Industry Minister Greg Hunt is considering the launch of a huge new Commonwealth-backed venture fund to support Australian high-growth scale-ups and mid-tier innovators that have found it hard to raise capital in this country.
The current thinking is that a generic Innovation Fund would be launched in early 2017, Mr Hunt said.
It is expected to be at least $500 million, and would become the third such government-backed venture capital fund to be announced through the National Innovation and Science Agenda, following the creation of the $200 million CSIRO Innovation Fund, and the $500 million Biomedical Translation Fund.
Speaking at the launch of the Commonwealth’s $23 million Incubator support initiative at Stone & Chalk in Sydney, Mr Hunt said the new generic Innovation Fund was being considered as a part of a second wave of NISA initiatives.
The need for a fund is understood to have been looked at as an option by the newly-created Innovation and Science Australia as part of its audit of the Australian innovation ecosystem.
It is similarly understood that Innovation and Science Australia would manage the for-profit fund, in the same way that it manages the for-profit Biomedical Translation Fund.
Mr Hunt said the first round of funding-focused initiatives through NISA included the support through tax incentives to angel investors and early stage venture capital limited partnerships (ESVCLPs).
“Then we have the Innovation Fund that we are considering,” he said. “I’ve outlined that as part of the second round of the National Science and Innovation Agenda and that’s under consideration for early 2017.”
Mr Hunt has also outlined a new role for the powerful Innovation and Science Australia agency in helping to drive government procurement strategy that maps to Australia’s industry development goals.
He has also foreshadowed a willingness in government to explore new procurement methodologies that encourages new thinking. The Industry Department is running a pilot program of grants-based ‘challenges’ to test the appetite for this kind problem-solving-as-procurement.
But the involvement of Innovation and Science Australia as an agitator for improved industry development outcomes is new and interesting.
Successive Australian governments have for at least a decade shied from drawing any direct line between procurement and industry development outcomes – leaving Australia’s mid-tier tech innovators frustrated and out in the cold.
Mr Hunt has signalled a change.
“One of the tasks that Innovation and Science Australia will be helping to drive is in government procurement,” Mr Hunt told InnovationAus.com. “So Innovation and Science Australia under Bill Ferris is tasked with an increasing role in working right across government as a ‘Ginger Faction’ [an agitator].”
“Their role will be to really confront each and every department and every agency of government to help hold them to account and to help drive procurement in new products, which from our perspective will make government operations more effective,” he said.
Meanwhile, Mr Hunt has opened applications for the Incubator Support initiative. Companies can apply for grants between $10,000 and $500,000 for the creation of new incubators in regions, or business sectors with strong links to international trade, as well as for existing high-performance incubators to expand their services.
As part of its program to drive new thinking in the startup ecosystem, the initiative includes a component where incubators can apply for dollar-for-dollar funding of $25,000 to bring in experts-in-residence.
The incubator initiative was originally announced as an $8 million program as part of NISA, but the government committed a further $15 million over four years to accelerate the flow of new businesses.
The additional funding was also tagged with a more rural and regional flavour, and it seems clear that government wants incubators to find their way into regional and outer metropolitan centres.