Australia is facing a generational crisis for young people over the next decade and beyond.
In this 3-part series, I’m unpacking why, and what I think Australian can do about it.
In Part 3: How to Rapidly Scale-Up Youth Entrepreneurship & New Business Creation in Australia I’ll unpack 5 key recommendations:
- The development of a National Strategy for Entrepreneurship Education
- Launch of an ATAR accredited course on Entrepreneurship available for all Year 11 & 12 students
- Announcement of the equivalent of a Peter Thiel Fellowship for Australia
- Launch of a post-school 12-month start-up incubator
- Increased government funding for youth-led start-ups via post-school incubator and university incubator programs
#1 National Strategy for Entrepreneurship Education
Currently, in Australia, there is an incredibly fragmented, piecemeal approach to entrepreneurship education in Australia.
There are some fantastic organisations doing great work (e.g. Generation Entrepreneur, Future Anything, Future X, 56 Creations and BOP Industries) and some fantastic in-school programs (Loreto Kirribilli, Normanhurst Boys) however in most cases these are small bright spots, with the overwhelming majority of students missing out.
Given the overwhelming priority and urgency in creating more jobs for young Australians while also equipping them for the future of work, we need stronger national leadership around entrepreneurship education. In fact, the Foundation of Young Australians has been calling for this since 2016. See here
A National Strategy for Entrepreneurship Education needs to:
- Set clear national priorities
- Increase funding for schools (or TAFE – see below)
- Enhance integration of entrepreneurial education in the curriculum (see more below)
- Increase training & development
- Create stronger connections and involvement of industry and businesses.
#2 ATAR accredited course on Entrepreneurship available for all Year 11 & 12 students across Australia
The best way to learn about business (for-profit, social enterprise or non-profit) is to start a business or organisation.
While the current format of 1-day, 3-day, or 1-week programs in a school (typically for students in Year 9 or 10) are a great starting point to create some early engagement with the idea of entrepreneurship and enterprise skills, for most students, it’s simply too short, too superficial, too theoretical and far too few students have access.
How could an Entrepreneurship Course in high school as part of the school curriculum work?
- Start-Up 101 is a course offered for high school students at local TAFE across Australia.
- This course is available for students in Year 11 and 12 and is a subject they can complete towards their Year 12 final results including their ATAR.
- Students complete the program over a 2 year period learning the building blocks of starting and running a business.
- The course culminates with a major work which includes launching a business, marketing, making sales, service delivery and reflecting on lessons learned via a final company report.
- Major works can be for-profit businesses, not-for-profit organisations or social enterprises.
- Students graduate Year 12 with their ATAR, and in addition to it a Certificate II or III provided by the TAFE.
Why run this course at a local TAFE?
- TAFE has a fantastic network of local businesses that can be drawn upon to provide mentoring and support.
- Schools don’t have teachers trained in entrepreneurship to deliver the course, but given that TAFE draws upon practitioners to teach are more likely to have existing resources to draw upon.
- Many high school students already local TAFE to complete subjects in Year 11 and 12, so there are an existing system and processes to facilitate the roll-out of a new course.
- TAFE are often an under-utilised resource and are also in local areas making it easy for students to access.
- TAFE can also provide certification for the course as a Certificate II or III providing an added incentive and value for students to take the course.
Why run this as a course in Year 11 and 12 that also counts towards your ATAR?
- Ultimately, in Year 11 and 12, most students get caught up in the ATAR game and choose subjects that will contribute to an ATAR.
- Subjects that don’t count towards an ATAR are often considered by students (especially high performing students) as inferior.
- As a result, to encourage a significant uptake of students taking the course, it’s critical that the course count towards students seeking an ATAR.
- Furthermore, the idea behind running it as a course specifically for Year 11 and 12 students is it captures students when they are more mature, and also considering more actively their post-school options.
Note: In early 2021, the NSW Government as part of their Curriculum Review has revealed they will be offering an entrepreneurship course. It appears that it may be delivered online only via TAFE which is an awesome step in the right direction that hopefully becomes a catalyst for a national roll-out. Given however that each state has its own education department and curriculum, this may be a slow process
#3 The equivalent of Peter Thiel Fellowship in Australia
Peter Thiel was one of the founders of Paypal and an early investor in Facebook.
In an effort to encourage talented young people to bet on themselves and to go out and start new businesses and projects that could change the world, he created the Thiel Fellowship in the US.
Essentially, the Thiel Fellowship is a two-year program for young people under the age of 23 who want to build new things. Thiel Fellows skip or stop out of college to receive a $100,000 grant and support from the Thiel Foundation’s network of founders, investors, and scientists.
Since the founding of this scholarship in 2011, a number of its alumni have gone on to create incredible projects & businesses, working to solve some huge challenges. To date, companies created by Thiel Fellows are worth over $29 billion, and this is not including 2014 Thiel Fellow Vitalik Buterin’s Ethereum, a distributed computing platform with a cryptocurrency Ether which has a market cap of over $200BN. See here.
While many return to university, they return with incredibly valuable experiences, networks and skills.
Like the Thiel Fellowship in the US, I believe offering a similar Fellowship in Australia would have a significant benefit in encouraging increased leaves of entrepreneurship and new business creation amongst young people.
