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I don't know about the USA, but in Australia all these government programs come with so much paperwork and bullshit that it's not worth it. The most successful

I don't know about the USA, but in Australia all these government programs come with so much paperwork and bullshit that it's not worth it. The most successful program, Accelerating Commercialisation (or Commercialising Acceleration, or whatever this year's government is calling it) requires matching funding, only funds a specific project, and takes around 3-6 months to complete the application process. Very suitable for a existing small business trying to create a new product line, totally useless for a startup trying to iterate in a new market quickly. The grant also comes with a case worker to follow progress, and the money is released in tranches according to achievement milestones. All sounds great on paper, but it completely ignores the fact that the original plan will definitely change in response to new information or market changes. I've known a few people who've been through the process, and they all said that the money wasn't worth the hassle involved. And that's the best, most successful government funding program. The others are worse, way worse. The root cause is that the mindset needed to be a successful bureaucrat is so far away from the mindset needed to be a successful entrepreneur. There's no way any program that would actually be useful to entrepreneurs will be acceptable to the bureaucrats who administer it. Also, the purpose of any funding program is complete the moment that a politician steps up to a TV camera to accept credit for creating it. Anything that happens after that is pointless/just a bonus. The point of all these programs is not to actually help new businesses, but to help political careers. My advice to anyone looking to get government help for their business is to not bother, it's just a distraction from communicating with customers. And it'll be five times as time-consuming and painful as you expect, with one fifth the return you expect.

hackits 7y ago
Big reason why most tech people I know leave Australia, go over to the states make their million and then come back home. Then the ATO has the audacity to want to tax them for their over-seas income well not residing in Australia.
- afarrell 7y ago
  The IRS makes Americans abroad file taxes as well.
  - Sahhaese 7y ago
    That's actually unusual, very few countries tax non-residents.
    - Tojot 7y ago
      Only USA and Eritrea to be specific.
  - mrtweetyhack 7y ago
    Become a non-citizen.
- thundergolfer 7y ago
  Not that Australia had a strong software industry in the first place (we well and truly missed the boat) but how the country's leadership is treating the software industry currently is going to ensure we never catch up and miss out on trillions in value for the country. The best and brightest have so many strong reasons to leave, and many will not come back.
- danieltillett 7y ago
  This is false. You only pay income tax if you are a resident of Australia. If you are a resident of another country you pay tax there - Australia is not like the USA in regards income taxes.
  - marcus_holmes 7y ago
    unless you were foolish enough to incorporate in Australia, or grant equity while still resident in Australia. The ATO will tax any capital gains at full value if they get half the chance. And they're a law unto themselves, with no independent appeal or way of refuting a decision that they made.
    - danieltillett 7y ago
      There is nothing foolish about incorporating in Australia given we have franking credits so that taxes paid by the company are passed down to the individual. While I have no great love of the ATO, it is a million times better than the IRS. Of course you can appeal a tax ruling in Australia. If you have done something that is an open-and-shut case of tax avoidance then this might not help much.
      - marcus_holmes 7y ago
        During my MBA one of our lecturers was a tax lawyer, and the stories he told of the ATO utterly shafting people were horrendous. I might be biased because of this ;)
danieltillett 7y ago
I disagree that these grants aren't worth it, but it depends on the industry you are in and if you are used to writing grants. My company (biotech) has had a few of these grants and they are an excellent way of making a dollar go twice as far. They are certainly easier than a full ARC or NH&MRC grant. If you are a typical software startup pivioting from idea to idea then no they are not so good. Do look into the export marketing development grants as they are a much better fit and are almost like free money.
- marcus_holmes 7y ago
  yeah, good point. I've heard that in medical & biotech startups the government funding works well.
  - shoo 7y ago
    i'd argue (without evidence) that medical and biotech startups probably require more up front capital and longer lead times to see a possible return on investment vs e.g. yet another SaaS so maybe this is working as intended
    - danieltillett 7y ago
      I would argue with evidence (personal experience) that you would be right :)
_cs2017_ 7y ago
> Also, the purpose of any funding program is complete the moment that a politician steps up to a TV camera to accept credit for creating it. Anything that happens after that is pointless/just a bonus. This is the mechanism by which many decisions are made, be it in the government or in the Fortune 500 corporations. I wish the theory and case studies of this mechanism were taught in high school or at least in college.
- PeterisP 7y ago
  It kind of is, management theory (both in business administration/MBA and public administration programs, and IIRC also in political science and certain sociology programs) devotes quite a lot of attention and research to all these issues e.g. the agency problem, governance structures, patterns of organizational politics, incentive (mis)alignments, etc, I recall a bunch of such case studies from my college courses targeted at this, so it is taught to college students - just not to most of them. Perhaps it should be, but it's hard to squeeze everything useful in everyone's study program, and I'm not sure if compressing all these topics in e.g. a single short elective course designed for people majoring in other disciplines can be done reasonably well, it's a complicated topic.
quadcore 7y ago
Same experience here in France. One of the trick we used was to overprice our salaries so we could reinvest those salaries in the company in order to have way more runaway than initially planned. That's until a tax controller came to told us that our salaries were too big for that grant/tax reduction thing. They actually weren't that excessive so with the help of a lawyer, he fucked off. My heart missed a beat or two though.
- superhuzza 7y ago
  That sounds vaguely fraudulent, but I have no idea if it actually is or not.
  - quadcore 7y ago
    It was a little hack; we didn't crossed the limit of decency imo.
solresol 7y ago
QUT did a study (the CAUSEE study) that looked at the predictive factors for startups to succeed. One of the best predictors for failure for Australian startups was if they had accessed a government service to help startups succeed. Of course, that might be selection bias. The only exception to this (and actually was a predictor of success) was accessing the R&D tax concession.
- marcus_holmes 7y ago
  yeah, the R&D tax concession is totally awesome. Except, it's now getting slowly screwed up by large corporates claiming everything they possibly can on it, so the rules are getting altered and tightened up. Add in a few greased palms (sorry, "campaign contributions") and it'll be ruined, as usual.
TeMPOraL 7y ago
I worked on a software project funded from an EU grant (which essentially funded half of the company); from this + some conversations with other entrepreneurs interested in EU grants, my impression is that the reality is similar over here. It's cool that you can get lots of money for essentially a wishlist on a piece of paper (though to actually get that money, your best bet is to hire someone specializing in writing EU grant proposals). However, the amount of paperwork couple years in, involved in verifying you spent the money appropriately, is so big you'll regret ever taking the grant. (One could say that entrepreneurs are partially to blame for this one, though. I hear that initially, it was much easier to work with EU grants, but a lot of people wrote up bullshit proposals and stole the grant money.)
- PeterisP 7y ago
  The last sentence is kind of the key issue. If you're a good entrepreneur skilled at doing your job well, it's very hard to compete with a good crook skilled at doing his job well; and you have to worry about your actual product while he can focus on making the paper milestones.
- p_l 7y ago
  Don't forget incompetence in local government with regards to EU grants, too. Often there could be less paperwork than there is...
- duxup 7y ago
  I've read a number of accounts of EU countries offering funds for tech start ups but in some countries folks in the same circles seem to get those funds all the time, outsiders not so much.
taneq 7y ago
> Very suitable for a existing small business trying to create a new product line, totally useless for a startup trying to iterate in a new market quickly. This is my experience as well. These programs are designed very specifically to stimulate small business R&D spending. They're not for startups, they're to encourage established businesses to spend their cash. Great for your second product, not so helpful for your first.
jmcqk6 7y ago
The problem is one of accountability. If you're taking public funds, then there should be checks and balances and make sure that it's going to good use. History has clearly shown that humans are not to be trusted otherwise, because bad actors are way too common, especially we think no one is watching.
- marcus_holmes 7y ago
  I get that. But if you say you're going to do X and then do Y, are you a crook stealing the money, or are you a startup pivoting as a result of new information? You need an entrepreneurial mindset to tell the difference...
  - jmcqk6 7y ago
    >You need an entrepreneurial mindset to tell the difference.. No, you don't. Why would you? You think too little of the average human. If you can communicate the chain of logic that led you to make the change. That should be sufficient. There needs to be the freedom to make this type of change, but you still need to be held accountable for your work. It should be ok to say 'we ended up building something different than we were expecting.'

