PROCUREMENT: DIGITAL MARKETPLACE

The Federal Government is creating a new digital marketplace to make it easier for start-ups and small and medium businesses to sell to and work with government.

Prime Minister Malcolm Turnbull has allocated $15 million for the Digital Transformation Office (DTO) to develop the Digital Marketplace – an online directory of digital and ICT services from which government agencies will procure – to improve competition and promote innovation across government.

“The Digital Marketplace will break down barriers to entry and make it easier for start-ups and small and medium businesses to compete for the $5 billion government spends on ICT each year,” Mr Turnbull said.

 

CYBER SECURITY COLLABORATION

AN INDUSTRY-LED Cyber Security Growth Centre is being established by the Federal Government.

Prime Minister Malcolm Turnbull said the government was investing $30 million in the Cyber Security Growth Centre, to create business opportunities for Australia’s cyber security industries.

“Attacks on Australia’s cyber network costs billions of dollars to the economy each year,” Mr Turnbull said. “The Growth Centre will bring together industry, researchers and governments to develop a national cyber security strategy and coordinate research to reduce overlap and maximise impact.

“This will help all Australians and businesses be safer and more secure online.”

It is the first initiative to be delivered under the government’s Cyber Security Strategy, to be released in 2016.

 

OPEN DATA INNOVATION PUSH

GOVERNMENT agencies will soon be required to “make appropriate data openly available by default in machine readable and anonymised form” Prime Minister Malcolm Turnbull recently announced.

He said the Federal Government would release a Public Data Policy Statement as part of the National Innovation and Science Agenda (NISA) to formalise the government’s commitment to open data and data-driven innovation.

Government agencies will publish the open data through data.gov.au

“Spatial data, in particular, is becoming increasingly important to the economy given the rapid take-up and use of mobile devices in Australia,” Mr Turnbull said.

“The government will release one of the most requested high-value datasets, PSMA Australia’s (PSMA) Geocoded National Address File (G-NAF), and their Administrative Boundaries datasets.

“Making the G-NAF available under open data terms will remove barriers that restrict the data’s use and promote innovation,” he said.

“These measures combined will help to create a more innovative and entrepreneurial Australia.”

www.innovation.gov.au

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FOREIGN Minister Julie Bishop believes the Australian Government’s new National Innovation and Science Agenda (NISA) will boost work being done through her department’s innovationXchange collaborative economic development hub in the Indo-Pacific region.

“The innovationXchange, an exciting hub within the Department of Foreign Affairs and Trade (DFAT) is already demonstrating how new partnerships can address development challenges in Australia’s region, including through our work with Bloomberg Philanthropies to collect health data via mobile devices,” Ms Bishop said. 

Ms Bishop said NISA would ensure Australia “is an enterprising, entrepreneurial and creative nation, capable of maximising the benefits from the economic transformation taking place in the Indo-Pacific region”.

“As part of this Agenda, the government's overseas network of more than 130 posts will promote Australia’s innovation, science and research capabilities overseas,” Ms Bishop said.

“Our diplomatic posts will connect Australian innovators with business, the Australian diaspora and the international alumni of Australian universities, including through internship placements for Australians under the New Colombo Plan.

“The Agenda commits to reviewing the Film Location Offset designed to attract major motion pictures to be produced in Australia and provide jobs in our creative industries,” she said.

“The recent decision to provide a top up to the Location Offset for two projects was instrumental in securing the agreement to produce in Australia the new Twentieth Century Fox Alien film and Disney/Marvel’s Thor: Ragnarok.

“Strengthening Australia's innovation and research links globally, and connecting with international investors, will lift Australia's domestic innovation performance and help Australia maximise opportunities in the new global economy.”

The Foreign Minister said new international profile brought to Australia's innovation and science capabilities would also attract international entrepreneurs “to visit and work in Australia and enhance Australia’s economic prosperity and international competitiveness”

www.dfat.gov.au

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INTERNATIONAL innovation hubs in five key markets are being established by the Federal Government as part of its Global Innovation Strategy.

Trade and Investment Minister Andrew Robb said the overseas hubs – to be called Landing Pads – would assist emerging Australian companies with in identifying and engaging with international opportunities in overseas markets. 

“Landing Pads will be created in key global innovation hotspots including Silicon Valley and Tel Aviv to give Australian entrepreneurs and start-ups a short-term operational base,” Mr Robb said.

“A Landing Pad provides for a collaborative workspace and facilities including office space and meeting rooms for up to two months, as well as accelerated access to international business networks, entrepreneurial talent, business development and investment opportunities.

