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I know these are the default complaints about startups in Australia, but to address each point:

The current tax law is a nightmare for those AU startups wishing to dole out equity.

100% true

Lack of talent, the majority of students have steered clear of tech disciplines in university after the dot-com bust, the effect of this is being felt now as engineering talent is needed.

There is talent around if you know where to look.

The government is not focused on the needs of startups preferring to invest heavily in pie in the sky ideas or just digging the dirt out of the ground. There is no decisive strategy from the opposition nor the current gov in power.

Mostly untrue. I've done work for two local startups in the last 18 months, and both received significant government help, to the point where my services were at least partially funded by gov programs. Yes, getting government help can be a slow process, but I doubt anyone would except anything else.

The Shoes of Prey guys spoke specially about this recently at the Google startup event in Sydney. They praised the tax concessions and other gov funding available to startups.

Lack of funding. There are just not enough investors in Australia looking to fund in Australian tech startups.

Mostly untrue. There are plenty of YC-Style accelerator programs giving seed funding, and a decent number of individual investors interested. The VC funds don't seem to be playing the same game as Silicon Valley VCs though (but then - Boston VCs aren't playing that same game either).

A local Australian startup I've done some work for raised a $2 million angle round recently[1] and didn't seem to have a lot of trouble with it.

[1] http://delimiter.com.au/2012/02/23/australian-web-2-0-start-...

"massive brain drain of engineers & tech entrepreneurs"

Bollocks. There is a massive amount of self-promotional noise coming from a medium-sized group of people going over to the US, not all of whom are that much or a loss to Australia.

Certainly Australia has its problems. And moving to the Bay Area to start a startup is obviously a good idea from many parts of the world. That being said, having a bit of a whinge in the SMH about how lousy Australia is is a great way to get some free media coverage for your startup.

Considering how easy it is for Australians in particular to live and work in the US, I don't think it's an idle complaint.

I dislike politicians as much as the next person, but in actual fact the Commonwealth has showered a lot of money and attention on venture capital.

They have an entire agency devoted to commercialisation and so forth -- Innovation Australia[1].

The problem is that despite the flowery language, it still moves, quacks and shits like a government department[2].

[1] http://www.innovation.gov.au/Pages/default.aspx [2] http://chester.id.au/2012/04/05/on-communicating-with-the-co...

In general, the Australian government's attempts to foster innovation have simply been disasters, the main reason being that they take two approaches — creating funds (which simply lead to feeding frenzies by people who know how to get grants) and tax incentives (which simply encourage companies to create tax shelters). In general, the US VC scene thrive precisely because the government does virtually nothing in this space.

Don't expect or even hope for the Australian government to help anything.

* Lack of talent, the majority of students have steered clear of tech disciplines in university after the dot-com bust, the effect of this is being felt now as engineering talent is needed.

Very much so in QLD from experience. I'm studying [software] engineering at the University of Queensland and they give seemingly all their attention towards mining and civil majors.

I've heard really poor things about UQ's IT department though. I've heard that if you're doing IT related things, the reputation of the universities is backwards: Griffith is best, followed by QUT, and UQ is rather poor.

QANTM and QUT are the 2 top In my opinion. I did programming at QANTM in 06-07 and it was fantastic as most of what I learnt was practical useful information and all the work we did was actually creating software rather than just studying theory / algorithms. Also got job offers at Halfbrick, Krome and Firemint upon graduating.

Honestly I haven't met (or even heard of) any good coders from Griffith and UQ is as said good for most disciplines but not sure about IT.

That seems to be true. Unluckily enough, or at least a mistake on my behalf, I was at Griffith last year and had the choice out of all three uni's for engineering and went with UQ because of their record, amongst other things. Oh well.

Why won't these Aussie companies hire American or Canadian devs? The scene down there seems so insular. Couldn't they mitigate the "brain drain" somewhat by recruiting in countries where English is already the default language and there is talent on the ground?

US/Canadian devs are probably equally attracted to the US tech scene over Australia, no? Anecdotally, I'm an Australian who moved to the US fresh out of college, and the salaries here were waaay higher than what I was being offered in Australia - like 150% to 200%.

Plus Australians don't have massive student debt -- we have income-contingent loans that don't count income earned overseas. So if you move to the USA ... you don't have to pay back the loan.

Every time I see people on HN bitching about "low" wages and "high" costs in the valley, I laugh bitterly. American programmers really have no idea how good they have it.

I've heard this explanation from others and it seems reasonable enough. I still wonder if they couldn't get "B" or "C" grade devs though. A lot of SV companies just won't settle for anything but "A" players, and if they can't get them (because of the incredibly competitive war for talent) many will just leave the job unfilled. That means that there are American and Canadian devs who might be willing to move to Australia to get some experience under their belt.

Why would an Australian company want to hire "B" and "C" grade devs, let alone import them?

Wow, this thread is misinformed. There's plenty of world class "A" grade talent in Sydney. Some of those people leave, some of those people stay. You just have to know where to look.

Funnily enough, not everyone wants to move to the US, because if you're not a founder of a tech company, there's very little reason to leave Sydney for SF.

I didn't say there was no A-grade talent in Sydney. Don't get defensive.

Of course I don't know much about the Australian startup scene. That's why I asked the question. It's on the other side of the Earth from the US. So the question remains unanswered. If there's plenty of startups in Australia that have no intention of leaving, why can't they hire US/Canadian devs if there isn't enough homegrown talent to go around? I for one would consider living and working in Oz.

I'm curious - what was the difference in salaries?

From my experience in Brisbane (I think Melbourne is similar, Sydney is higher because of higher living costs).