hackits 7y ago

Big reason why most tech people I know leave Australia, go over to the states make their million and then come back home. Then the ATO has the audacity to want to tax them for their over-seas income well not residing in Australia.

afarrell 7y ago
The IRS makes Americans abroad file taxes as well.
- Sahhaese 7y ago
  That's actually unusual, very few countries tax non-residents.
  - Tojot 7y ago
    Only USA and Eritrea to be specific.
- mrtweetyhack 7y ago
  Become a non-citizen.
thundergolfer 7y ago
Not that Australia had a strong software industry in the first place (we well and truly missed the boat) but how the country's leadership is treating the software industry currently is going to ensure we never catch up and miss out on trillions in value for the country. The best and brightest have so many strong reasons to leave, and many will not come back.
danieltillett 7y ago
This is false. You only pay income tax if you are a resident of Australia. If you are a resident of another country you pay tax there - Australia is not like the USA in regards income taxes.
- marcus_holmes 7y ago
  unless you were foolish enough to incorporate in Australia, or grant equity while still resident in Australia. The ATO will tax any capital gains at full value if they get half the chance. And they're a law unto themselves, with no independent appeal or way of refuting a decision that they made.
  - danieltillett 7y ago
    There is nothing foolish about incorporating in Australia given we have franking credits so that taxes paid by the company are passed down to the individual. While I have no great love of the ATO, it is a million times better than the IRS. Of course you can appeal a tax ruling in Australia. If you have done something that is an open-and-shut case of tax avoidance then this might not help much.
    - marcus_holmes 7y ago
      During my MBA one of our lecturers was a tax lawyer, and the stories he told of the ATO utterly shafting people were horrendous. I might be biased because of this ;)

danieltillett 7y ago

I disagree that these grants aren't worth it, but it depends on the industry you are in and if you are used to writing grants. My company (biotech) has had a few of these grants and they are an excellent way of making a dollar go twice as far. They are certainly easier than a full ARC or NH&MRC grant. If you are a typical software startup pivioting from idea to idea then no they are not so good. Do look into the export marketing development grants as they are a much better fit and are almost like free money.

