During March 2024, Investment NSW called for responses to a set of discussion questions about the NSW Innovation Blueprint it is developing to position NSW as a global frontrunner in innovation, attracting new investment, ideas, industries, and talent. This document summarises Cruxes Innovation’s response to those questions.
Major contributions to our submission came from NSW-based deep tech startup legend David McKeague.
The NSW government in its 20-year R&D roadmap has identified four target technology themes. We believe NSW has the potential to be a major producer of innovations that fuel the creation of new businesses, jobs, and wealth in these target themes. To do so, we believe it’s important to develop CRITICAL MASS within each theme by catalyzing the creation of many new companies in each theme, across all levels of the value chain.
An example of success using this approach was the NSW-headquartered Australian Photonics Cooperative Research Centre (CRC) in the 1990s, which, through its commercialisation arm Redfern Photonics, created more than half a dozen startup companies based on Photonics CRC research. These companies operated at multiple levels of the telecommunications value chain – components, subsystems, and equipment. The legacy of this approach includes Finisar Australia, employing 270 people in Sydney, and emerging new ventures such as Cylite, Baraja, Terra15, and FiberSense founded by Redfern Photonics spinouts’ alumni. In contrast, in the radiofrequency (RF) electronics sector, Australian venture investors have made at most one major investment per decade (Radiata, Nitero, Morse Micro), and this has not created a valuable new Australian industry sector.
A barrier to creating critical mass is the unwillingness of existing venture investors to make multiple investments in a single theme or sector. We recommend that the NSW Government set a target of 10-20 NSW or Australian new ventures, at multiple levels of the value chain, receiving Series A funding in two years in each target sector.
Another barrier is the lack of “venture builders” with the expertise and networks needed to partner with technical founders/inventors (e.g. university researchers) and drive foundation of new ventures that “escape” from their universities and commercialize their inventions. There is evidence to prove that, with sustained, structured support, mentoring, and training, PhD students and early-career researchers can become highly investible builders of early-stage ventures based on their research. We recommend that the NSW government partner with specialist executive recruitment agencies, globally connected incubators, and innovative coaching and training providers such as Cruxes Innovation who have direct experience working with researchers, technology innovators, and early-stage tech startup founders to pilot novel venture builder creation programs.
Barriers to innovation by existing NSW businesses include: limited skills, confidence, and capacity of business owners to simultaneously EXPLOIT their current products and business model and EXPLORE; their limited skills, confidence, capacity, and networks to access, navigate, and leverage the research system; the small size of the domestic market for the resulting products combined with business owners’ limited skills, confidence, capacity, and networks to explore and address global markets; and limited funding and support for them from experts and peers to explore and fuel innovation. To reduce these barriers, we recommend that the NSW government fund: incentives, financial support (risk reduction), and programs for the leaders and owners of these businesses to acquire skills and expert support to conduct market validation (domestic and global) for novel innovative outputs – including validation that the innovation outputs are scalable to a global market; neutral brokers to help them access university resources; and initiatives to foster peer support “innovation communities” of business owners who are pioneering commercialization of novel innovation outputs.