One bright idea that could transform innovation in Australia

Australia lacks a small business industrial research program (SBIR) like the United States, and I would argue it has been a vital ingredient for the innovation success in the US for three decades. My day job is advocating for the Cooperative Research Centres in Australia, but I think the number one thing we need is a system that fires up our Start-up/spinoff sector to a much greater degree.
The SBIR scheme in the States serves two purposes: (!) it encourages spin off and start up companies (over half of all spinoffs in the States are spun out to access the scheme) and (2) it is a procurement scheme for government, so the company has the first customer for its product or service lined up. I've written about the scheme in more detail here: The other important aspect of the SBIR scheme in the US is that it is big. Between it and the STTR scheme, they fund nearly 60% of early seed capital, leaving the private VC sector to concentrate on its areas of interest. SBIR achieves many of the things we need in Australia: a bigger VC pool; a more entrepreneurial culture at the university level to move ideas out; start-ups with a customer locked in and ventures that are addressing the national needs (because it forces government departments to articulate their innovation needs).

user picture Tony Peacock · 3 years ago · 178 votes · 7 comments
Not only are these good programs, as I understand it, but they have the enormous benefit of having been in place for long enough for the market to understand how they work and access them to everyone's benefit.
Robert Mitchell · 3 years ago
Perhaps Consider the Victorian Market Validation program as a more nimble model to SBIR.
Graydon Smith · 3 years ago
Mark makes a great point re the SBIR program in the US. The Victorian Govt had a limited program based on the US SBIR program. First there was the Market Validation Program, and then the previous Vic Gov rebranded it as the Driving Business Innovation program. Instead of being driven by Govt, in terms of topics funding, there were proposed challenges that were selected, and these were proposed by government funding organisations that had specific needs. This program was not bad, but there has to be care taken in terms of which programs are selected for funding. A strong panel of judges that understand the various disciplines is needed. One year there was on specifically on health. In other years, they were on a variety of topics. In terms of the granting process, the first round was a smaller amount to prepare a feasibility report. Then the second round, over $1M, was competitive based on quality of the submission. Like the SBIR program, no matching funding was required. From the entrepreneur's perspective, this is key!
David Lester · 3 years ago
As you know Tony I have had considerable experience with the SBIR program in the US. Australia does have some programs with similar elements, but the key point if they are to work, is to recognise (as you have pointed out) that Government is in and of itself a large customer in its own right - particularly in areas such as Defence, health care etc. Innovation programs need to be linked (but not hard wired) to procurement...procurement policy should recognise investment made in innovation/new technology but success in winning R&D support funding should NEVER guarantee a contract. The best value principle is critical, but we need to get away from the idea that best value = cheapest purchase, and look at through life costs, as well as collateral benefits to the broader economy (taxes on company profits, employees, re-injection of funds into retail from increased employment etc.) as one element in procurement decisions. The US does this reasonably well, but not perfectly. We can learn a lot from the SBIR program but there are in my view important modifications that we could make to make it work especially well in the Australian context.
Mark Hodge · 3 years ago
I used up all my votes, but if I had seen your suggestion I definitely would have voted for this.. Sounds like a very interesting program
Simon Spencer · 3 years ago
Great idea!
Shaun Coffey · 3 years ago
I like it, as it links industry with the Government.
Tony Rothacker · 3 years ago
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