How does this however lead to more young people starting businesses?
What the Fellowship has done is to create a powerful signalling effect.
At present in Australia, the default pathway for students is some form of tertiary study, with our brightest and most talented students being funnelled into a narrow set of degrees (often due to social expectations and perceived prestige) including Law, Commerce, Medicine, Engineering and Computer Science that in most cases, prepare students for employment with some of Australia’s largest companies.
What we need however in Australia is to create a compelling, high prestige pathway that attracts some of Australia’s most talented young people to instead start businesses and pursue entrepreneurship.
This is what a Thiel-like Fellowship can create, as it encourages highly talented young people to apply for the program, while simultaneously normalising and increasing the prestige of pursuing entrepreneurship and business as an alternative to Law, Medicine, Engineering etc.
This then has the longer-term effect of changing social expectations and cues around which pathways young people should take which play a HUGE role in influencing decision making on post-school options.
#4 A post-school 12-month incubator program
While the Thiel-like Fellowship is a tool to create a positive signalling effect, it only benefits directly a small number of young people.
In addition to the Fellowship, we should also create a 12-month incubator program for young people (aged 17-25) who want to build a business (or continue building the business they started in their Startup 101 course at their local TAFE).
This could also be run at co-working spaces or university hubs across Australia, that tap into existing networks & resources in the business community.
This program would sit as an alternative to studying ‘Entrepreneurship’ at university (which let’s be honest, sounds a bit like an oxymoron doesn’t it…).
Instead, students interested in pursuing entrepreneurship would join the incubator and build a business over the course of a 12 month period with support from mentors & experts.
Unlike typical incubator programs, the program would be specifically for young people aged 17-25, and would not require participants to necessarily have an idea or project ready to pitch, or already started.
Instead, the first 3 months of the program would involve working with students to identify, evaluate and test market opportunities (potentially based around key national high impact/high need priority areas) so they can create businesses that will make a difference.
The remainder of the program over the following 9 months would then involve supporting students to develop and launch the product or service to market, and to help them grow their business, or pivot and iterate based on market feedback.
During the program, students would also have the opportunity to pitch their business for funding (see more below) so that viable businesses can continue to grow.
While the hope is for sustainable businesses to emerge from this 12-month incubator program that increases new job creation, ultimately, even if a number of businesses fail (startup failure rates are very high at 90%+) the goal with this incubator is further train and develop young people with entrepreneurial skills for future business creation.
The hope as well is that the incubator program also increases more traditional employment outcomes for graduates by becoming a standard that industry looks to as a key prior experience when hiring people into intrapreneurial roles in existing organisations.
#5 Increased government funding for youth-led start-ups via the post-school incubator program and university incubators
Israel has more start-ups per capita than any other country and is only second to Silicon Valley in its levels of innovation, with 1 start-up per 1,400 people. [Source]
One of the key factors (among many) that has played a key role is the government’s role in funding early-stage start-ups in Israel.
In the early 1990s, the Israeli government set up Yozma with a budget of $100MN which established 10 venture capital funds, contributing 40% towards the total capital investment. The remainder was provided by the private market (in the case of Israel from overseas), attracted by risk guarantees provided by the Israeli government. Staggeringly 9 of the first 15 companies funded went public or were acquired, and an OECD report on innovation has called Yozma “the most successful and original programme in Israel’s relatively long history of innovation policy.” [Source]
There is a high chance of start-up failure across all start-ups and therefore it’s likely that there would be an even higher chance of failure for youth-led start-ups. This increases the risk profile for private investors, potentially impacting their appetite to back youth-led start-ups.
At the same time, the goal isn’t simply to create successful start-ups, but also to rapidly train and skill a generation of people with entrepreneurial skills they can take into society more broadly, there is a clear additional social good of education that exists, providing a case for government intervention and funding.
The government plays a key role in funding education, and as such, in many ways, this is an education program with the potential for significant additional upside.
As such, the Federal government should therefore create a venture capital fund to invest in youth-led start-ups via both the post-school incubator program and via university incubators.
While it may start as a fully government-funded education initiative, it could also operate as a government & private sector partnership, where the government like in the Yozma model, provides a significant percentage of the funds and then attracts paired private funding which has risk guarantees provided by the government.
Alternatively, the government could also provide matched funding, so that start-ups from the post-school incubator program or university incubators that are successful are chosen by private funds for investment to receive matched funding by the government.
Young people in Australia are facing a generational crisis over the next decade.
With rising numbers of high school graduates, rising youth unemployment compounded by a COVID Recession that will create labour market scarring, we need to jump-start new job creation at levels far beyond the current government policy response.
With 68% of all employed Australian’s working in small and medium business and the fact that running your own business (as a freelancer or a contractor) is the future of work, the lever we need to pull as an Australian economy is to rapidly scale up entrepreneurship education for young people.
Not only will this lead to new business creation and job creation, but it will also equip young people with the key skills they need to thrive in more traditional employment opportunities as well.
I’d love to hear your thoughts on both the problem young people as a generation are facing, the current policy response and policy levers, and finally your suggestions for a path forward. Let me know in the comments!
Want to discuss this further? Feel free to get in touch with me as well!