The door is open on the federal government’s changes to capital gains tax (CGT) and that is the most important thing right now.
The proposed CGT changes are not final. The government has said it will consult with the startup sector before finalising how the reforms apply to new businesses, and Labor MPs reportedly expect some form of concession for startups may emerge after the backlash.
So yes, founders should make the case.
Australia should incentivise innovation. We need more ambitious companies, more competition, more R&D, more scale-ups, more skilled jobs, more employee wealth creation and more Australian ideas being built here, instead of being finished somewhere else.
But if founders want to win the consultation, the message needs to change. Right now, too much of the story sounds like: “Founders and investors will miss out when they exit.”
That may be true, it may matter and it may affect behaviour. But as the headline argument, founder loss is a hard sell.
Get the best of Startup Daily straight to your inbox
Want to know the latest in startup news? Subscribe to our daily news and analysis coverage on what’s happening to ANZ startups, investors and the broader ecosystem. And best of all, it’s FREE!
By continuing, you agree to our Terms & Conditions and Privacy Policy.
Most Australians are not sitting around worrying about someone else’s liquidity event. They are thinking about rent, mortgages, wages, groceries, childcare and whether the economy is working for them at all.
That does not mean startups are wrong, it just means the messaging is.
Lead with employee upside
The stronger case is not founder loss. It is employee upside.
Startups use equity because they often cannot compete on cash alone. That is the deal. Join somewhere riskier, come in before the playbook exists, carry more ambiguity, build something that might not work. In exchange, you may share in the upside if the company succeeds.
It helps startups attract talent from bigger, safer and better-paid companies. It gives employees a reason to bet on the mission, the product, the team and the future. It creates the possibility that the people building the company can share in the value they help create.
That is the story founders should be telling.
Not, “protect my exit”, but, “protect the ability for early-stage companies to attract talent, share upside, build capability, create jobs and keep innovation in Australia.”
That is harder to dismiss and gives the government something useful to work with. The public does not need to be convinced that every founder deserves a bigger payday. It does need to understand how equity helps everyday employees take a career risk, join a growing company, build skills and participate in upside they would not get in a standard salary role.
That is the card to play. Play it properly.
The old jobs story needs receipts
There is an uncomfortable bit here too. The startup sector cannot rely on old-growth mythology.
There was a time when the jobs argument almost told itself. When startups were growing headcount by 20% – 30% year on year, the public value was easy to point to. More people hired, more skills built, more wages paid, more future leaders developed, more economic activity created.
But this is not 2021. The current market has been shaped by restructures, slower hiring, AI-driven efficiency plays and “doing more with less”. If the growth story is now closer to 5% – 10%, the jobs argument does not disappear.
It just needs better receipts. Jobs created, skills developed, employees participating in equity, talent retained in Australia, capability built here, competition created, Australian ideas scaled here instead of offshore. That is the public value case and it needs evidence.
Don’t forget your people
Founders also have another audience: not the government, investors, LinkedIn or the group chat.
It’s your people.
Employees and candidates are watching this debate and quietly doing the maths. This is where founders need to lead with clarity and confidence, not fear.
Michelle Obama recently reminded Melbourne that “leadership is hope, not fear”. The way founders talk about this will either create clarity or create panic. It will either help people understand uncertainty, or make them feel like the ground under their reward, career and trust just got shakier.
Your team does not need panic. They do not need memes. They need clarity.
What is known, what isn’t, what is subject to consultation, what they should seek independent advice on and how the business will keep them informed.
Equity was never just a line in an offer. It was a promise.
A bet on the company. The mission. The team. The future.
If the rules around that bet might change, your people deserve more than noise. They need you to steady the ship.
Remember that the success of your startup is more contingent on what your people do today, not less on what may happen on taxation around a potential liquidity event.
The story that wins
The consultation door is open. Do not waste it on the weakest version of the argument.
Back innovation, yes. But make the case through the people who build it.
The employees are taking the risk, the teams are creating the value, the skills are being developed, the jobs are still being created, the capability is kept here and the upside is shared beyond the founder and investor table.
That is the story that the government can hear, the story the public can understand, and the story your people need to believe in. Remember that equity is a promise and a bet on the company, the mission, the team and the future.
The founders who handle this well will not be the loudest ones online. They will be the ones who turn uncertainty into trust, and trust into a stronger reason to join, stay and build.
The door is open. Now tell the story that gets people through it.
- Deepak Singh is the founder and chief culture officer at Mission and Rhythm, helping startups get their culture right.
