Procurement policy holds cyber startups back


Joseph Brookes
Senior Reporter

Australia’s cybersecurity startups have matured to a point where many have global potential. But a lack of support from the federal government in both policy and procurement is holding the sector back, according to a Melbourne cyber accelerator.

CyRise chief executive Scott Handsaker says beyond the government’s AustCyber growth centre there is little in the way of support for early stage cyber companies.

“Outside of that [AustCyber], the strategy from the Australian Government in not really focused on entrepreneurship,” Mr Handsaker told InnovationAus.

“They don’t really see it as critical, which I think is wrong.”

Cyber security industry policy
Government procurement policy is getting in the way of startup growth

The Australian government’s $1.7 billion cybersecurity strategy unveiled last year has been criticised for its lack of support for local industry.

The vast majority of funding for the strategy had already been announced and is re-appropriated from the Defence budget. It provides little attention to the local cyber sector including no incentives for startups and tech companies.

Experts have also pushed for a less fragmented approach to Australia’s cyber policies that sees cybersecurity as a national interest rather than a national security issue.

CyRise was founded in 2017 through a partnership between Deakin University and global tech service firm NTT. The accelerator provides funding and support to cyber statups in exchange for a small equity stake, and has typically focused on early stage Australian companies in its four previous cohorts.

Mr Handsaker, whose accelerator received support from the Victorian government to get started but now operates independently, says it is critical to support local cyber companies early on as their first customer is typically the hardest to get.

A risk averse culture from the federal government, however, means large cyber multinationals get most of the work, leaving the procurement lever unpulled, according to Mr Handsaker.

“From a government’s perspective, typically, they’re going to go with a really large company — often that’s a multinational company — so that they can feel confident and safe their services are going to be delivered. And that’s not always the case.”

“… There’s enormous opportunity to drive innovation by using a procurement lever. At the moment, federally, whatever they’re doing it’s not working.”

There is a similar challenge for cyber startups trying to work with risk averse large corporates in Australia, according to Mr Handsaker, who says big companies in the US, Israel and the UK are typically more open to smaller partners.

CyRise seeks to address the reluctance through the network partnerships it provides its cohorts, including the latest round announced this week.

The accelerator is taking on board five companies ranging from drone security to developer skills in its fifth and latest cohort. CyRise invests $50,000 into each team and provides a 14 week program. The companies are:

  • Dronesec: a cyber-uav firm providing security and threat intelligence for drones and drone operations.
  • Safestack: The startup’s academy trains developers, testers, analysts and architects in security skills to design, build and deploy secure, high quality software at speed.
  • Cyamast: an Australian cybersecurity technology and analytics company that has developed a new approach to asset visibility and anomaly detection for connected devices.
  • Byte25: a network monitoring solution providing comprehensive visibility of network security, performance and end user experience.
  • Traild: an AI-driven security product that patrols the payment workflow to protect businesses from business email compromise, insider fraud, supplier fraud and other threats.

“The quality of the teams just continues to rise,” said Mr Handsaker.

“100 per cent of the teams coming into the program have existing revenue, with more than half having customers spread across multiple countries.”

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