Rachel Lebihan has written a piece in the Australian Financial Review covering my submission to the Australian Federal Government’s review of the state of entrepreneurship and venture capital.

I’ve uploaded a scan of the article here and here.

It’s one thing to say, “Where there is a will, there is a way,” but another thing to go out there and put it into practice. The team didn’t want to be another startup that complains about how difficult it is to raise capital. We wanted to take matters into our own hands and do something about it. The need to stay alive was also very motivating.

We’re a strong team, and not only do we know what we have been capable of doing in the past, we know what we can do in the future, and to what extent we are willing to go to make things happen.

Yesterday, Eric Ries spoke to another, much larger, audience on his Lean Startup theories. The auditorium at the Australian Technology Park hasn’t buzzed like that since the heady days of 1999!

Eric’s thesis that we should be measuring and managing startups in a much more sophisticated way totally resonates with me. I have been calling for a science of startups for a while now and in fact included this as one of my main points in a submission I put forward to the Australian Federal Government earlier this week. They had put out an Issues Paper calling for submissions (I understand this was targeted at certain people and organisations) on the state of entrepreneurship and venture capital in the country.

My submission (you can read the entire thing here) spoke to the establishment of an Australian Centre for Entrepreneurship & Venture Capital (ACEVC). This Centre will include an Entrepreneurship Conservatory that is focused on developing a results-based set of training programs for upskilling entrepreneurs using a real time, interactive pedagogy that will form the basis for a ‘science of startups’.

I also call for a VC College that can provide real life experiential training on the job for successive generations of Australian venture capitalists – an initiative designed to build up a true venture capital industry.

I believe that ACEVC is transportable to many other geographies so for all metarand readers from other parts of the world than Australia: feel free to adopt these ideas for your own country.

Besides Eric’s push for lean startups another great evangelist for the science of startups is Steve Blank with his recently released book, The Startup Owner’s Manual. I highly recommend both books for entrepreneurs.

Should/when ACEVC gets up and running, it will draw heavily on the the great work Eric and Steve have done so far to codify the science of startups.

It really excited me for two reasons. Firstly, I find myself formally and informally mentoring entrepreneurs on a regular basis. It is something I’d like to formalise more into a wholistic entrepreneurial coaching program. Given this, many of the points made in the article resonate with me.

The second reason for my excitement is that I am a big believer in creating truly matrixed entrepreneurial ecosystems. I’ve experienced first hand how Silicon Valley, for example, works and one of my passion areas is fostering such an ecosystem in Sydney and across the region. Sydney is currently where Boston was circa 2010. We have a solid level of entrepreneurial activity bubbling up and some high profile wins. We also have successful serial entrepreneurs returning to our positive economic climate. But we are not sufficiently matrixed.

I was talking with a colleague yesterday who, having returned from a stint working in Silicon Valley, found Sydney to be bubbling with pockets of activity, but no true connection between them and unless she was looking hard these pockets were easy to miss completely.

This article explains beautifully just what is required to create a more matrixed ecosystem. It was only once:

Boston’s start-up “ecosystem” began to deeply interconnect – like some massive neural network…the community is nurturing, embracing, and considerate of its entire being…what was once an environment of competition and posturing has been replaced by one of cultivation and brotherhood.

Are you starting to get the picture?

The momentum that’s brought Boston into 2012 is irrefutable. Everywhere you turn new nodes are being created and synapses are firing.

Similarly, Sydney can benefit from the approaches Dave and Jennifer are advocating, namely spiderweb mentorship and horizontal entrepreneurism.

The crux of the piece is around spiderweb mentorship, which they illuminate on as such:

This is about creating the strongest start-up “web” possible, by weaving an incredible tapestry of ideas and connections, allowing for random new offshoots, connecting divided webs, and oscillating the whole entrepreneurial ecosystem into action.

How can this be achieved?

They argue, and I wholeheartedly agree, that this occurs when experienced veterans (mentors) focus not on making each individual entrepreneur better, but on making the system as a whole stronger. Mentors must be open and willing to (a) connect with people beyond only those with the right “credentials” and (b) focus on the development of “web-like” interconnectivity to other mentors and entrepreneurs.

There are 5 critical behaviors mentors need to follow in order to achieve this:

1. Take the unknown meetings with ambiguous agendas.

Yes, I do this, but will counter that while I’m a big believer in serendipity it can sometimes prove frustrating and one does have to balance the number of such meetings versus those with specific business agendas.

