Larry Marshall’s Main Sequence

James Riley
Editorial Director

The CSIRO marked a huge milestone this week with the formal launch of its Main Sequence Ventures and the unveiling of four investments it has made into Australian deep-tech startups.

CSIRO chief executive Larry Marshall these initial investments are a first step to filling a huge gap in Australia’s venture capital market. For all the VC that has washed into StartupLand in the past five years, the appetite for investment in deep-tech science startups has remained suppressed.

“The perennial problem for science has not changed,” Dr Marshall told this week. High risk investments into the mining sector are more Australia’s cup of tea.

Larry Marshall: The CSIRO chief is getting into his groove at the science agency

“We’re willing to take risks in speculative mining investments, but we’ve not been willing to take risks on science. Somehow science seems way too hard, and way too risky,” he said.

Main Sequence Ventures is the $200 million Bill Bartee-led fund announced in late 2015 as part of the National Innovation and Science Agenda to bridge that gap between Australian science prowess and mainstream money.

It’s all part of the Marshall Plan, the new infrastructure within the CSIRO design to drag science-based solutions off the lab bench and into the potentially commercial daylight. I spoke to Dr Marshall at length and will publish the full podcast interview next week.

It has not been obvious from the outside that new structures like ON Accelerate, Main Sequence or even the horizontally structured business unit Data61 would gel with the existing CSIRO cultural mores.

But there is a fair bit of momentum now – particularly on the back of the ON accelerator programs – and the arrival of the Main Sequence investment engine, the working parts have shifted a gear.

It is a largely Silicon Valley model being constructed in Australia, unsurprising given Dr Marshall’s professional background.

The notion that the CSIRO could be reshaped to be the catalyst for this structural change must have looked like a terrible bet in 2015 to many in the industry. But here we are. That crazy-brave decision to hire a venture capital guy to run a billion-year-old (seemingly) national science agency is starting to look pretty interesting.

The four Main Sequence investments unveiled this week (the fund has actually made six, but only talked publicly about four) are listed below. They are all interesting for different reasons.

But if CSIRO Innovation Fund initiative aimed to get science innovation out of the lab into the community where it can make a difference, then quantum computing startup Q-Ctrl is the most fascinating investment.

Founded by Sydney University researcher Michael Biercuk from the university’s Quantum Science Research Group, Q-Ctrl will take the parts of the emerging quantum computing ecosystem that can be commercialised, out of the lab.

Professor Biercuk will transition out of the university and into the Q-Ctrl startup over the next 18 months. He says the company aims to be cecome the trusted provider of quantum control solutions for all quantum technologies.

The investment was led by Main Sequence partner Phil Morle who spent a year-and-a-half building a relationship with the team and getting to understand the tech. Mr Morle also brought in yet-unnamed international VC partners.

That process was a key feature of the Silicon Valley ecosystem that Dr Marshall is trying to replicate in Australia through the ON Accelerate and Main Sequence – relationship building between science laboratories and entrepreneurs.

“Silicon Valley in the 80s took a lot of risk on science. It looked at science in the same way that Australians look at prospective mining projects,” he said.

Entrepreneurs and VCs spent a lot of time in deep tech laboratories at Stanford University building trust, “not necessarily to cut a deal, but trying to learn and to build a genuine relationship with the inventors and scientists, because they knew that was a long term investment.”

“And that process broke down a lot of the distrust between the entrepreneur and the science, the inventors and the finance [both] as a historically adversarial relationships.

“We don’t have that here [in Australia], and I think that is  hurting us in terms of our innovation agenda,” he said.

This is where the CSIRO is looking a lot more interesting to the rest of the nation than it looked three years ago.

Of course innovation takes many forms, Dr Marshall says, it’s not just about science. “But in the context of the national science agency, that’s how we look at it.”

“Even with all this money raining down in venture capital [in Australia], that investment is focused away from the lab bench, rather than toward it,” he said.

“That’s the gap we are trying to fill. We are trying to be the bridge between the innovation that happens on the lab bench and [an investment-ready stage.”

“The ON science accelerator tries to move the idea sitting on a laboratory bench to some kind of prototype, and then the [Main Sequence] fund tries to move that prototype to something that an Australian venture firm or an Australian private equity fund could see as de-risked enough to invest in,” Dr Marshall said.

“We are not trying to take it all the way. We are trying to fill a market gap – a market failure – that we see about investing in science.”

The four Main Sequence investments announced this week were:

  • Q-Ctrl – A quantum computing startup being established under the leadership of Professor Michael Biercuk from the University of Sydney. Q-Ctrl will address the important issue of error control in quantum computing
  • Morse Micro –Imagine Wi-Fi devices that can run many years on a single coin cell battery. Or forever from harvested energy. With low peak power requirements and energy usage 100-200 times lower than conventional wireless links, long lasting IoT devices will become a reality
  • Maxwell MRI – Maxwell MRI is rethinking the way we detect and diagnose disease. By combining machine learning with medical imaging. It is making cancer diagnosis faster, more affordable and more accurate – starting with prostate cancer
  • Intersective – Intersective is an experiential education tech startup co-founded in 2012 by veteran entrepreneurs Wes Sonnenreich, Beau Leese and Suzy Watson. Its Practera platform powers a range of experiential learning programs like internships, cross-functional projects, accelerators, mentoring and skills micro-credentialing, delivering better outcomes for educators, employers and learners

A full podcast interview with Dr Marshall will be published by next week.

Do you know more? Contact James Riley via Email.

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