APJ 2016: Startups, smart cities and "living labs"

The news that investment group Blue Sky Venture Capital is attempting to raise AUS$200m to fund local startups speaks volumes about the rise of Australia as a hub for tech hopefuls.

Investment director Elaine Stead recently told Australian Financial Review:

“There is now so much funding available for the angel and seed funding rounds, because that area was previously very thirsty, but Australia also needs to have enough capital available to support the wonderful opportunities that make it through to series B funding stage and beyond, which actually need a lot more capital to scale up.”

Blue Sky’s lofty ambitions chime with those of other financiers and will be a fillip for the government of Malcolm Turnbull that has made technology a pillar of Government strategy. It also points to a sea change. For a long time, Australia has been viewed as a place for startups to get out of when they reach a certain size. Now the ambition is to get them to stay.

Some in Australia’s tech community have high hopes of Turnbull, Australia’s fifth premier in as many years. Turnbull has personally invested in Australia’s tech firms and is a regular social media user. He was formerly communications minister and is viewed as having helped pioneer digital government, even if he was slated by some for scaling back the country’s ambitious National Broadband Network.

Australia’s modern tech icon is probably collaboration software company Atlassian which floated this month. You might argue that this is a distinctly democratic, no-nonsense Australian company in that it appeals to the user and spreads ground-up. Sydney-founded Atlassian has two CEOs who say they can be contacted at any time by anybody; the stock ticker is TEAM and the company eschews traditional enterprise software selling in favour of transparent pricing. With Atlassian’s IPO Australia now has a truly modern, iconic company to showcase what can be done, even if the float was on the US, tech-laden NASDAQ market and the company is registered in England.

The hugely successful New Zealand accounting company Xero also has strong links with Australia but it is the lighthouse of NZ technology and had built up a market cap of over US$2.4bn at time of writing. As with Australia, relative proximity to the Asia-Pacific region provides challenges (notably cyber-security) but also opportunities to sell into lucrative markets. That has helped the growth of companies such as workforce management software firm GeoOp and retail point-of-sale software company Vend, and clearly the trend towards cloud will benefit smaller countries because the need to build global salesforces and other infrastructure is less pronounced. That has helped technology hubs such as Walkato in New Zealand prosper and Microsoft’s BizSpark accelerator has a close involvement in the area.

New Zealand has also been in the news as one of the first testing grounds (or skies) for Google’s Project Loon ‘internet in a balloon’ project. And of course the saga of controversial Megaupload founder Kim Dotcom’s possible US extradition will continue to be closely watched.

Another country in APJ that is betting on technology to shape its future is Singapore and its ambitious Infocomm Development Authority with its hopes of being a “living lab” for technology projects. Indonesia, as huge as Singapore is tiny, also has great aspirations. You might expect that to be in manufacturing as one of the lowest-cost labour forces on the planet but Indonesia also wants to push on in fintech and in other technology developments.

We can also expect to see smart cities advance across the APJ region from China to Singapore and South Korea as more countries seek to capitalise on digitally instrumented towns.  

Chinese hardware has been a revelation in recent years, seeing the rise of Lenovo, Xiaomi, Huawei, ZTE and many others. These companies now vie for market leadership in many countries but geopolitical changes, allegations of dodgy practices, cyber-espionage and censorship makes China still a conundrum in western eyes.

In Japan, giants such as Sony, Toshiba and Panasonic have lost some of their lustre in recent years and the country could badly use a big product hit from one of its leading lights. Alternatively, Japan might be boosted by the fruition of blue-sky projects in areas such as artificial intelligence or holograms, both areas of local investment. The declining fortunes of the banner-name companies have been partly offset by successes in infrastructure (bullet trains, spacecraft, robotics and defence systems, for example) and software, where Trend Micro continues to prosper. NTT and Rakuten remain examples of Japanese companies with western-style global outlooks – expect more acquisitions to help their worldwide marches in 2016.


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