HECS-style loans for university students and recent graduates to launch innovative new companies could be on offer as early as next year, with consultation on the federal government’s planned “Startup Year” program now underway.
Industry minister Ed Husic announced the start of the six-week consultation process on Thursday, calling for feedback from universities, students and investors, among others, to design the loan scheme.
The program will offer 2000 loans to final-year undergraduate students, post-graduate students and recent graduates to develop their ideas through university programs or private accelerators on a yearly basis — a Startup Year.
Loans of up to $11,300 will be offered through the High Education Loan Program (HELP) system under the proposal, which was first proposed by Labor in 2015 to support a new generation of entrepreneurs and drive innovation.
Announcing the consultation at the UTS Startups space in Sydney, Mr Husic said the program aimed to “give a leg up” to good ideas and “inject business dynamism into the economy” without needing to give away equity.
He said this was particularly important at a time when “capital is becoming more expensive”, leading to reduced early-stage investment by angel investors and re-evaluation by venture capital.
“If people in unis want to stay on one extra year, we want to be able to extend that system, create a Startup Year, working with accelerators and incubators to make that happen,” Mr Husic said.
“And then, have that layer of capital available for people to draw at a time when they find it hard to get that money.”
According to the consultation paper, the government hopes to either rollout the program in full or pilot it in the 2023 academic year, depending on the feedback from industry.
Any pilot would include a small number of places at a select number of higher education provider-based accelerator programs.
The program already has backing from the startup community and technology universities, who expect the program will be oversubscribed.
UTS Startups alone has 500 active startups and has supported 2000 over the last four years. Approximately 60 per cent of students coming to the university are interested in entrepreneurship.
Research by Universities Australia shows there are around 1000 accelerators and incubators across the country.
Mr Husic told InnovationAus.com the consultation would be used to tease out the final shape of the program including the selection process, which is expected to be competitive like other HELP places.
The process will also be used to determine whether to prioritise regional and rural areas for loans, or particular sectors – such as those that align with the National Reconstruction Fund.
Mr Husic is also wary of the program substituting existing support being provided by accelerators and incubators. “We would like to see more go through those accelerators and incubators,” he said.
“We want people to step forward and we’re hoping that they get a sense that they can help design the program from the ground up,” he added.
The consultation will end on November 15.
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