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Universities tighten the purse strings on startup boosters

Funding for the University of New South Wales’ Founders program has been reduced and the program has switched to a lower-cost online model. The University of Technology Sydney’s accelerator program has maintained its operational budget after a funding cut through a re-allocation of cash and other assets.

Murray Hurps, director of entrepreneurship at UTS, said he was very concerned about the effect the funding cuts will have on the Australian startups sector and the broader economy.

“This needs to be something we are paying attention to, we have millions of people effectively unemployed and thousands of companies on life support,” he said. “Where are the new companies coming from?”

Accelerator and startup programs were often seen as “non-core” activity for universities, according to Alan Jones, founding partner of shuttered venture fund M8 Ventures. He warned more would be forced to close.

“I think all of these people feel very vulnerable, they have to report in to the vice-chancellors,” he said.

Mr Jones added the impact of cuts to university and accelerator programs were likely to be far-reaching.

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“You will see in the next three to five years the adverse results of not supporting startups through accelerators, you will see a reduction in the volume of startups and the calibre,” he said.

“Blackbird, Airtree, all those other A list venture capital funds need a steady reliable source of high quality investment opportunities of startups to invest in.”

Mike Nicholls, partner at the CSIRO’s Main Sequence Ventures, said university accelerators were vital for students to experiment and for researchers to get exposure to the challenges of customer, product and market development.

“It will be a generation of people that essentially get put on pause or can’t get funding to get their idea going,” Mr Nicholls said.

However Professor Colin McLeod, who heads up The University of Melbourne’s entrepreneurship program, said he was confident of at least another two years of funding. He added that while it was a challenge for all accelerator programs to show the value they delivered, university accelerators played a vital role in creating links with industry, venture capital and government.

“I think it’s also important for accelerators, particularly at this time, to be seen as good stewards of the university’s resources, to act responsibly and manage what we have in appropriate ways.”

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