who may still require initial seed funding or a grant to get themselves there with a prototype or concept in the first place.”

Meanwhile understanding “what next” after the 90 days in terms of the follow on funding, incubation, ecosystem introductions and market validation opportunities of this scheme is also unclear from the details shared to date, Mula stresses.

“This is important to choosing whether or not the time and expense required at such an early stage in the business lifecycle will pay off for the entrepreneur,” she explains. “Now for existing SMEs business owners, it may be out of reach given that they are time-poor as it is.”

Exportia Australia’s managing director, Christelle Damiens agrees, and believes while any government initiative to increase export will help give local businesses more incentive to think globally, the initiative is very start-up focused and the existing SME market may not benefit from it as much.

“That said, I do find that start-ups that are geared with an international mindset from the early years of their business usually do better down the track,” she says. “The Landing Pad in Berlin is very exciting as Europe has so much to offer Australian businesses and its sometimes overlooked. The Berlin Landing Pad is also a great opportunity to showcase all the opportunities that Germany has to offer, and the rest of Europe as well.”

"I do find that start-ups that are geared with an international mindset from the early years of their business usually do better down the track."

Is the funding really enough?

In addition to the Landing Pad space, the Government is offering grants to SMEs and Research organisations under the Global Connections fund of Primer Grants amounting to $7,000 and Bridging Grants $50,000.

CEO of gaming app company Animoca Brands, Robby Yung says while the Landing Pad initiative is a good idea, he’s concerned the funding may not be adequate to meet the demands of business serious about being more globally-minded.

“The only issue I see with it is that the funding does not seem adequate unless the company planning to go overseas is already established and funded, because $7000 and office space -- if I'm understanding it correctly - is not enough to convince an entrepreneur to

move to another country, go through immigration procedures, and all the rest,” he says. “I think the government may be better off spending $36m on grants and co-working spaces at home.”

Mula highlights the initial grant of $7,000 is really aimed at supporting exploratory meetings between SMEs and Research companies to innovate, not execute, while the $50,000 is aimed at follow on funding to get to proof of concept and market validation. The participating companies must be from an approved list of 17 markets, which include the EU, Singapore, Japan, China, Brazil, Israel and India.

“A similar scheme exists in Singapore and is also inclusive of co-investment benefits aimed to encourage associated investment from local angels and high-net worth individuals who may be interested to invest in the concept but find it too risky at this early stage,” she adds. “Again, these grants are designed to promote international collaboration/innovation and for Australian SMEs and research firms who are seeking to incubate new concepts and ideas, but potentially do not have the resources to execute or know how to start.”

Not the be all and end all

While both of these initiatives involve promoting cross-border collaboration, R&D and access to international expertise and networks, Mula believes going global and being an international success requires a longer-term commitment to ongoing R&D efforts to ensure product/market fit, access to partner and customer networks, access to capital and commercialisation resources such as sales staff and marketing exposure.

“What is also interesting is to understand how the government is helping to facilitate or connect SMEs who innovate and start-up companies with larger industry who are potential customers, investors or acquirers of the innovation – both at home in Australia and overseas markets,” she adds. “Autrade offer export grants to SMEs and can help accelerate the commercialisation of R&D born out of these early-stage funding schemes.”

Dr Matthew McDougall, founder and CEO of a cross-cultural digital marketing consultancy Digital Jungle agrees and says while he is a huge supporter of the initiative, he stresses it is not necessarily a be all and end all solution.

“When Australian businesses can get Government support and information from regional target markets it is going to help in developing plans and programs,” he explained. “That said, this cannot be considered as the only requirement and broadening ways to gain market insights will be need. For brands, I suggest that would include consumer and competitor analysis as well as product and market testing.”

Azadeh Williams

Azadeh Williams is a former business and finance news editor at Thomson Reuters, Azadeh Williams has written over 3,000 articles in her 15-year international career on business, technology, marketing and innovation for the likes of The Times, CMO Magazine and Fast Business. She has also lectured in business journalism and media law at Macleay College. 

Image: SOSA Facebook page, Tel Aviv Landing Pad