Innovative region: Australia, Israel and New Zealand
Australia
Australia is one of the most exciting regions in the world for technology transfer. This is not due to a well-established system like those in Europe or the US, nor is it indicated by mega-companies coming from the country. It is due more to the fact that tech transfer in Australia, a country with six universities in the top 100 of the Times Higher Education’s World Reputation Rankings, is only recently coming into its own.
As Matt Barrie, CEO of Australia-based start up Freelancer.com, put it in a Global University Venturing guest comment last year: “With our population of 22 million and labour force of 12 million, there is no other industry that can deliver long-term productivity and wealth multipliers like technology. Today our economy is hailed by our prime minister, Julia Gillard, as a miracle, but the reality is it is in the Stone Age. Our gross domestic product (GDP) of A$1.6 trillion [$1.5 trillion] is 69% services but our ‘economic miracle’ of GDP growth comes from digging rocks out of the ground (mining 19%), shipping the by-products of dead fossils (natural resources 5%), and stuff we grow (agriculture 3%). This is great while commodity prices are going up and we still have stuff left in the ground to dig up, and people still want to buy it.”
Barrie’s thoughts on the Australian economy appear to be mirrored by many entrepreneurs and universities in the country looking to transform Australian knowledge into Australian dollars. However, there are numerous hurdles for the country to overcome before it can transform its resource-based economy into one that fosters high-tech innovation.
First and foremost is the people to drive the innovation. While Australia is increasingly a high-cost society cited in numerous reports as one with a future in the hands of technological innovation, graduates in science, technology, engineering and mathematics (Stem) have been dwindling. The percentage of students enrolled in Stem subjects is down across the board, and expansion has been hampered by a capacity gap due to a lack of teachers capable of educating in Stem areas. At university level, Barrie reports that of the 12,000 information and communications technology (ICT) graduates per year in Australia, two-thirds are international students looking to take advantage of Australia’s strong academic output before returning home.
To counteract the imbalance, Australia has launched the Science and Technology Education Leveraging Relevance (STELR) programme. While it is early days for the programme, which has trained extra teachers and seen increased retention rates in schools, it seems to be delivering results, and is being replicated in Singapore, New Zealand and Malaysia.
Another obstacle for Australian innovation comes in the form of the country’s lukewarm venture capital community. As Barrie noted: “According to the Australian Private Equity and Venture Capital Association’s 2012 Yearbook, the country has the lowest active number of VC managers doing deals compared with any time in the past 10 years. In the whole of 2012, outside renewable energy, only A$40m was raised by three venture capitalists for new funds. This A$40m was half of 2011, which in turn was half of 2010’s total.”
This lack of venture action has also knocked on to Australian exits, with total exits for 2012 down 72% to A$28m from 14 companies.
To reverse this trend, Australia must do what it can to bring the investors back into the country, and it seems to be making those first tentative steps in the right direction. The government has launched a $350m innovation investment fund to be spread over 14 years, offering $25m a year to stimulate the commercialisation of Australian research and development (R&D).
Incubators are also springing up around Australian universities. Incubate, the subject of this month’s spotlight, has begun a national expansion. Starting at Sydney University, the accelerator, launched in 2012, has gone on to attract Google as a partner to provide financial and mentoring support, and has begun offering its programme at Adelaide. The University of the Sunshine Coast’s Innovation Centre also attracted international attention when it made it to the University Business Incubator (UBI) Index’s top five university incubators last year. Newcastle University is also hoping to put the Aussie coal town on the map
with its new incubator, Slingshot.
Australian spin-outs are also showing their ability to edge into international markets. Hatchtech, a spin-out from Melbourne, recently landed $12m for a head-lice treatment which is heading for the US. Similarly, a life sciences spin-out from Western Australia University, Iceutica, recently received the green light from the US Food and Drug Administration for its anti-inflammatory drugs.
