Innovation has been a key strategic pillar in the work of the Australian Government as they recognise how technological change is transforming how we live, work, and communicate. In order to nurture innovation and harness new sources of growth for continuous economic prosperity in Australia, the Australian Government introduced the National Innovation and Science Agenda which focuses on culture and capital, collaboration, talent and skills, and government as an exemplar.

Apart from the Government, the corporate sector is also a driving force for innovation, as more and more companies are becoming active in activities like corporate ventures investments, startup accelerators, etc. Indeed, in a recent report on venture capital released by The Australian Private Equity and Venture Capital Association (AVCAL) in federal Parliament last month, Telstra tops the new corporate innovation index that ranks the top 50 companies by their investments in corporate ventures, accelerators, incubators, internal innovation labs, co-working spaces and startups, and accounted for 18 percent of the innovation activity. A large part of this innovation activity comes from Telstra Ventures, Telstra’s corporate venture capital arm. This year, we increased our portfolio so that it now includes over 40 technology companies.

The report also assessed the current state of venture capital in Australia, saying that the funding mechanism for innovative businesses has never been healthier. In FY16, venture capital fundraising increased to $568 million, reaching the highest level of record. While startups are the source of innovation, they are also the largest contributor to job creation in Australia. According to the Australian Innovation System Report 2016, startups created more than 1.2 million jobs from 2004 to 2011, representing 90% of net positive job creation.

However, Yasser El-Ansary, CEO of AVCAL, commented in the report that there are still gaps in the Australian venture capital landscape as it is still “far too small for a country with bold ambitions to be an innovation leader”. The report compared the Australian venture capital investment with other countries. When looking at venture capital investment as a percentage of the GDP, Australia is sitting at 0.023% in 2015, compared to 0.33% for United States investments and 0.38% for Israel investments. The Australian figure is even lower than the OECD+ average of 0.049%.

Does that represent a dark future for the Australian venture capital scene? No.  In fact, experts are positive about Australia’s venture capital development and see a lot of room for improvement in the sector. There are also increasingly more successful cases from Australia in terms of securing significant venture capital funding.

Earlier in May, Telstra Ventures hosted activation sessions at the Sunrise Conference which brought together founders from some of the most successful Australian startups to tell their stories. I joined a session with two of our portfolio companies HealthEngine and Panviva to share insights on how to take the business global, attract international investors and enter new markets.

HealthEngine announced a significant Series C funding earlier this year led by Sequoia India, one of the leading venture capital firms globally. The company targets an industry with over $160 billion expenditure per annum, with a goal to improve the health of all Australians with a platform that enables both timely access to quality care and a seamless patient experience. Marcus Tan, CEO of HealthEngine, shared that, from his experience, trust and timing were the two key things in attracting investments from global venture capitalists among a number of factors. As with any kind of investment, VCs want to know they can trust the company and the business with their money. Startups need to know their own business story inside out and be able to not only communicate but demonstrate they have a solid team. This will help them sell the company to investors and ultimately allow the company to reach the next stage of growth.

Another Australian-based company Panviva is helping companies worldwide to solve their most complex information access problems by delivering just-in-time information. Co-Founder and CEO of Panviva, Ted Gannan highlighted the importance of engaging the influencer community to create impact. Insights from the panel also reflected some important initiatives to be taken in the Australian’s venture capital sector for a brighter future. Collaboration is definitely key and more importantly, companies should think big and have a clear strategy in establishing and growing their businesses internationally.

Timeline: Venture Capital in Australia