In January, Harry Johnson decided to jump on a plane to San Francisco to pursue his start-up dreams.
It’s a narrative we hear often in the Australian start-up sector, with our best and brightest swapping Silicon Beach for Silicon Valley in hopes of better investment opportunities and catching that big break. But Johnson’s motivations are different. In Australia, young start-up founders can’t incorporate a company until they turn 18.
Teen image from Shutterstock
Johnson turned 18 just this week, but by then it was too late for the eager entrepreneur: he’d already dropped out of school and got the ball rolling to set up his company — a location tracking app called Wombat, which swaps always-on GPS for text messaging technology to keep battery usage to a minimum — in the US.
Out of principle, he says he won’t be incorporating his company in Australia until the rules change.
“I tried to find ways to get past the issue,” Johnson explains.
“I tried to look for a co-founder [18 years or over] but the ones I wanted I couldn’t get and the ones who I could get I didn’t really want.”
While at least one company director must be 18 years old or over to register a company in Australia, in the UK the minimum age is just 16.
In the US, company law differs from state to state. Some have minimum age requirements, while others — including California, where start-up dreams are made — have none.
Johnson says registering a company in his name will help considerably when talking to investors, many of whom won’t engage with sole traders.
A company structure also takes the burden of financial liability off the founding individual. That’s a key ingredient in the high-risk tech start-up sector, where a more holistic attitude to failure can encourage innovation.
Johnson is not alone in his frustrations. Sixteen-year-old Rafe Skidmore co-founded Stickasmile, which aims to bring happiness to the world — particularly to teenagers — through channels including social media, smiley stickers and merchandise.
He wants to register Stickasmile as a not-for-profit so he can use donations from its growing supporter base to fund the project, rather than his own money.
“If the government could change this [age restriction] I think there would be a heap more start-ups in Australia,” he says.
“It would encourage young people. I know heaps of people my age who have ideas to start companies.”
Fellow Glenaeon Steiner School student Harrison Shoebridge, 17, founded a coding club for Sydney kids called Hack Lab.
Harrison says he used to have to use his dad’s name when submitting the iPhone apps he created to the Apple App Store. He found the experience off-putting and says he would have been “way more productive” in his coding pursuits if he hadn’t been made to jump through hoops.
“In my eyes it pretty much sends the signal of ‘You’re not good enough to do this by yourself until you are 18’,” he says.
Harrison believes the message the age restriction sends to young people about entrepreneurship is “very contradictory” to the government’s National Innovation and Science Agenda, announced in December.
Federal assistant minister for innovation Wyatt Roy says the age restriction is worthy of further consideration. However, the government currently has no formal plans to address it.
Roy says he became aware of the issue after speaking with 11-year-old entrepreneur William Grame, who invented a prototype of a diabetes test-strip disposal unit.
“I’m not suggesting company directors as young as Will, but at the very least we should have a look at what other countries are doing,” the minister says.
Victorian minister for innovation Philip Dalidakis also says there would be “positives in such a change”. However, any change to age restrictions on company directors will need to happen at the federal level.
William Grame was able to appoint family members as co-chief executives of his company, Diabetes Domination. Not all ambitious kids necessarily have that level of support at home or elsewhere to help their bright ideas grow, however.
Victor Zhang, co-founder of not-for-profit organisation Generation Entrepreneur, which supports and encourages high school students who want to start their own ventures, says the age limitation can discourage young people from incorporating companies altogether, or to find loopholes — like shifting their business overseas.
According to the national start-up industry survey StartupMuster, nearly one in five start-ups is considering a move overseas, while one in four is considering a capital raising overseas in the future.
Zhang says support for school aged entrepreneurs is growing in Australia but remains missing from the government’s recent investments in innovation and entrepreneurship.
“There is almost nothing in the high school sector helping young entrepreneurs,” he says.
StartupMuster statistics show teenagers make up just a small portion — 1.3 per cent — of Australia’s start-up community.
However StartupMuster chief executive Monica Wulff says that number could grow if impediments such as company age requirements were removed.
“I think there is an opportunity to delve further into that,” she says.
“I can really understand the frustration young entrepreneurs would have if they were able to get through other barriers in the whole start-up development process — only to have the last hurdle be a tax or legal issue of this nature. It is saddening,” Wulff says.
Peter Bradd, founding director and chairman at StartupAUS, says the industry advocacy body “definitely wants to see more kids exposed to entrepreneurship at a young age”, and sees “no reason” why capable young people like Harry, Harrison and Rafe shouldn’t be able to start a company.
“It’s part of the cultural change Australia needs,” he says.