“The Landing Pads will be established by Austrade in the US and Israel, with a further three locations to be identified in the near future,” Mr Robb said.

“Austrade will also provide access to tailored services including mentoring, business coaching, identifying investors and potential business partners.

“This is a valuable new resource for Australian companies and will help foster the innovation and entrepreneurialism we need to create new jobs and build the industries of the future,” Mr Robb said.

Mr Robb said the Global Innovation Strategy was the key international element in the Australian Government’s $1.1 billion National Innovation and Science Agenda (NISA) and will support Australia’s ongoing economic diplomacy and science diplomacy efforts globally.

“Through the strategy, Austrade will receive $11.2 million in new funding to establish five Landing Pads and also develop a new annual in-bound innovation forum to foster collaboration and encourage international market experts, entrepreneurial talent and investors into Australia,” Mr Robb said.

He said a focus on innovation will also be a key theme of Ministerial-led business missions such as the forthcoming Australia-United States Business Week, February 16-26, 2016.

www.innovation.gov.au

 

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TECHNOLOGY and business entrepreneurs will be encouraged to bring their ideas to Australia through visa reforms.

The Federal Government has announced changes to migration and business visas to attract what it calls “talented and highly educated people” under the new National Innovation and Science Agenda (NISA).

The Minister for Immigration and Border Protection, Peter Dutton said a new Entrepreneur Visa will be introduced to attract innovative talent and changes will be made to retain high achieving foreign students in Australia. 

"The visa system is a key enabler of Australia’s ability to attract and capitalise on the expertise and ideas of foreign innovators within a global marketplace,” Mr Dutton said.

“We also have a strong interest in retaining highly educated individuals to contribute to a thriving knowledge economy.”

Mr Dutton said the new Entrepreneur Visa would attract individuals with unique skillsets, ideas and the entrepreneurial talent to Australia.

"It will be available for emerging entrepreneurs with innovative ideas and financial backing to develop their ideas in Australia,” he said. “Australia’s overseas networks will be leveraged to actively encourage entrepreneurial and innovative talent to come to Australia.

“We also want to retain highly educated, talented people whose knowledge base has been developed in Australia.

“We will make changes to facilitate a pathway to permanent residence for foreign students who are recent graduates from Australian institutions with specialised doctorate-level and masters-by-research qualifications,” Mr Dutton said.

Mr Dutton said ideas, skills and talent were essential to a high performing economy.

“The National Innovation and Science Agenda will change the way Australians work together to shape the nation," Mr Dutton said.

“The agenda includes initiatives to foster new start-ups, help businesses to grow, and prepare young Australians for the opportunities of the future.”

The changes would assist graduates in science, technology, engineering and mathematics (STEM) subjects or specified information and communication technology (ICT) and related fields.

“Innovation is an important building block for our nation’s growth and through these reforms we will ensure Australia can benefit from the expertise of the global marketplace,” Mr Dutton said.

“These changes remove impediments in the visa system to facilitate entry and retention of highly talented people.”

The reforms will be introduced in the second half of 2016, according to Mr Dutton.

www.innovation.gov.au.​

 

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EXTRA >>

THE Medical Research Commercialisation Fund’s (MRCF) current third round of capital raising has not just shifted the goal posts for biotech innovation in Australia, it has widened them substantially. It is a paradigm shift according to MRCF chief executive, Chris Nave.

It is still possible to miss, according to Dr Nave – and it is his job to “try to make these companies fail” because the ones that make it are likely to be big winners – but now innovative Australian biotech start-ups have a much greater chance of scoring. And scoring big, internationally. 

That’s because, for the first time, Australia’s superannuation industry is properly engaged with the fund to provide substantial financial backing to the biotech innovation sector.

In the past, Dr Nave said, the $3 trillion Australian superannuation industry did not consider the sector a safe-enough option for superannuation investment. However, the involvement and support of most Australian state governments over recent years, matched with some major success stories and financial returns from start-ups fostered by the MRCF program, has changed everything.

“We realised in the medical research sector that if we had a cardiologist or a clinician like Daniel (Timms) with a great idea (the complete artificial heart, BiVACOR), we had no ability to support the funding even to get the patents, let alone take it from the laboratory through to a development stage that either a pharmaceutical partner would come in to support it, or whether a traditional investor would come and support it,” Dr Nave said. “So what happened was a lot of our IP was being lost.

“The MRCF was set up to try and fill that funding gap. We went to a bund of research institutes and said, we want you to join a venture fund. If you join the fund, I’ll be able to raise the money. But if you join you have got to give us first right to review your opportunities.