So while Australia may be a long way from being the tech paradise some would like to see it become, it seems the winds are changing. Whether it can capitalise on this early momentum is a question to be answered throughout 2014 and beyond.
Israel
On paper, a cursory glance at Israel would have some overlook the country as a leader in innovation. Israel has little in the way of natural resources, is surrounded by enemies, and has been involved in one conflict or another since the state emerged from the ashes of World War II. At just over 8 million citizens, the country has a population comparable to Tajikistan, and has a grand total of nine universities conducting research.
Yet despite these disadvantages, the country has a thirst for innovation and start up generation comparable to another country of similar population size, Switzerland. News provider the Economist has noted that Israel has more high-tech start ups and venture capital investment per capita than any country in the world.
What is driving this innovation? In the 2009 book Start up Nation: The Story of Israel’s Economic Miracle, the authors conclude
that Israel’s entrepreneurial spirit stems from two major sources – its mandatory service in the Israeli Defence Force (IDF), and the country’s immigrant background.
The influence of immigration is easy to understand. Both the US and the UK are countries built on diversity – the English language itself is a melting pot of settlers, immigrants and invaders finding a home in Great Britain. Harnessing this same pool of international talent and knowledge that flowed into Israel over the past 60-plus years has been a key driver for innovation, and is far more integral to the make-up of the nation is the case for either the US or the UK.
In Israel, nine out of 10 Jewish Israelis are immigrants or first or second-generation decendants of immigrants. While this wave has caused plenty of well-documented friction in the Middle East, it has also spawned several generations of Israelis not averse to risk and starting from scratch.
The IDF is not plain to see as a force for innovation, but Start up Nation argues otherwise. The book says the IDF not only provides Israelis with army experience, but also technology-based skillsets and a wide array of contacts. This is underlined by a unique culture within the IDF involving minimal guidance from the top, and junior officers are encouraged to call out higher ranking officers when they see them doing something wrong.
Israel’s universities have also provided substantial fire-power to Israeli innovation. All nine of Israel’s universities operate a tech transfer office (TTO), even the Open University of Israel (OUI), modelled on the UK’s distance learning institution the Open University, which despite being rated as a moderate research institution fails to commercialise much in the way of its research, nor does it encourage entrepreneurialism like its Israeli cousin.
The TTOs are also proactive in weaving themselves into other parts of the Israeli innovation ecosystem. The universities have adopted a tech transfer style similar to the US, with TTO professionals “working full-time to tap into Israeli VCs, entrepreneurs, multinationals, seek innovation stem-ming from academia, and partner programmes from the Office of Chief Scientists”, according to Saul Reichman, executive vice-president of investor the Challenge Fund.
Israel is also home to Yeda Research and Development – the tech transfer office of the Weizmann Institute for Science and a leading example of effective technology transfer. One of the top-performing TTOs in the world – earning $50m to $100m a year – the TTO takes an approach differ-ent from most of its peers in translating research. In a rare interview with news provider Globes, Amir Zaiberg, Yeda’sCEO, said: “We have not been tempted by alternative models, such as raising a venture capital fund to support our ventures in-house, or setting up a group of companies and floating them on the Tel Aviv Stock Exchange.”
Instead, the company relies solely on a royalties-only approach. Without taking an equity position in a company, the TTO prefers the royalties approach, as its share will never be diluted and Yeda has less to lose should a company fold. However, Yeda could be criticised for resting on its laurels, and the lack of early-stage investment means some inventions at Weizmann are unlikely to see the light of day.
To counter this, Zaiberg added: “Even though we have excellent ties with all the multinationals, we now need to make a greater effort than before to grab their attention, because they are flooded with good ventures from all over the world. At the stage at which we commercialise our products, it is hard for us to bet which of them will make money for us. It is really a matter of luck, of the huge range of factors that are not under our control. That is why we do not want to bet and invest our money, or what we raised, in a limited number of companies.”
