‘Enemy of innovation’: start-ups battle bureaucrats for… Leave a comment
Australia has largely been a consumer of overseas space technology, relying on international partners for technologies that underpin defence capabilities, as well as for weather tracking, communication and navigation systems throughout consumer and business devices.
A damning report by the Australian Academy of Science in February had found Australia’s almost total reliance on foreign-owned satellites for the provision of vital services posed a dangerous sovereign risk to the country. Mr Gilmour said the length of time taken for Defence to make buying decisions was unworkable for nascent companies, which needed cashflow.
‘Enemy of innovation’
“We realised in 2016 there wasn’t a lot of awareness in Defence on space capability, we were 100 per cent relying on our allies and we had no ambition to do anything ourselves,” he said.
Mr Gilmour said the traditional Defence procurement process can take 10 to 15 years from identifying the need for a specific capability to delivering it.
“The hard bit was [working out] how to start getting money out of Defence that doesn’t go through a 10-year process,” he said.
Despite champions at senior levels of Defence backing the company, Mr Gilmour said the existing methods for venture-backed businesses to secure funding from the government department were slow and the “enemy of innovation”.
Mr Gilmour’s comments come as Defence groups have signalled a desire to strengthen their engagement with the start-up sector.
The Defence Science Technology Group, the government’s research group which advises Defence on technology acquisitions, is courting innovators with a focus on artificial intelligence, robotics, biotech, cybersecurity and space.
Defence has invited start-ups to pitch their ideas at the inaugural Australian Defence Science, Technology and Research Summit in July, where founders will be connected with possible funding sources.
David Kershaw, chief of the DSTG’s science, engagement and impact division, told The Australian Financial Review the department was conscious of the challenges smaller organisations faced when trying to crack into the defence industry.
“Defence has its large contracting mechanisms that are used to buying submarines and the like. We put SMEs through the same process. We are working to simplify the process where we can,” Dr Kershaw said.
“It is a challenge and recognised, and it will take time to evolve.”
Dr Kershaw pointed to Defence’s Next Generations Technology Fund, which has earmarked $1.2 billion to be spent over 14 years to 2030 on research in emerging and future technologies.
Another key source of technology funding comes from the Defence Innovation Hub (DIH) which has signed 227 contracts valued at $475 million since late 2016. Eighty per cent of those contracts were awarded to micro, small and medium businesses and one quarter of the contracts went to organisations that had not previously done business with Defence.
Increase funding
During a recent visit to Gilmour Space during the election, Mr Gilmour told former Defence Minister Peter Dutton the government needed to lift the amount of money that can be allocated by the DIH.
“We had a proposal that was rejected because it was $12 million,” Mr Gilmour said.
“So I’ve said to the ministers that if you don’t change that, all Australia will ever make in defence is widgets. If you want real capability you’ve got to put $20, $30, $40, $50 million on the table for R&D.
“I bitterly hate the DIH. It is the enemy of innovation.”
A co-founder of Galileo Ventures, James Alexander, said Defence groups should be given the autonomy to tender for smaller “proof-of-concept” projects to get money in the hands of founders more quickly, rather than have to compete for large contracts that only Defence prime contractors have the resources to apply for.
“What I’m seeing now is we have the talent, the start-ups are starting to emerge and we now need to switch to very aggressively allowing the start-ups to engage with Defence so that they can get these POCs done really fast, to prove out that they can actually deliver,” Mr Alexander said.
He said it was a positive sign that Defence groups had set up innovation tenders, but from his experience applying for the funds was still a slow and bureaucratic process.
“I can tell you from entrepreneurs’ perspectives who have actually applied to these things, it’s extremely slow and being slow for a start-up is always very much, much harder felt than at a larger company,” he said
Mr Gilmour said start-ups founded today would have an easier time working with Defence compared to five years ago, but there was still a long way to go before the government was prepared to take a risk on funding emerging suppliers.
“When you see a $100 million contract won by an Australian SME, that’s when the game will have finally changed,” he said.