“I went to the super funds and said I’m going to get some great institutes to join, if you give us money, they’ll give us first right to look at their opportunities.”

“We don’t just invest. We help establish these companies, we help put management teams around them … often we are the management team for the first two or three years while we are doing crucial experiments.

“We basically have every major medical research institute and every department of health in Australia as a member now,” Dr Nave said. “The most powerful thing is that we bring every one of these organisations together every six or seven weeks. They send a representative to that meeting.

“It probably sounds like an unwieldy meeting, but it functions incredibly well. It is the only initiative in Australia that brings together all of the clinical and medical research capability on a regular basis,” Dr Nave said.

“Normally, as we know, everyone is in their silos, busily researching away a applying for grants and competing for grants. This initiative helps us to look at all the capability in Australia and help create collaborations.”

Dr Nave said the benefit of this MRCF model is that the research partners get access to dedicated funding “so we overcome that early stage funding gap”.

“For the investors, they get first right of review of the opportunities, so they realise that there is real risk here, but they hope that they get the next Spinifex or the next Cochlear,” he said. “They are prepared for failure, to make sure they are at the table when they get that success.

“We have had strong returns from drug companies. Fibretech we sold late last year to Shire. It was a $552 million deal. That result represented a 62-times result for our total investment. So it was a really significant deal. When we talk about risk versus reward, this industry really pays off.

“Spinifex we sold a few months ago – I was on the board and I was the Australian rep on the transaction committee – and it was a huge exit, significant – it was A$998 million, the total deal. This is a Queensland-based technology, developed by a really smart researcher, but it started as an idea in a laboratory. It just shows we can do it.”

PARADIGM SHIFT

This approach changes fundamentally the way biotech can be developed in Australia and could help to set the country up as a world leader that consistently develops and commercialises breakthroughs.

“Funding for early stage opportunities really just doesn’t exist in Australia,” Dr Nave said

“It was either being licensed at sub-optimal terms to international companies or it just wasn’t being developed. They (university researchers) were publishing it and then moving on to the next thing. “Remember, this is taxpayer funded research. It should be an obligation for us to make sure we actually generate income and jobs out of the outcomes of that taxpayer funded research.

“As you can imagine, going to sandstone institutes telling them join a venture fund, that’s a bit of an anathema. And so I had great difficulty in the early days. I managed to get seven institutes to join in the early days and then got support from two state governments,” he said.

“Pretty quickly, within six months, word got out that we were actually doing what we said we’d do. We were helping them identify opportunities and we would help them package IP. Then we were hopping on the other side of the fence and investing.”

Dr Nave said the ongoing support of state governments had been crucial to progress.

“State governments have supported us through two election cycles and have all just committed to another seven years – they get funding that actually supports the infrastructure that they have been investing in and developing,” Dr Nave said. “Obviously, hopefully, we help to grow a sustainable industry.

“The MRCF has performed very well, we have been fortunate.

“We have 20 active companies and they cover all of the spectrum that you would expect in biotech – drugs, devices, delivery platforms and diagnostics. We have a number of Queensland companies.”

Dr Nave said the MRCF had success in the development, too, of device companies.

“Osprey we listed in June 2012,” he said. “It was the only company in the world in the biotech space that stayed above its list price. We have just completed a large 650 patient US study and the FDA have approved expanding claims. We have a focus launch at the moment in Texas and sales have doubled every quarter for the last four quarters. We actually have two term sheets on the table now with global pharmaceutical companies.

“GKC (Global Kinetics Corporation) is another story out of Florey (Neuroscience) Institute,” Dr Nave said. “This is a device for treating Parkinson’s disease. It is now being sold in 115 sites across 11 countries and growing rapidly and we have the major companies around the world all funding the roll-out of this product because it makes such a difference to their products that they co-sell with it. 

“Again, a device being manufactured here in Australia, with a market size that is actually bigger than Cochlear’s.”

But Dr Nave said the fund had also had its share of failures – but that went with the territory and it was something “we need to get better at embracing in Australia”.

“Failures have been very interesting for us,” Dr Nave said. “Our investors now feel really comfortable when we kill something, as they see it as investment discipline. Every time something fails we get better at that and we learn for what we do next.

“I often say my job is actually to just try to kill things quickly. The things that I can’t kill go on to be successes.

“As an industry and as a country we need to get better and more comfortable with failure. CEOs of these companies often have a black mark against them for two years before that is washed off and they get the next job.

“That’s crazy. We want people who have seen the movie before and know what it takes to be successful.

