Big deal: Australia unveils $772m in spinout funding

We take a look at how Australia has been upping its government venturing game since Malcolm Turnbull took over as prime minister last year.

Australia has big plans – the country has undergone several fundamental changes since Malcom Turnbull contested Tony Abbott and became prime minister in September 2015.

That statement may come as no surprise to regular readers of the Global Government Venturing editorials, but it is nevertheless interesting to see that Australia is still busy improving its ecosystem.

In November 2015, Turnbull named venture capitalist Bill Ferris, a co-founder and co-chairman of Champ Private Equity, as innovation czar to advise the government on how to support technology startups and companies.

The announcement followed the preceding month’s news that the Department of Industry, Innovation and Science’s Industry Innovation and Competitiveness Agenda, launched by the Abbott government, was boosting funds by A$350m ($270m).

Since then, a range of superannuation funds, Australia’s retirement funds, have joined the VC world.

Australia has had a lot to catch up on. Editor-in-chief James Mawson took a closer look at the country’s funds in 2014 and explained how the availability of venture capital had been deteriorating steadily since 2006. Research institutes and universities were almost entirely lacking VC investments.

There were, of course, some. University-focused venture fund Uniseed was set up in 2000 with a first A$20m proof-of-concept fund provided by Queensland and Melbourne Universities. New South Wales University and superannuation fund Westscheme joined for a A$40m second fund in 2006.

In December 2015, Uniseed raised its largest fund to date at A$50m, as reported by Global University Venturing at the time. The fund attracted commitments from existing limited partners as well as Sydney University and Australia’s national science agency, Commonwealth Scientific and Industrial Research Organisation (Csiro).

The Turnbull government has been vocal about its intentions to increase collaboration between universities and Csiro, so the science agency’s involvement in that fund can only be seen as a welcome development.

And that collaboration is set to grow even further as the government will provide a significant chunk of a A$1bn capital injection into several funds.

Half of the A$1bn is going to a Biomedical Translation Fund, while the Csiro Innovation Fund will receive A$200m. The government will supply A$250m to the biomedical fund and A$100m to the Csiro fund.

The remaining money will come from private sources and possibly Group of Eight, a coalition of research-intensive higher education institutions – Western Australia, Monash, New South Wales, Melbourne, Queensland, Adelaide, Sydney and Australian National universities. Superannuation funds and UK-based commercialisation firm IP Group have also shown an interest.

IP Group’s reach into Australia is intriguing, and follows a statement by James Wilkie, chief executive of Birmingham University’s tech transfer office Alta Innovations, who recently told Global University Venturing that the UK’s biggest challenge is pipeline, and that investors may have to look outside the country.

The funds, which are expected to begin operations this year, should boost spinout activity in the country, but universities are not necessarily happy with the development – the funds might feel like a smokescreen for deeper cuts elsewhere.

Vicki Thomson, chief executive of Group of Eight, wrote in an editorial last Thursday: “In Australia universities deal with two major parties who have cut our funding. Since 2012 almost A$1bn has been removed by both major parties from research funding programs. A further A$262m over three years was removed from the Sustainable Research Excellence fund in last year’s federal budget.

“A further 20% cut to university funding remains in the government’s forward estimates and it will be extremely challenging to equitably fund these cuts from changes to student fees and payment terms alone.”

More could always be done, of course, and universities and governments may find themselves with competing agendas – though they should not. Politics might get in the way even more in the near future however, as the country’s federal budget will be released on May 3 and a federal election is looming with a deadline of January 14 next year.

With Australia currently ranking 27 out of 32 countries for public investment in tertiary education, the only way to go is up, and it would be foolish of Turnbull not to recognise that fact. But it remains to be seen whether the government can handle the delicate balancing act of making universities, venture capitalists, citizens and everyone else happy enough to ensure voters support Turnbull come election day. He is certainly trying.

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