Why overseas investors are taking notice of Australia and its startups

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The Australian investment landscape has until recently been a traditional one. Australia’s export profile has been dominated by energy and commodities (amounting to 75% in 2019), and the startup community hasn’t received as much media attention as global tech hubs like Silicon Valley. But things are changing, and Australia’s remarkably stable economic history provides the perfect setting for new enterprise and innovation.

In 2020, an even more significant factor came into play regarding Australia’s financial strength. The comparatively successful containment of the coronavirus didn’t just save lives, it protected banks, businesses, and the nation’s entire financial ecosystem.  

Investors were undeterred by pandemic-related uncertainty in 2020. During the first six months of the year, investment in Australian startups hit record highs of $944.7 million, with 92 new deals recorded.

On top of the world

Here are a few more reasons why overseas investors are taking notice of Australian startup opportunities.

  1. The handling of the pandemic builds on the superior historical strength of the Australian economy. Remarkably, Australia hasn’t seen a recession since 1991, and no more than two years of negative growth since the 1960s.
  2. Australia’s strong commodity markets, far from becoming irrelevant, will play a crucial role in the development of new tech and transport. Natural gas, lithium, and minerals will all have roles to play in sustainable energy, transport systems, and supply chains for technology and electronics. Clean Australian energy (namely wind and solar power) and world leading agriculture remain in global demand.
  3. Globalisation has made cross-market trading and investing possible, but Australia’s geographic positioning comes with huge advantages for investors in the Asia-Pacific region. The hyperfast growth seen across Asia has generated abundant funds for investing. Australian opportunities have become a particular draw for Asian investors. The country’s proximity, free trade agreements (of which there are currently 14 in place), and time-zone connectivity provide three big advantages over UK and US based markets.
  4. Australian investment in innovation is on the rise. Commercial R&D spending is rising 2% faster than GDP (by contrast, the UK’s expenditure is 1.7% of GDP).
  5. Government investment in Australian entrepreneurs enhances their potential for success. Programs such as the Entrepreneur Tax Discount seek to reduce the risk of failure due to financial strain. Australia provides generous tax rebates for R&D, as well as hundreds of grants and startup programs.
  6. Australia’s economic strength and authority are predicated on its highly developed banking, digital, and government systems. Australia’s banks are stable and its living standards high. These factors make Australia’s markets much less volatile than those of many other developed countries (we’re not naming names).
  7. Australia’s diverse and multicultural workforce continues to drive excellence and strengthen economic ties with the rest of the world. 28% of Australia’s population was born overseas, bringing high skill levels into the economy. Research by the Migration Council Australia has shown ‘significant links between multilingual ethnic communities and export and international business collaboration and investment’. This research suggested that migration would contribute $1.6 trillion to the Australian economy by 2050.  

STAX enables you to invest in Australian startups and established companies from anywhere in the world using FIAT or cryptocurrency. Australia is open for business!

James Brannan

Director of Operations at STAX

All views, investment or financial opinions expressed are those of the author and do not necessarily reflect the official policy or position of STAX. The information contained in this post is not investment advice or a recommendation to buy or sell any specific security.

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