Zaiberg’s first comments, aimed at peers in other Israeli TTOs, underlines a strong spirit of competitiveness that not only stems from the US model of tech transfer, but also the culture of a nation which has had to compete to survive. It is a spirit Israel embodies fully as a nation, and evidently does little harm to its prospects for tech transfer.
New Zealand
The bird everyone associates with New Zealand is the kiwi. However, universities in New Zealand are probably more concerned with being associated with the kakapo. Described by author Douglas Adams as the “world’s largest, fattest and least-able-to-fly parrot”, the kakapo is the perfect example of what happens when the outside world comes to visit. With no natural predators, the kakapo had lost any natural defences, and came up with a bizarre and ineffective reproductive cycle that ensured its numbers stayed in line with what the ecosystem could support.
The reproductive cycle and lack of defences were not a problem until man arrived with cats and dogs. Suddenly under threat, the kakapo responded in the only way it knew how – breeding slowly.
With New Zealand institutions falling down the main university rankings over the past few years as institutions in Asia improve their offerings, New Zealand is taking measures to avoid following in the kakapos nearly extinct footsteps. Often cited as one of the most peaceful countries in the world, New Zealand also has one of the highest costs of living – largely due to its need to import. To support this, the country must urgently switch to a more innovative economy.
From a tech transfer perspective, the New Zealand gov-ernment is now pushing the innovation agenda. Over the past year, the government has given Kiwinet, a consortium of 12 universities representing 60% of the country’s scientists, $6m for the next three years to provide pre-seed funding to promising innovations coming out of New Zealand’s universities.
The government has also established Callaghan Innovation, a new government body that intends to bring New
Zealand’s scientific and business communities together. It has already entered into an agreement with Kiwinet to support commercialisation, and with Auckland’s TTO Uniservices. The body aims also to reduce competition between
universities. Bram Smith, Kiwinet general manager, said: “All of that drives researchers to work within their organisations, potentially even compete with each other. We cannot afford to compete like that, we cannot afford so much fragmentation in New Zealand.”
The land of the All Blacks rugby team is also generating some interesting and internationally reaching intellectual property and spin-outs. Last year, Otago Innovations, Otago University’s TTO, began selling subscriptions to Toxinz, a database of poisons with more than 190,000 items on it. A deal in the US with publisher Ebsco could result in the university making millions on the database.
Smartphone manufacturer Samsung has also taken an interest in an Auckland spin-out, PowerbyProxi. Similar to the Massachusetts Institute of Technology’s Witricity, the company is developing wireless power transfer. An obvious technology to go hand-in-hand with the world’s growing addiction to smartphones and tablets, Samsung has invested $4m in the company, and also entered into a strategic partnership to pursue development of the technology.
New Zealand certainly has a way to go in rejuvenating its academic institutions and fostering collaboration among them to support innovation. That said, it is looking for inspiration from the fighting spirit of the Maori rather than the listlessness of the flight-less kakapo.
Australian tech transfer offices
Australian National University Innovation ANU
Queensland University UniQuest
Sydney University Commercial development and industry partnerships
Monash University Monash Commercial
New South Wales University NewSouth Innovations
Western Australia University Office of industry and innovation
Adelaide University Adelaide Research and Innovation
University of Newcastle Technology transfer and licensing
Israeli tech transfer offices
Technion – Israel Institute of Technology T3
Weizmann Institute of Science Yeda R&D
Hebrew University of Jerusalem Yissum Technology Transfer
Bar-Ilan University Bar-Ilan R&D
Ben-Gurion University of the Negev BGN Technologies
Tel Aviv University Ramot
Haifa University Carmel Haifa University Economic Corp
Ariel University Ariel University R&D
Open University of Israel OpMop
New Zealand US tech transfer offices
Auckland University UniServices
Canterbury University Research and innovation
Auckland University of Technology AUT Enterprises
Lincoln University Research and commercialisation office
Massey University Business development and research commercialisation
Otago University Otago Innovation
Waikato University WaikatoLink