Budget 2017: Startups disappointed with ‘traditional’ budget

Startups have been left reeling from Tuesday night’s federal budget, with founders believing they have been left out in the cold – unless they’re a fintech company.

Expert360 chief executive Bridget Loudon asked “has the government forgotten about startups?” while phrases such as “diluted down,” “all talk” and “a joke” were rife through the sector after the budget was announced on Tuesday.

While there were no big ticket items aimed at the job-creating segment of the economy, the government has proposed a number of initiatives to spur the development of new fintech companies.

These include expanding the regulatory sandbox to allow businesses to test a wider range of fintech products without a licence, a commitment to delivering a framework to allow fintech startups to more easily access bank customer financial data by 2018, changing the definition of a bank to allow firms with less than $50 million in capital to call themselves banks and the removal of ‘double taxation’ on digital currencies such as bitcoin. These changes were welcomed by FinTech Australia.

Chief executive of online lending marketplace SocietyOne, Jason Yetton, said an open banking regime would put consumers in a better position to negotiate better deals with their credit provider.

“Not only could these changes help individuals, they could also stimulate competition across key sectors of the Australian economy and support growth well into the future.”

The Turnbull government has also followed through on its commitment to extend crowd-sourced equity funding to proprietary companies, releasing draft legislation for the change following on from the Senate passing the bill to allow unlisted public companies to raise money via crowdsourcing in March.

Under the proposal, startups that want to crowd-source equity will need a minimum of two directors, financial reporting that is compliant with accounting standards, as well as audit requirements, and there will be restrictions on related-party transactions and minimum shareholder rights for exits.

WiFi startup PoweredLocal chief executive Michael Jankie said the crowd-sourced equity funding extension would likely be the greatest announcement for innovation in the budget.

“Extending this to proprietary companies should see a larger amount of uptake and growth in innovative ideas that become companies,” he said.

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