A new report by Australia’s flagship deep tech incubator Cicada Innovations confirms the greatest impediment to Australia shifting from a services-based industry to one built on science and engineering is a longstanding deep tech “scaleup problem” – but that a systems approach is the antidote.
The inaugural “Cicada x Tech23 2023 Insights” report collates data gathered from 128 deep tech applicants to Cicada x Tech23 2023, as well as insights gleaned from Cicada’s 23-year tenure as Australia’s longest-standing deep tech incubator.
Sally Ann Williams, CEO of Cicada Innovations
It covers a broad cross-section of deep tech founders, sectors and business stages; offers insights into founder and company demographics, funding stages, and IP status; and outlines the systems and solutions required to transform current challenges into opportunities for Australia.
For instance, of the 128 deep tech startups to apply, a massive 76 percent were founded independently instead of being spun out of universities or research institutes (11 percent), contrary to popular belief that the majority of science-based deep tech startups and CEOs originate from academia.
This demonstrates that some of our nation’s greatest talent is originating from unexpected places, and that we must broaden our national support and commitment to include a more diverse talent pool.
Interestingly, “partnerships” were cited as one of the startup’s most important growth tools (62 percent), incredibly only a small percentage behind funding (67 percent) which is often considered a startup’s ultimate ongoing need.
Respondents were engaging in an average of 2.8 active partnerships to validate and build their solutions with partner support, as further evidence deep tech startups are routinely built via collaboration.
Surprisingly it is actually in collaborations where academia plays its starring role, with 41 percent of all 358 cited partnerships occurring with universities or research institutions – only slightly lower than the 44 percent occurring with industry where we normally assume these partnerships occur.
Despite the small sample size, 40 percent of the deep tech startups from the Tech23 applicants had over 5 staff, which is significantly higher than the figure for all Australian businesses (23 percent), as stated in the Industry Innovation and Science Australia (IISA) report.
While this still lags behind 62 percent in Germany and 64 percent in Canada, it highlights the opportunity the deep tech sector specifically brings to Australia if we were to address the “scale-up problem, not a start-up problem” as described in the same IISA report.
The report highlights “a considerable opportunity for scaled growth that has not been realised”, that could be leveraged by applying the same collaborative, systems approach implemented within Cicada Innovations, and championed by CEO Sally-Ann Williams for the entire ecosystem.
According to Sally-Ann Williams, CEO of Cicada Innovations: “The world’s leading nations and regions are building resilient science-backed economies of the future through integrated policies and systems across government, industry, and academia that catalyse billions in public and private investment into deep tech.
“These initiatives are not siloed into individual industries or technologies either, with a great example being the US Inflation Reduction Act, which offers deep levels of funding, programs, and other incentives to significantly accelerate the climate transition across multiple industries and technologies.
“So when Australian deep tech companies are ready to transition from startup to scaleup, they are being lured offshore – and taking their valuable IP, jobs, contribution to GDP, and future tax revenue with them.
“So we should be looking to programs like the $15 billion National Reconstruction which is now investing in Australia’s industrial capabilities, and create a similar, systems-based environment here. This is the only way to stem this exodus of Australia’s most promising value-creating deep tech companies.”
Additional insights from Cicada X Tech23 2023 Insights:
Deep tech isn’t just robots: Over 45 percent of respondents are working on innovations in software and 41 percent in artificial intelligence (often to power the hardware component of their component), compared to just 24 percent developing hardware and robotics. Another 31 percent are working in biotechnology, 30 percent in advanced materials, 19 percent in photonics, 5 percent in blockchain, and 2 percent in quantum computing.
Primary motivations: Environmental and sustainability concerns were the primary motivator for starting a company (26 percent), followed by personal passion and experience (23 percent), market gaps and business opportunities (17 percent), technological and research advancements (13 percent), and health, well-being and societal benefits 21% percent).
Industries of primary focus: Key industries of focus for the startups included Health and MedTech (39 percent); clean tech, climate and energy (24 percent); advanced industry and infrastructure (10 percent); defence, aerospace, and space (9 percent); and food and agriculture (7 percent).
Funding: Over 35 percent of applicants had raised over $1 million to date despite a majority being pre-revenue, and with some raising well over $20 million. This is indicative of the greater capital requirements and longer runways of deep tech startups, which become significantly greater at the point of shifting from startup to scaleup.
Sustainable Development Goals: Of all 16 Sustainable Development Goals, the top three being tackled by respondents were “Industry, Innovation and Infrastructure” (72 percent), “Climate Action” (45 percent), and “Good Health and Well-being” (41 percent).
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Please contact KC Igna or Jeremy Liddle for any interview requests: 0480 097 479
Cicada Innovations (www.cicadainnovations.com) is the home of deep tech in Australia. Founded in Sydney, Cicada Innovations has a 23-year track record of developing deep tech ventures that tackle some of the world’s most pressing problems. Cicada’s national incubators, commercialisation training, and community brings together the entrepreneurs, scientists, business leaders, and policymakers to solve complex challenges with deep tech like the future of human health, food security and the climate crisis.
Since its inception more than two decades ago, Cicada has seen an unprecedented $1.3 billion in exits from six deep tech ventures, and has helped over 300 companies raise more than $1.8 billion in funding. It has twice been named the ‘Top Incubator in the World’ by the International Business Innovation Association and has delivered commercialisation training to thousands working in the science and technology sectors.
