Future’s bright for start-ups
GILMOUR Space Technologies founder and CEO Adam Gilmour said he “absolutely” still believed in the dream of turning the Gold Coast into Silicon Beach despite a recent downturn in the global technology market.
Technology stocks have copped a beating in recent weeks, with spiralling inflation and hiked interest rates prompting a 30 per cent drop in the NASDAQ 100 Technology Sector Index.
But while conceding he was “nervous” due to the recent downturn, Mr Gilmour said he was confident Gold Coast start-ups would weather the storm, due to large savings held by investors.
Gilmour Space Technologies is a venture-backed company building rockets on the Gold Coast and is backed by a slew of high profile investors, including a recently announced a $15m deal with the Department of Defence to develop and launch a new surveillance satellite.
“Our investors are still telling us they’ll give us money if we need it – the liquidity is still there – but we might not get the valuation we want,” he said.
“The valuations of companies overall will come down, up to 30-40 per cent I’d think.”
Meta – the parent company of Facebook and Instagram – subsequently revealed plans to slash recruitment by up to 30 per cent in an ominous sign of things to come for the industry.
The Gold Coast has become ground zero for the burgeoning start-up industry in Australia, forming the backbone of last year’s Queensland Innovation Strategy paper, which predicted 80,000 new jobs and an $11bn-a-year windfall for the state economy over the next decade.
Ray White Surfers Paradise Group head Andrew Bell, a strong proponent of the Silicon Beach vision, said the Gold Coast remained in the best position for start-up businesses since the 1970s.
“I don’t see anything standing in our way,” he said.
“The Gold Coast has been repositioned over the last decade, and when you inject capital, regardless of what’s happening in global markets, it lifts the area.”
Sayan Bhattacharyya, cofounder and chief of operations at Gold Coast start-up company Desygner, was also upbeat about the long-term outlook, noting the differing business models used by Australian start-ups would shield the local industry from the international market crunch.
“There’s been a downturn … but it’s primarily affecting start-ups that are venture capital-driven, whereas most Australian start-ups follow the bootstrap model,” he said.
Venture capital companies rely on investors to bankroll operations, while bootstrap firms cover their start-up costs from private savings and income from initial earnings.
“If that external oxygen burns up though, you’re left with a massive cash flow problem – that’s why you read about companies laying off employees overnight, because their investors are getting nervous,” Mr Bhattacharyya said.
Mr Gilmour added that he believed tech moguls saw the Coast as a perfect place to launch companies and tap into markets across the Asia-pacific. “Tech is still growing and expanding rapidly here,” he said. “People like living here, you’re close to Brisbane where you have a big hiring base, and innovation is still alive. ”