Governments failing to provide business certainty amid prolonged COVID-19 restrictions risk a brain drain, as entrepreneurs relocate to more favourable operating conditions – warn growing voices within the startup sector.
The mounting concerns come as ‘CEOs and Rich Listers flee’ Melbourne city, within the Australian state of Victoria, which is currently under strict business lockdowns.
Stephen Colman, co-founder and director of Melbourne’s Neighbourhood co-working spaces, is among a growing number of entrepreneurs fearing the long term impacts on the startup sector.
“As stage three numbers were going up and stage four numbers were going up, we did see this exodus,” he says.
Colman’s concerns echo those of Australian entrepreneurs Tania de Jong, Naomi Simson and Julie Parker, who believe many of the Victorian state government restrictions have been an over-reaction that will see ‘deaths of despair’ from the economic and social damage, outnumber the lives saved.
Business groups have been heavily critical of the Victorian Government’s extended lockdowns, describing the approach as a ‘road to nowhere,’ which will decimate business and jobs.
Colman believes government policy that focuses on public health, while at the same time balances business needs, is crucial to re-establishing confidence within the startup sector.
“There are going to be businesses that are so shaken by what’s occurred from this government, where they think, is this actually a government that’s interested in supporting small business?
“And they will start to look at places like New South Wales and others, which seem to be taking a more pragmatic approach around it.”
It comes as COVID-19 drives global population shifts amongst the upwardly mobile – impacting the global tech hub of San Francisco Bay, where ‘locals fed up with lockdown life’ are relocating en masse.
Colman, also an investor and consultant, says those stifled by restrictions, given the choice and opportunity, will naturally look elsewhere.
“They are thinking, ‘I don’t need to be in Melbourne to do this work. I can move somewhere else, where there is a lifestyle dividend and continue to do the same work remotely.’
“The reason to create a business and run it out of Melbourne will be greatly diminished.
“You live and work in big cities, because it’s the proximity to opportunity. That’s kind of gone out the window now.”
As far as his co-working business – and the city’s co-working sector more broadly – he feels there’s a long, hard road ahead.
“As a sector we’re feeling pretty downtrodden at the moment, because we don’t really see a path out of it.”
Sentiments that contrast sharply to Melbourne’s burgeoning co-working sector before COVID-19.
A 2018 LaunchVic industry report declared Melbourne the ‘co-working space capital of Australia,’ accounting for nearly half the total volume of co-working sites across the nation.