2. Follow the law of three introductions

I like this. I’m always looking for connections across my network and love watching synapses occur when like minds meet.

3. Be constructive – and critical

Indeed. Enough said.

4. If you’re a spider, show up!

I agree that corporate execs should be more prepared to mentor.

5. Start your own web

Looking back 15 years – it was the best thing I ever did!

Here’s a video of their product and the company’s CEO, Costa Koulis, talking about the market and his vision:

Asher Moses has written a wonderfully inspirational piece in the Sydney Morning Herald regarding the rise and rise of Australian entrepreneurial talent. In it he explores how well some of the Internet-focused startups born in Australia are doing in sourcing Silicon Valley venture capital.

It is a great story and touches on much of my experience over the past 15 years. Australia and, closer to home – Sydney, has an incredible wealth of entrepreneurs. But in Asher’s story there is also a hint at the dark side. Let me paint the picture in three ways:

1. Financial arrogance

While I was living in Silicon Valley I assisted a startup to raise its first round of funding from a tier one VC firm, in two weeks and right in the middle of the GFC. Fast forward to today and as Asher has eruditely pointed out, tier one VC’s from Sandhill Road are currently falling over themselves to get the attention of Australia web startups.

Against this backdrop, picture me meeting with a senior executive at one of Australia’s most successful investment banks in the past fortnight. In that meeting I was told how incredibly hard it is to find funding for technology businesses, how no-one is investing in this space in Australia and blah blah. Can you see the disconnect here?

I personally believe Australian ‘investors’ have a heightened level of financial arrogance driven by an absolute ignorance of technology and also tainted in their financial risk profiling by resource-based investing (mining etc).

As long as this position remains I can fully understand why Australian entrepreneurs are US-centric. For Australia though this amounts to a major loss as we are not only losing talent in droves, but also access to ROI as our entrepreneurs grow great businesses with other people’s money!

2. Technological bias

For as long as I can remember Australian government granting schemes and venture firms have had a bias against Internet-related companies. They have preferred to back biotech businesses and other science-heavy companies that are notoriously hard to scale globally and which usually have a hard time getting international attention due to the tyranny of distance.

It is heartening to see this position starting to shift and that web-focused ventures are in fact now getting more access to schemes like Commercialisation Australia.

3. Web-centrism

While I am ecstatic about Australia’s well deserved recognition (finally) for great entrepreneurial talent, I am somewhat concerned that we get seen as only producing web-centric talent and intellectual property.

The Australian Federal government pours some $9.8 billion into public research and there is incredible technology floating around within the countries 43 universities and even more public research institutes (by contrast the US only has 41 universities). However, most of this never sees the light of day. It gets locked up in over-protective tech transfer quagmires and/or stuck in the valley of death between research proof of principle and commercial proof of concept due to a massive lack of funding for this gap.

In contrast, in the UK companies like Imperial Innovations and the IP Group, and Allied Minds in the US, are absolutely going gangbusters building businesses around research intensive technologies and assisting IP through the valley of death.

Australia desperately needs a similar business and it is on my to do list for 2012 to see that one forms. We need to not only continue to support our web-centric entrepreneurs, but also inspire generations of Australians to become tech entrepreneurs in areas that can have major global impact such as energy and health!

Professor Sir Peter Gluckman, the Chief Science Advisor to the New Zealand Prime Minister, gave a talk on Monday, 5th December titled Innovation through science: the pathway to economic prosperity–a conversation with Auckland.

Much of what he has to say about Auckland could very easily be transposed and repeated largely and boldly in capital letters about Sydney.

His talk is about innovation, of the science and knowledge and based variety,  and how it can be used to boost the economy of a particular city or region through the creation of a well-developed ecosystem.

He defines innovation as being about using knowledge, research and experimental data to generate a product or service which has impact, generally by way of producing something to sell.

He points out that there are two myths that need to be overcome when discussing and developing a thorough understanding of innovation.

The first myth is that innovation is achieved by individuals working as backyard inventors. He rightly points out that the bulk of innovation emanates from multidisciplinary interactions. The reason for this is that innovation is first and foremost about doing things differently and as such requires a major shift from reductionist linear thinking. Such shifts mostly take place when disciplinary boundaries are crossed.

He points out that one of the attractions of big science projects is that they can become the nucleus and focal point for disparate disciplines to work together, leading to great new ideas. He uses the World Wide Web and wireless broadband as examples of incredible innovations that came out of such big science projects.