Games Companies: Junior - $35k - $45k (< 5 years experience) Mid Level - $45k - 65k (3 - 8 years experience) Senior - $65k - $85k (5+ years experience)

(skill is also a factor, which is why the experience brackets aren't equal)

At a web dev company doing Javascript / PHP / Asp work it's about $10k - $15k on top of that for each level.

Working at an enterprise doing what most would class as boring work it's probably another $10k again over working at a web dev company.

There are a few high paying ($80k+) jobs for ruby devs that I've seen around too and freelancing pays pretty well but then you have to find the work.

Games companies always underpay. It's never financially worthwhile working in that field (except maybe in social gaming if you are in SV)

Taking any permanent job as a developer in Australia is almost always a bad move financially. You should be looking at contracting.

If you are prepared to work in enterprise software then rates are around $70-$90/hour for mid to high level developers (rates go higher for architect positions too). Contracts typically are 6 months, and almost always are renewed.

(These are Adelaide Java rates - East Coast rates are typically $5-10/hour higher, and I've heard Perth rates are higher still)

Sounds about right. I graduated from UQ in 2008 - I had job offers from Honeywell in Sydney ($56k) and a local Brisbane firm ($45k) but took Microsoft (US$80k). Banks and IBM were offering ~$50k. A couple friends who went to Google in Sydney were at ~$60k, those who stayed in Brisbane were generally on ~$40-$50k. 5 or 6 of us from my graduating class came over to MS that year.

Regarding lack of funding, one of the founders of Shoes of Prey wrote an in depth blog post on raising a $3M series A round: http://www.22michaels.com/2012/06/how-we-raised-3m-round-of-...

It's a good read, and to me it highlights just how difficult it is to get funding in Australia. To put it in perspective, they are a well established company with solid founders and a proven business model, and they still had a great deal of difficulty raising money.

> * The current tax law is a nightmare for those AU startups wishing to dole out equity.

Could you elaborate?

It's less that it's a nightmare, and more that there aren't enough people that have done it to know the right way to go about it. We've been trying for 6months to get an ESOP off the ground, and have had a hard time finding an accountant/lawyer who knows their way through it, EVEN THOUGH we know what needs to be done.

Mmmm. Strange.

Anyways, the major problem is that shares and options are taxed like income at the time of issue, with no easy way to defer the tax bill. This makes it essentially untenable to hand out equity to employees. This then makes it a lot harder to employ people as a bootstrapped startup.

there are a lot of legal fees to set up the kind of employee equity plan that can cost a few thousand dollars in the US. we're talking 10-30 times as expensive.

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Ugh. That sounds all too much like the way we do taxation here.

Bingo.

And the fault lies with the incubators/VCs who are pushing and pushing these startups/entrepreneurs to go to the US so they can exit profitably.

They are basically trading off the long term health of the industry for short term personal gain. They are a disgrace.

Disgrace is too strong of a word.

If I was being offered a multi-million dollar round of funding that I wasn't getting in Australia I would be a fool not to go.

Many who have gone in the past have promised to come back and give back to the startup scene where they came from.

Time will tell if they kept their promise...

How is it too strong of a word ?

These incubators/VCs have the ability to bring more money to the table. They simply choose not to. And let's be honest here. The only reason they are pushing them to the US is so they can make money. They are sycophants.

If they really cared about the industry they would be encouraging these people to stay in Australia, build something to benefit the local market and help them expand into Asia like every country dreams of and which we are uniquely positioned.

And so far every successful Australian startup that I know of mad it in Australia BEFORE expanding to the US. Not when you have nothing more than an idea/prototype.

You are aware that making money is kind of the point of venture capital, right?

True.

But I would hope that when many are taking TAXPAYER money that they would think about something more than short term money. After all it is in their best interest to have successful Australian startups.

Wait -- what VCs are funded with tax dollars? Either you guys do things very differently in Australia, or I'm missing your point altogether.

Regardless, it isn't necessarily as black and white as you've stated. They aren't just looking for the 'short term' money, but to give the teams the best opportunities for success.

Per beilabs' argument, it seems that their best chances for success aren't in Australia.

You also seem to be missing the fact that it's a boon to the Australian economy for companies to succeed, even if they succeed elsewhere, unless they completely emigrate. Every Australian success story sparks another entrepreneur in Australia to get motivated.

Yeah, it sucks that the deck is stacked against them at the moment, but that's not a problem the VCs can fix until the government gets cracking to foster startups. That's a long slow process... and as the existing government watches startups leave for those reasons, it should serve to motivate them to fix their laws and better retain local talent.

What a lot of shit.

8 companies from this year's Startmate batch incorporated in the US from day 1 (last year only 2 flipped up post incorporation).

Flightfox is in YC. Happy Inspector is in 500 startups. Scriptrock raised in the US. Ninjablocks went nuts on Kickstarter and also raised in the US. The other 4 I believe are either back in Australia or are heading back here, most of them also raised money in the US.

So why did they incorporate in the US instead of Australia? Because ONE company from Startmate 2011 raised in Australia (that'd be us), and even then most of our first round came from the US.

So the choice is either to run an incubator that results in no companies getting funded, OR you get them to a place where they can raise money and be successful, and last I checked that's the whole point of an incubator.

As far as VC's go, it makes literally no sense for a VC to be pushing their portfolio companies to the US were valuations are higher. All they'd be doing is making it more expensive for themselves to invest in future rounds. They're not that dumb.

There will continue to be no investment in startups in Australia until there is PROOF that investing in Australian startups isn't a dickhead investment. The best way to do that is to do everything you can to get these companies to be successful. These companies are doing great things in the US and it is ALREADY encouraging several (up to 6 that I know of) new funds to get started in Australia WITH substantial incentives from the Aus Govt.