What funding opportunities will the recently announced Commonwealth Commercialisation Institute provide young, emerging businesses?
The short answer is that we don’t know.
Despite the announcement of $196.1 million over four years and $82 million per year thereafter, no details have been released as to the precise mandate of the CCI or the mechanisms by which it will deliver services to the innovation sector and make funding available.
The Government has released a questionnaire to facilitate the submission of thoughts/ideas with respect to these questions, but has only provided very broad objective statements as to the motivations behind the creation of the Institute.
On the one hand it is disappointing that despite the enormous effort put in by the innovation sector to inform the Cutler Report, it appears that we remain in consultative mode with no concrete model put forward for critical commentary.
On the other hand, we are presented with an opportunity to further inform Government decision-making and suggest innovative methodologies to address points of “market failure” in our innovation economy.
All of us that have been working in this sector for many years understand only too well the paucity of skills and resources available to help our technological innovators. We invest $billions in technology R&D through our universities and research institutions and expect the results to sell themselves.
Working out how and in what form to bring innovation to market, or as I like to call it “Commercialisation R&D” is a crucial link in the chain that is not widely appreciated because the vast majority of people have not built businesses out of novel/innovative technology. It’s not simple (hence the very poor conversion rate) and, in my view, it is worthy of Government funding – just as classic technology R&D is supported.
Importantly this is not the role of venture capitalists. Their job is to deliver returns to their investors within, typically, a 10 year fund framework. This model is not designed to do Commercialisation R&D – it assumes that this work has been done, the results are encouraging and execution of the resultant business plan needs funding.
The funding of Commercialisation R&D is the point of market failure as it is inherently non-commercial work that, more often than not, results in failure. In fact, fast failure methodologies are critical so that scarce resources are not wasted.
If the CCI is to truly address market failure in the innovation sector, it must appreciate these realties and address them with bold initiatives that focus on education, opportunity selection and the application of skills, experience and funding to bridge opportunities from non-commercial R&D to commercial, investable propositions.
Doron Ben-Meir has been an active venture capital manager for the last eight years. He founded Prescient Venture Capital and prior to that was a consulting investment director of Momentum Funds Management. He was a serial entrepreneur over a 12 year period, co-founding five new technology-based businesses.
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