Opinion: The best startup founders aren’t wondering whether to stay in Australia or leave, argues David Burt. They’re asking a different set of questions entirely.
Every ambitious Australian startup eventually becomes a global story. The current debate about whether founders should stay or leave Australia misses the point.
Founders start in Sydney. The first serious customers may be in the Middle East. The strongest technical talent may be in Brisbane. The deepest capital market will be the United States.
A company’s regulators, strategic partners or earliest adopters may be concentrated in a city that surprises you. The location of the first best customers helps decide where your sales and marketing are. Your access to talent and partners helps answer where Research & Development (R&D) should happen. Geography is an operating decision that will shift as the company grows.
The latest Federal Budget has made this decision more urgent. Proposed Capital Gains Tax (CGT) and R&D Tax Incentive (RDTI) changes have pulled startups into a debate largely framed around housing, passive assets and fairness. But founder equity is not a passive asset. It is created through concentrated risk: years of low or no salary, technical uncertainty, dilution and a high probability of failure.
The ball is in the Government’s court now. If handled well, it could help Australia become a stronger base for global companies. If not, then it will make the already challenging decision to start a high-growth company in Australia much harder to justify.
The wrong debate
The public conversation has settled into two positions. One view is that Australia remains a strong environment for early company formation: deep research capability, strong technical talent and institutional stability that can make the first phase of building more efficient than in larger markets. The other view is that Australia is too constrained: a small domestic market, thin pools of growth capital, slower productivity growth and too few early adopters for globally ambitious companies.
Both views contain truth, but the better frame is not “stay” or “go”. It is: which geography gives this company the best chance of becoming globally significant? That answer will vary by sector, stage and business model. Some companies should stay and scale from Australia. Some should move key functions overseas early. Some should deliberately split the company across markets. The important thing is that founders make those decisions deliberately and strategically, not emotionally.
From our work with early-stage founders at UNSW, the pattern is clear: the best founders are asking where the company learns fastest. Through this lens, one of the most important questions becomes: which global city has the highest concentration of your first best customers? This question helps founders to think about where customer learning happens, where talent is strongest, where capital is available, where regulatory buyers sit, and where the company’s real advantage can be built.
Aussie start-ups Cauldron and Breaker offer two different answers to that same question.
Building and staying
Cauldron, a company building at the intersection of biology and manufacturing, represents one version of the Australian startup story: start, stay, and build globally from here. Their technology makes biological manufacturing possible at industrial scale and their recent $13.25 million raise shows that this geography is not a constraint.
This is the kind of company that better policy settings should make it easier to build. RDTI settings that reward technical risk-taking help companies keep high-value work here.
A more effective refundable loss regime would support companies like Cauldron to invest more before revenue catches up.
Find where your customer lives
Breaker shows a different path. The company is building a software agent that enables operators to easily command fleets of autonomous robots. Their platform-agnostic agents deploy onto existing hardware and enable voice control without the need for screens, controllers, or continuous data links. For them, Australia was a strong environment for early technical development, giving them access to talent to efficiently prototype.
But the density of its most important customers was elsewhere, so Breaker moved a significant part of its operations to the US. It kept product and R&D in Australia, with one co-founder leading the team in Sydney while the other led the US operations from Austin. A company can move quickly into a larger market without severing its Australian roots. It can pursue customers, capital and commercial velocity overseas while still using Australia as a base for product R&D, engineering and technical talent.
For many startups, international expansion is part of finding the market in the first place. That does not mean every founder should leave Australia. It means founders need to be realistic about where learning happens fastest. If you want to survive, find where your customer lives. For most startups, proximity to early-adopter customers reveal what matters, what is broken, what they are willing to pay for and what the product needs to become. If those customers are not in Australia, ignoring that fact is an expensive delay.
Cauldron and Breaker are not contradictory stories. Cauldron shows that Australia can be a powerful base when the company’s advantage depends on scarce technical capability and infrastructure. Breaker is the argument for policy that does not try to force companies into a domestic-only model. Instead, it should give founders strong reasons to keep meaningful, high-value work here as they expand overseas.
What the budget got half right
The budget has opened an important door to what a better refundable loss incentive regime could look like. Unfortunately, it also makes Australia the worst country in the world to sell a business (the US is half the proposed rate; Singapore’s rate is zero tax).
The policy question should not be “how do we stop founders leaving?” but rather “how do we make Australia the obvious place to build the parts of a global company?”.
Refundable loss offsets, sensible CGT settings and predictable rules must be part of this answer. If Australia wants to build a more globally competitive startup economy, policy needs to reflect how companies actually grow.
If we want more companies to keep product, engineering and scientific capability here, the incentives need to be strong enough to matter. That means refundable loss settings that put real cash back into early-stage companies. It means stable treatment of founder and employee equity. And finally, it means policy that recognises the cost and risk of hiring high-calibre technical talent before revenue is predictable.
If the CGT and loss refundability settings nudge more founders to keep product, R&D and technical capability here while they grow overseas, that is a win for Australia. This will only happen if Government policy is designed with founders in the room.
David Burt is the Director of Entrepreneurship at UNSW Founders.
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