The second myth is that innovation takes place within a linear process moving in an orderly fashion from basic research to applied research to development to sales that is predictable in direction and time and readily divisible into these four categories. He very correctly points out that in science-based innovation, at least half the products that are developed and sold originate in research in an area of activity well away from that that started it.

He points out that science-based innovation requires at least two major components–firstly a sufficiency of ideas flow and secondly an ecosystem that’s allows the market and scientist to get close together. Statistically, he states that the Israelis believe that they need to evaluate at least 100 ideas that are thought to be of value in order to see one that actually justifies investment. As he says, this gives you an idea of the ecosystem we have to build.

And this is where we can start transposing because he points out that the Israelis don’t have any more researchers than New Zealand, just a better linked up system. The same can be said about Australia.

There are, of course, other components required to create a complete innovation ecosystem, as he points out these include access to capital, to professional expertise in capital raising, in IP management, experts in dealing with regulatory affairs and skills in managing an innovation company–as these are markedly different to the skills required to run a property investment company or, equally relevant to the Australian context, a mining, professional services or agricultural company.

He pauses for a moment to reflect on how New Zealand came to be in the position that it is in. He feels that their failure to move as far as other small countries in developing a knowledge economy is  partly a function of their cultural history. Australia has been called the lucky country and he could very well have been speaking directly about this country, as opposed to New Zealand, when he states: we have been a lucky country, able to live off of farming. Of course, in Australia we would add mining to this picture.

He feels that the lack of a sense of crisis and urgency led to an undervaluation of the role of intellectual activity and science, and contrasts this to countries like Israel and Singapore where a real sense of crisis led them to invest heavily in knowledge and science and science-based innovation. They had to use the only natural resource they really had–the combined intellectual horsepower of their well-educated populations.

We do not yet have a sense of acute crisis but things are starting to change. We cannot get rich by carrying on doing what we do now, and yet there are enormous demands for a better social system, for higher wages, for a cleaner environment. Clearly we have to be richer to achieve these things. And what is our unexploited asset–the very asset other small countries have recognised–we have a good education system and we have clever people, we have a stable society, we are corruption free–we are good place from which to make new knowledge, protect it, exploit it and export it. Even if we were in better shape than we are, there is another reason to invest more in the knowledge economy–we need to diversify, since diversified economies are more robust.

Ditto Australia.

He repeatedly used the term ecosystem in his talk. He did this intentionally. In Australia, as in his country, they have a habit of believing in single interventions rather than integrated systemwide approaches.  He notes that in every country that they looked at as a potential comparator and which has done well, that country has both recognised and acted on multiple points across the whole system simultaneously.

This is a point I have repeatedly made about Australia as well. We have had some great programs over the years but these have been provided from the stance of a single intervention strategy rather than viewing the ecosystem as the complex system that it is.

MULTI-LAYERED INNOVATION ECOSYSTEMS

This part of his talk is music to my ears:

Key to all of what I have been saying is a need to have a multi-layered innovation ecosystem. It has many components. It has to have local government committed to promoting, encouraging and if necessary, part-financing an “innovation city”. It needs the development of technology parks clustering academia and entrepreneurs along with support services. It needs institutions–hospitals, universities, technical institutes–to cooperate rather than compete. It needs venture capital. It needs a commitment to work together and to attract the best and brightest to want to live in Auckland (transpose SYDNEY). We cannot leave it all to central government even though their role is critical–the evidence is clear, local government must play a role.

 We have several academic precincts and we need to work out how to integrate and use each to maximal advantage without destroying their individuality.

WHAT WILL DRIVE MORE INNOVATION?

Four things matter, according to the Israeli experts he has spoken to, in driving more innovation. These are education, basic research, a holistic approach and a risk-taking attitude.

He goes on to talk about the Israeli model for incubators that are owned jointly between investors and the local authority or between the local authority and the local university. He points out that this model is based on a high ideas flow, and aggressive culling, high levels of investment and international management and technology input from the start. New ventures are supported with loans, not grants, to encourage entrepreneurial activity – written off if the product does not make it. Auckland has to work as “Auckland Inc.” to attract more risk capital to Auckland. It is uniquely placed to create an environment for this type of innovation.

Again, ditto Sydney.

KEEPING IT LOCAL

Much like Sydney, and the rest of Australia for that matter,  Auckland suffers from a major brain drain. All too often  we/they lose great entrepreneurs and scientists to other parts of the world. Recognizing this he highlights that while it’s one thing to build knowledge-based businesses, it’s quite another to keep them locally. Essential to doing that is to create an environment that keeps the R&D function in our city.

