Australia’s startup ecosystem is world-class. Its policy is not.

Every few months, a government policy lands in the Australian startup ecosystem like a wrecking ball. The CGT changes. Adjustments to the acquisitions approval process. Increases to sophisticated investor thresholds.

Each time, a measure designed to address something in one part of the system creates collateral damage in another. The debate that follows is loud. Then it moves on, until the next one.

Paul Naphtali, founder of Rampersand, argues that the spotfire response is the wrong frame entirely. The real problem is not this policy or that one. It is the absence of anything that resembles a strategy.

“These missives have largely missed the point,” Naphtali writes in the firm’s latest newsletter. “There will always be views on tax winners and losers. The real question is different: where is the underlying strategy on innovation?”

The race is already underway

The competitive framing matters here. Naphtali is not making an abstract argument about policy design. He is pointing to a specific global contest, for talent, capital, creativity and self-reliance, that Australia is currently running without a coherent game plan.

The international comparisons are instructive. Israel has made a long-term commitment to entrepreneurship through fund matching, grants and tax incentives, and now claims more unicorns per capita than any other country.

Britain offers significant tax relief, co-investment vehicles and founder visas. Singapore provides a 250 per cent tax deduction for R&D. South Korea, Chile, France and Germany have all moved in the same direction.

Australia is not starting from nothing. The R&D Tax Incentive is functional. ESVCLP and ESIC provide real support. But Naphtali’s point is that incentives without a strategy are not enough. “Even those are constantly reviewed and questioned, and they don’t add up to a strategy,” he notes.

“As a startup ecosystem, we can say the same thing to our government [as the old tourism ad]. We’ve got the beaches, the food, the outback, come on down.”

What Naphtali wants advisers to understand

For advisers with clients in early-stage or growth companies, the implications are practical. Policy instability does not just affect valuations. It shapes the planning horizon for founders, the risk appetite of institutional co-investors and the structure of deals available to sophisticated investors.

When R&D incentives get re-litigated every budget cycle, founders cannot plan a five-year roadmap. Uncertain capital gains treatment dries up secondary liquidity, and without a matched co-investment vehicle sitting alongside private capital at the seed and Series A stages, the earliest and most impactful entry points become less accessible.

“This isn’t whinging,” Naphtali is careful to clarify. “It’s recognising that private endeavour has built this ecosystem into a genuinely positive position. We have a rapidly growing, world-class, highly motivated talent pool. Established, value-additive investors. We are one of the fastest-growing ecosystems on the planet.”

Three asks from the industry

Rampersand has put forward three specific asks. The first is a matched co-investment vehicle modelled on the British Business Bank or Israel’s Yozma program, deploying government capital alongside private capital at the seed and Series A stages, where the funding gap is sharpest.

The second is a genuine founder and talent visa, competitive with the UK’s Innovator Founder Visa or Singapore’s Tech.Pass. Not a token scheme, Naphtali says, but one that actually shifts the dial on attracting the best operators globally.

The third is broader, more stable R&D incentives that do not get revisited at every budget. The argument is straightforward: if founders cannot plan a five-year roadmap because the rules change every twelve months, the incentives lose much of their value.

The broader message is one adviser working in the Australian startup ecosystem will recognise. Australia has the ingredients. It does not yet have the recipe.

Naphtali’s call is for the industry, as the second-biggest sector in the country, to stop fighting fires individually and start making the case for what it actually needs. “Let’s stop fighting spotfire after spotfire and start asking for what we actually need,” he says.