With the abolishment of 457 visas, a much-talked-about concern amongst start-ups has been that it will be harder to secure skilled labour, especially as large, international competitors continue to lure local talent with competitive salary packages. What has received less attention is the fact that the reforms will make it difficult for some entrepreneurs, such as Greg Villain, to continue growing their early-stage start-ups from Australia. In fact, the French expat has been left with little choice but to take his business elsewhere.
Operating out of Sydney’s Fishburners, a co-working space for tech ventures, Villain is the founder of Boutiq, a food and travel start-up. It has developed a mobile app that serves both as a ‘memory bank’ of its users’ favourite places as well as a listing of destinations personally recommended to them by their trusted inner circle.
The app had its soft launch at the end of March and Villain and his team of four (two employees, two freelancers) began promoting it in May. While it’s still early days, Villain said the start-ups is seeing 400% user growth week-on-week “with almost $0 spent on media” due to word-of-mouth amongst foodies and travellers.
A letter to the PM
Villain had the idea for Boutiq while studying product management in San Francisco in 2015, prior to which he’d lived in Sydney for two years, citing its ‘amazing lifestyle’. Once the prototype had been developed, Villain decided to pursue the start-up full-time back in Sydney.
“Australia’s tech ecosystem was – at that time – on the rise and consolidating, with more investment by VCs from the US and Asia,” he said. “Being an Anglo-Saxon country situated in the Asian market with a reasonable time difference with California (technically 18 hours, but in effect six hours), Australia is in a great position to build ties with different markets.”
Villain recently penned an open letter to Malcolm Turnbull, to whom he revealed: “It was attending your speech at Fishburners in 2014 that truly inspired me to make Australia the home of Boutiq”. Against this background, he expressed disappointment in the government’s decision to abolish and replace the 457 visa as well as the ‘unrealistic’ conditions of the 188 Entrepreneur visa.
“Foreign-founded companies need a chance to start out, and start-ups need to be able to sponsor foreign employees,” he wrote, noting that neither the 188 nor the new Temporary Skills Shortage (TSS) visa offer adequate assistance in this regard.
A Catch-22 of sorts
In conversation with Dynamic Business, Villain explained that for Boutiq and other early stage companies not yet generating at least $1 million in revenue, sponsorship of skilled migrants is now “unattainable”. Critically, he said that not only has he been left unable to sponsor himself through Boutiq on a TSS visa, he is not in a position to secure a 188 Entrepreneur visa.
“At first glance, the 188 Entrepreneur visa seemed like the perfect opportunity for a foreign entrepreneur, such as myself, to start and grow a business in Australia, instead of having to go through a 457 visa,” Villain said. “However, by restricting this visa only to foreign founders with investment from Australian registered Venture Capital funds – and then making them wait at least 14 months for the visa to be granted – it contradicts its intended purpose… it’s well known that Venture Capital investors do not back ideas, they invest in operating start-ups with traction who need to execute fast!
“The reality is that for a start-up with potential global reach, like Boutiq, raising money is crucial to gaining traction and going viral. We had plans to raise AU$1.5 million to hire 10 full-time employees, mainly in Australia. My intention has always been to hire locally, but for some jobs, we may have needed to hire foreigners if we did not find suitable candidates in Australia; however, investors we’ve been talking to want me to have my own visa, which is fair enough as they need to de-risk their investment as much as they can.”
It’s a Catch-22 of sorts – Australian registered VC funds are reluctant to invest in Boutiq because Villain doesn’t have a visa, but he is unable to obtain a visa without investment from an Australian registered VC fund. Given this dilemma, Villain said he is unable to stay in – or operate Boutiq from – Australia.
He has, however, made plans to move forward with the start-up. He is relocating to Singapore on a Singapore Entrepreneur Pass in mid-October, while his Australian co-founder Nick Watt is moving to Berlin: “The move won’t be without its challenges but I’m of the view that challenges will make us even stronger.”
Nomadic start-ups can adapt but…
Ultimately, Villain told the PM in his open letter, “nomadic start-ups like Boutiq can adapt and operate from other locations, the real impact is on Australia’s potential for innovation.”
The entrepreneur has proposed the 188 Entrepreneur Visa be amended to enable foreign entrepreneurs to quickly access a provisional two-year visa to help them establish their business, before graduating to the full visa once they have secured investment.
Asked whether the 188 visa should also be relaxed so that entrepreneurs don’t have to secure funding from a registered Australian VC fund, Villain replied: “As in Singapore, foreign entrepreneurs should show they have a source of income or savings to support expenses in the first 1 or 2 years. I think it’s fine to keep it to Australian VCs and expand it to Australian private investors, but NOT before securing the visa. The crucial point here is that entrepreneurs need to be able to establish themselves, start the business, with a fast visa process, to then be able to secure investment”.