“What has surprised us is that because the MRCF is prepared to work with the organisations from the very beginning, sort out IP, write business plans, and then invest, we have actually attracted a lot of other capital that wouldn’t ordinarily come.

“For every dollar we have put in we have attracted another $7 of capital put in – and that’s cash. That’s not in-kind. That’s pure cash going back into the sector. That is a very significant modifier and a very big part, I think, of why state governments keep supporting us.”

The figures verified Dr Nave’s view that MCRF was a true paradigm shift for Australian biotechnology.

“Our first fund we returned over double the money and we have still got seven companies in that portfolio,” he said. “In the second fund we have returned all the fund and that one still has 13 companies left. Our funds have performed well. We have returned over 33 percent RoI over the last three years.

“We went back to our investors and said we took money the way you wanted us to, but we thinks we can push harder and so put to them a concept of splitting what we do into two parts.

“Part A is a $200m fund which is now closed in investing. Stage one of that we have set aside $50m to support 25-35 opportunities. So that is seeding heaps of stuff.

“We’d expect a lot of those to fail, but the important thing is that we get them out and we see if they’ve got a chance of success,” Dr Nave said.

“The companies that are successful go on to stage two, where we have $150 million and we can put up to $17 million per investment. For some of our drug companies this will take them through to phase two proof of concept and we will be able to exit like we did with Spinifex and with Fibretec.

“But the real paradigm shift has been that we now have a stage three for our device companies. We can now put up to $20-$30 million per investor, so up to $120 million per company into assets that truly have the chance to be global businesses.

“This is the paradigm shift because we have not had this capability in Australia – we have always been beholden to sell them at a certain stage overseas, or run the public markets path.

“Our investors are saying please give us real businesses that grow up and our crossover funds will then invest, and our super funds, our public markets funds will still invest and it will help your system and give us greater diversity,” Dr Nave said.

www.mrcf.com.au

ends

NEW TAX and business incentive measures under the Federal Government’s National Innovation and Science Agenda (NISA) will help to drive economic growth and jobs for Australia, according to Treasurer Scott Morrison.

Key among those measures are tax breaks for early stage investors, a new and more enlightened regime for counting tax losses and changes to bankruptcy laws aimed at helping fast-moving entrepreneurs to recover quickly from financial failures. 

“Innovation is critically important to every sector of the economy and the government’s tax and business incentives under the NISA will encourage smart ideas to encourage innovation, risk taking and build an entrepreneurial culture in Australia,” Mr Morrison said.

The Treasurer outlined the new measures to:

Provide new tax breaks for early stage investors in innovative startups. Investors will receive a 20% non-refundable tax offset based on the amount of their investment, as well as a capital gains tax exemption.

Build on the recent momentum in venture capital investment in Australia, including by introducing a 10 percent non-refundable tax offset for capital invested in new Early Stage Venture Capital Limited Partnerships (ESVCLPs), and increasing the cap on committed capital from $100 million to $200 million for new ESVCLPs.

Relax the ‘same business test’ that denies tax losses if a company changes its business activities, and introduce a more flexible ‘predominantly similar business test’. This will allow a start-up to bring in an equity partner and secure new business opportunities without worrying about tax penalties.

Remove rules that limit depreciation deductions for some intangible assets (such as patents) to a statutory life and instead allow them to be depreciated over their economic life as occurs for other assets.

INSOLVENCY REVOLUTION

Mr Morrison’s planned changes to insolvency laws and conditions in Australia bring it more into line with the US environment, where the ‘fail-fast-and-move-on’ culture is embedded in many Silicon Valley tech success stories.

“The government will also reform insolvency laws which currently focus on penalising and stigmatising business failure,” Mr Morrison said. “We understand that sometimes entrepreneurs will fail several times before they succeed – and will usually learn more from failure than from success.”

Mr Morrison said the reforms would:

 

Reduce the default bankruptcy period of three years to one year;

Introduce a ‘safe harbour’ for directors from personal liability for insolvent trading if they appoint a professional restructuring adviser to develop a plan to turnaround a company in financial difficulty.

Ban ‘ipso facto’ contractual clauses that allow an agreement to be terminated solely due to an insolvency event if a company is undertaking a restructure.

“The NISA fosters an environment that incentivises and rewards innovation, science and taking risks to succeed,” Mr Morrison said.

“These measures are the next step in building a more innovative and agile economy. The Turnbull Government is implementing a National Platform for Economic Growth and Jobs, of which the NISA is a central part. We are broadening and diversifying the economy through economic policies to build growth and increase the productive capacity of Australia.

