Innovation minister Greg Hunt will reset the government’s innovation agenda so it extends beyond start-ups, and has flagged a new fund to help businesses worth between $20 million and $200 million.
In a speech outlining the second and third waves of the National Science and Innovation Agenda on Thursday, Mr Hunt will seek to move the innovation agenda away from being an exclusively start-up affair, emphasising the importance of innovation for businesses regardless of size or age.
The Coalition built its election pitch around innovation and its potential to create jobs and stimulate economic growth. But critics say the message failed to cut through and even alienated voters, particularly in regional areas.
“Innovation is not just about tech start-ups or IT,” Mr Hunt will tell the AFR’s Innovation Summit.
“It’s also about established businesses doing things better to stay competitive in a changing environment … Innovation is happening on the factory floor, on our farms, at the supermarket checkout and in the office, in addition to the leading-edge research occurring in our science laboratories.”
While help for start-ups has been the dominant theme of the government’s innovation agenda so far, Mr Hunt will signal for the first time the establishment of a “national innovation fund”.
“While we have already established the Biomedical translation Fund and the CSIRO commercialisation fund, the venture capital sector has made it clear that there is a mid-level gap for commercialising technologies,” Mr Hunt will say.
“As companies grow from $20 million to $200 million in value, there is often real difficulty in finding investment capital.
“In this context I will be exploring with the sector the value of a broader national innovation fund based on matching debt or equity, rather than grants, for this mid stage commercialisation.”
Industry groups are likely to welcome the idea, having previously raised concerns that the government is too focused on very small businesses.
Labor will no doubt point to the fact that Australia had an Innovation Investment Fund before it was demolished by Tony Abbott on the recommendation of the Commission of Audit.
“This body provides direct subsidies to Australia’s venture capital industry,” the Commission of Audit’s 2014 report said. “In the same way other industry-specific assistance is recommended for abolition, to avoid distorting resource decisions across the economy, so should this assistance to the venture capital sector.”
Mr Hunt will also outline a third wave, which will involve cutting red tape and a national innovation, science and research plan.
He will say it should be easier for businesses to interact with the government and commit to “tackling the burden of unnecessary regulation, particularly where there might be duplication across federal, state and local government level”.
“The third wave will see Innovation and Science Australia, a new expert board chaired by Australia’s father of venture capital, Bill Ferris, prepare a national 2030 plan for innovation, science and research,” Mr Hunt will tell the summit.
The Australian Private Equity and Venture Capital Association has been urging the government to free up capital for what it describes as “scale-ups”.
That is, businesses that have “graduated from the initial startup phase with a proven product and market opportunity which now need further capital” to hire staff, grow sales and invest more in R&D.
“What the debate around innovation has missed until now is that the most significant funding challenge confronting fast growth businesses is the availability of later stage capital – amounts between $5 million and $20 million. If we concentrate on boosting the flow of capital into scale-up businesses, we’ll see a major economic payoff,” AVCAL chief executive Yasser El-Ansary said.
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