We have to build a city and a country that really values knowledge and science and entrepreneurship. We need technology parks, we need an intertwining of researchers, in the public and private sector, we need a world-class university and a vibrant knowledge-based ecosystem.

Spot on, and ditto Sydney.

The investment needed is partly fiscal, but so much more of it is psychological and motivational. Let us do the things that enable Auckland to brand itself as a city of innovation; a smart city in a smart nation.

Well said, Sir Peter!

At one point Sydney seemed to be heading in the right direction. We had a focus on brand Sydney, but I think we’ve lost the way – let’s focus laser-like on Sydney Inc or we will soon be shown up by our southerly neighbours!

]]> http://metarand.com/2011/11/17/the-university-of-sydney-in-hdr/feed/ 0 http://metarand.com/2011/10/23/singapore-paving-a-national-framework-for-research-innovation-and-enterprise/ http://metarand.com/2011/10/23/singapore-paving-a-national-framework-for-research-innovation-and-enterprise/#comments Sun, 23 Oct 2011 03:12:09 +0000 metarand http://metarand.com/?p=1171 In July 2009 I was compelled to write a paper on how I saw the Australian Federal government could assist in creating a ecosystem for research, innovation and entrepreneurship. At the time they had announced that they were going to set up a Commonwealth Commercialisation Institute. I wanted to give them some of my insights after more than a decade in the space in Australia and the US.

Fast forward more than two years. My paper was largely ignored. Instead the Federal government set up Commercialisation Australia, which is essentially yet another granting body. It does little more than hand out staged grants, there is no hint at the matrixed ecosystem this country so desperately needs to move itself forward.

In contrast let’s take a look at one country that is powering ahead: Singapore. Note that there are others doing great things too, but let’s just focus on one, that’s close enough geographically to really show off how far behind Australia is lagging.

Set up as a department within the Prime Ministers Office in 2006, Singapore’s National Research Foundation sets the national direction for research and development by putting in place policies, plans and strategies for research, innovation and enterprise, funds strategic initiatives, builds up R&D capabilities and capacities through nurturing Singapore’s talent and attracting foreign talent, and co-ordinates the research agenda of different agencies focused on transforming Singapore into a knowledge-intensive, innovative and entrepreneurial economy. One of the NRF’s aims is to make Singapore a talent magnet for scientific and innovation excellence.

In March 2008 Singapore’s Research, Innovation and Enterprise Council, which is chaired by the Prime Minister, approved the establishment of a National Framework for Innovation and Enterprise (NFIE). This framework was set up to encourage universities and polytechnics to pursue academic entrepreneurship and turn their R&D results into commercial products for the marketplace, while also assisting entrepreneurs to start-up technology based companies.

Currently the NFIE has a budget of $360 million, which is used to support a range of ecosystem creating initiatives, namely:

• Early Stage Venture Funds – the NRF invests $10m, on a 1:1 matching basis, to seed VC funds for investing into Singapore-based early stage high-tech companies. The VCs can buy out the NRF’s share within 5 years by returning NRF’s capital with a nominal interest;
• Proof of Concept Grants – grants of up to $250,000 are provided for technology proof of concept development projects, both for researchers and companies;
• Disruptive Innovation Incubator – this scheme supports a business incubator which invests in Singapore-based start-ups with disruptive innovation;
• Technology Incubation Scheme – the NRF invests up to $500,000 in Singapore-based start-up companies that are incubated by selected technology incubators;
• Translational R&D Grants for Polytechnics – the provision of development grants of up to $500,000 to researchers to carry out translational research;
• University Innovation Fund – the provision of funding to the Singapore universities for approved innovation-related activities;
• National Framework of IP Principles – a framework designed to speed up the licensing of IP from universities and research institutes to industry;
• Innovation and Enterprise Institute – the Institutes objective is to help develop the innovation and enterprise ecosystem by providing the necessary information, research methodology and relevant networks to galvanise innovation and enterprise activities in Singapore;
• Global Entrepreneur Executives – this scheme is aimed at attracting high-growth and high-tech venture-backed companies with global entrepreneurial executives in ICT, medtech and clean tech to relocate to Singapore. The NRF invests up to $3 million in matching funding to eligible companies via convertible notes; and
• Innovation Vouchers Scheme – local enterprises are give vouchers under this scheme that are redeemable for R&D and technical services from universities and public research institutes.