New innovation fund takes shape
Bill Ferris: Chair of the powerful Innovation and Science Australia
With the appointment this month of investment managers to oversee the $500 million Biomedical Translation Fund, Industry Minister Greg Hunt will likely now turn to the creation of a generic innovation fund of the same magnitude.
A Commonwealth-backed venture fund to support Australian scale-up and mid-tier techs seeking to re-engineer for growth would fill a hole in the capital market, and a noticeable gap in the Turnbull Government’s policies on capital attraction.
Such a fund would be the third such government-back venture capital initiative to be announced as part of the National Innovation and Science Agenda (NISA), joining the $200 million CSIRO innovation fund and the Biomedical Translation Fund.
Mr Hunt has previously flagged a generic fund to InnovationAus.com in late September. You can read about it here. More recently, Mr Hunt confirmed that the proposal remains under active consideration in an interview with Paul Smith at the Australian Financial Review.
So why is the fund under such active consideration now?
First, the appointment of Brandon Capital, OneVentures and Bioscience Managers as fund managers to the Biomedical Translation Fund, that program is now complete from a policy perspective.
It is not entirely clear why it took so long to make those appointments, given the plans for the fund were announced more than a year ago. But a two month election campaign, and the slow-off-the-mark formalisation of Innovation and Science Australia (which oversees the BTF) as an entity is a clue. And the fact that ISA chief executive officer Charles Day has only just been appointed to the job a month ago.
The creation of a generic innovation fund of this magnitude obviously has budget implications – even if the $250 million Commonwealth contribution is borrowed, as would be likely. And so its creation would need to be considered in the context of the May 2017.
If for whatever reason the government preferred that the fund not make an appearance in the mid-year economic update (MYEFO), then it could not be decided on prior to MYEFO (Government is bound to make public any new initiative that has an impact on its accounts in MYEFO, just as it does in the budget each May).
With the economic update now out of the way, expect a more detailed discussion on a new generic innovation fund to begin earnest.
It is worth noting also that Innovation and Science Australia – which would be expected to also oversee such a generic fund just it oversees the Biomedical Translation Fund – is only now completing its performance review of the Australian innovation, science and research system.
The audit is supposed to provide a baseline of data and will be used to help construct a 2030 strategic plan for innovation. But it should also point to gaps in the funding market that would benefit from Commonwealth intervention.
The performance review results are expected to be announced in January. If you were looking for ducks to put in a row to make sure you were making the right investment in the right area – these results should provide many.
These are all good reasons to think that a new Innovation Fund is on the agenda for 2017. The other reason is the fact that the Minister keeps talking about it publicly.
Greg Hunt has been getting great reviews from the broad innovation sector since he was appointed to the Industry, Innovation and Science portfolio following the July election.
Watch this space.