marcus_holmes 7y ago
yeah, good point. I've heard that in medical & biotech startups the government funding works well.
- shoo 7y ago
  i'd argue (without evidence) that medical and biotech startups probably require more up front capital and longer lead times to see a possible return on investment vs e.g. yet another SaaS so maybe this is working as intended
  - danieltillett 7y ago
    I would argue with evidence (personal experience) that you would be right :)

_cs2017_ 7y ago

> Also, the purpose of any funding program is complete the moment that a politician steps up to a TV camera to accept credit for creating it. Anything that happens after that is pointless/just a bonus. This is the mechanism by which many decisions are made, be it in the government or in the Fortune 500 corporations. I wish the theory and case studies of this mechanism were taught in high school or at least in college.

PeterisP 7y ago
It kind of is, management theory (both in business administration/MBA and public administration programs, and IIRC also in political science and certain sociology programs) devotes quite a lot of attention and research to all these issues e.g. the agency problem, governance structures, patterns of organizational politics, incentive (mis)alignments, etc, I recall a bunch of such case studies from my college courses targeted at this, so it is taught to college students - just not to most of them. Perhaps it should be, but it's hard to squeeze everything useful in everyone's study program, and I'm not sure if compressing all these topics in e.g. a single short elective course designed for people majoring in other disciplines can be done reasonably well, it's a complicated topic.

quadcore 7y ago

Same experience here in France. One of the trick we used was to overprice our salaries so we could reinvest those salaries in the company in order to have way more runaway than initially planned. That's until a tax controller came to told us that our salaries were too big for that grant/tax reduction thing. They actually weren't that excessive so with the help of a lawyer, he fucked off. My heart missed a beat or two though.

superhuzza 7y ago
That sounds vaguely fraudulent, but I have no idea if it actually is or not.
- quadcore 7y ago
  It was a little hack; we didn't crossed the limit of decency imo.

solresol 7y ago

QUT did a study (the CAUSEE study) that looked at the predictive factors for startups to succeed. One of the best predictors for failure for Australian startups was if they had accessed a government service to help startups succeed. Of course, that might be selection bias. The only exception to this (and actually was a predictor of success) was accessing the R&D tax concession.

marcus_holmes 7y ago
yeah, the R&D tax concession is totally awesome. Except, it's now getting slowly screwed up by large corporates claiming everything they possibly can on it, so the rules are getting altered and tightened up. Add in a few greased palms (sorry, "campaign contributions") and it'll be ruined, as usual.

TeMPOraL 7y ago

I worked on a software project funded from an EU grant (which essentially funded half of the company); from this + some conversations with other entrepreneurs interested in EU grants, my impression is that the reality is similar over here. It's cool that you can get lots of money for essentially a wishlist on a piece of paper (though to actually get that money, your best bet is to hire someone specializing in writing EU grant proposals). However, the amount of paperwork couple years in, involved in verifying you spent the money appropriately, is so big you'll regret ever taking the grant. (One could say that entrepreneurs are partially to blame for this one, though. I hear that initially, it was much easier to work with EU grants, but a lot of people wrote up bullshit proposals and stole the grant money.)

PeterisP 7y ago
The last sentence is kind of the key issue. If you're a good entrepreneur skilled at doing your job well, it's very hard to compete with a good crook skilled at doing his job well; and you have to worry about your actual product while he can focus on making the paper milestones.
p_l 7y ago
Don't forget incompetence in local government with regards to EU grants, too. Often there could be less paperwork than there is...
duxup 7y ago
I've read a number of accounts of EU countries offering funds for tech start ups but in some countries folks in the same circles seem to get those funds all the time, outsiders not so much.

taneq 7y ago

> Very suitable for a existing small business trying to create a new product line, totally useless for a startup trying to iterate in a new market quickly. This is my experience as well. These programs are designed very specifically to stimulate small business R&D spending. They're not for startups, they're to encourage established businesses to spend their cash. Great for your second product, not so helpful for your first.

jmcqk6 7y ago

The problem is one of accountability. If you're taking public funds, then there should be checks and balances and make sure that it's going to good use. History has clearly shown that humans are not to be trusted otherwise, because bad actors are way too common, especially we think no one is watching.

marcus_holmes 7y ago
I get that. But if you say you're going to do X and then do Y, are you a crook stealing the money, or are you a startup pivoting as a result of new information? You need an entrepreneurial mindset to tell the difference...
- jmcqk6 7y ago
  >You need an entrepreneurial mindset to tell the difference.. No, you don't. Why would you? You think too little of the average human. If you can communicate the chain of logic that led you to make the change. That should be sufficient. There needs to be the freedom to make this type of change, but you still need to be held accountable for your work. It should be ok to say 'we ended up building something different than we were expecting.'