Australia is considering bringing together a group of large companies to form a management team to run a corporate venturing fund to back innovative small and medium-sized enterprises (SMEs).
A pilot of the project could start as early as next year, according to business organisation Australian Industry Group.
The group’s Innovation Review Steering Committee in its report, Innovation: New Thinking>New Directions, said: "Participants identified an opportunity to facilitate development of knowledge and experience in corporate venturing, by bringing together representatives from large corporations to establish a corporate venturing management team and an associated fund that would seek strong returns on investment.
"At the same time, the deal-flow presented by SMEs provides the industry group members with privileged access to the innovative technologies that are identified and developed by the management team and coupled investment fund.
"In addition to boosting the competitiveness and profitability of participating corporations, this model is likely to prove immensely important for Australia in developing a much stronger SME sector and growing new companies with the potential to make a truly international impact."
The report made seven recommendations for improving the country’s innovation, including the corporate venturing pilot, after speaking with 400 businesses. The other recommendations are: transforming culture by showcasing innovation; leveraging the Australian broadband opportunity; building and embedding professional innovation skills; developing new models and incentives for research/business collaboration; re-examining the role of government procurement in fostering innovation; and streamlining access to government programmes and support.
The report came as local trade body the Australian Private Equity & Venture Capital Association said buyouts increased to A$2.18bn ($2.15bn) during the 12 months to end-June, while venture capital investment declined 7% to A$187m.