“The NISA builds on the government’s responses to the Harper Competition Policy Review and the Murray Financial System Inquiry and is the next step in building a more innovative and agile economy,” he said.

“Whether it is the NISA, our reform of Australia’s financial system, a better tax system, national infrastructure plan, a stronger budget or competition policy, our focus is on giving Australians confidence that they can continue to work through the transition of our economy and ensure their families will be better off. The Turnbull Government is backing Australians in that task,” Mr Morrison said.

www.innovation.gov.au

 

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MANNY STUL may spend his days playing around with toys – but that has proven to be his great edge in business.

Mr Stul was recently named the 2015 Australian EY Entrepreneur Of The Year (EOTY) and he will travel to Monte Carlo in June next year, where he will compete against national winners from more than 60 countries for the chance to be named the 2016 EY World Entrepreneur Of The Year. 

In 1974, Mr Stul created what became one of the largest, most innovative gift companies in Australia. Skansen Giftware listed on the Australian Securities Exchange in 1993 – and 25 years later, he took control of Moose Enterprise. It has since grown from 10 people to more than 200.

Moose Enterprise designs toy products in Australia and develops, manufactures and distributes from its factories in China and Hong Kong to more than 80 countries. It is the fourth largest toy brand in Australia and is today the eighth largest in the US.

Mr Stul won the prestigious Australian EY EOTY title ahead of 27 other national finalists and was presented at an awards dinner held in Sydney recently.

Chair of the independent judging panel, Glen Richards, the founder and non-executive director of Greencross Limited, said the judges were impressed by Mr Stul’s persistent determination to develop innovative, high quality toys in an extremely competitive global market.

“Moose Enterprise is an Australian company that is taking on the world by combining an incredibly innovative local design team with the cost advantages of low cost manufacturing,” Dr Richards said.

“Manny has demonstrated an ability to understand the demographic of his target market and deliver high quality, innovative toys that are now attracting extraordinary demand from retailers around the world.”

Eight other fantastic Australian entrepreneurs also took home national trophies from the awards ceremony.

They were Kayla Itsines and Tobias Pearce of The Bikini Body Training Company; James Spenceley of Vocus Communications Limited; Cyan Ta’eed and Collis Ta’eed of Envato; James Muecke of Sight for All; Timothy Power of 3P Learning Limited; and Brian White, of Ray White Real Estate.

EY Oceania CEO and area managing partner, Tony Johnson congratulated the winners, saying the winning entrepreneurs’ stories provided inspiration and valuable lessons for those aspiring to emulate them.

“Entrepreneurs have an eye for opportunities and take calculated risks,” Mr Johnson said. “They drive job creation, spark innovation and grow our economy. It’s for these reasons that EY has a long-term commitment to recognising and supporting the best entrepreneurs from Australia and around the world.

“This year we celebrate the 15th anniversary of the EY Entrepreneur Of The Year awards in Australia. And every year we see the incredible talent and enthusiasm that Australian entrepreneurs bring to the table.

“On behalf of EY, I congratulate all of our 2015 national category winners for their innovative ideas, determination and entrepreneurial spirit. I wish Manny Stul all the best when representing Australia at the World EY Entrepreneur Of The Year awards in Monte Carlo next year.

“I’d also like to congratulate Brian White AO, chairman of Ray White Group, for being named as the first Australian winner of the EY Family Business Award of Excellence,” Mr Johnson said.

“Family businesses face unique challenges and the White family has navigated these challenges with great success for three generations. Ray White Group is a testament to the economic and social value that entrepreneurial families contribute.”

Commonwealth Bank group executive or business and private banking, Adam Bennett, said,

“The Commonwealth Bank recognises the great value entrepreneurs bring as innovators that find new solutions to old problems. We look to entrepreneurs as beacons of innovation and leadership. Their achievements and drive inspire the broader business community.

“Congratulations to all of the finalists and especially Manny Stul, this year’s Australian Entrepreneur Of The Year,” he said.

www.ey.com/au/eoy.

2015 EY Entrepreneur Of The Year national winners, by category:

Australian Entrepreneur Of The Year and Industry category – Manny Stul, Moose Enterprise Holdings & Controlled Entities

Emerging category – Kayla Itsines and Tobias Pearce, The Bikini Body Training Company

Listed category – James Spenceley, Vocus Communications Limited

Services category – Cyan Ta’eed and Collis Ta’eed, Envato

Social entrepreneur – Dr James Muecke AM, Sight for All

Technology category – Timothy Power, 3P Learning Limited

EY Family Business Award of Excellence –  Brian White, Ray White Real Estate

 

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