Quantum, AI and robotics are recognised as technologies that are critical to the growth of Australia’s economy, creating well-paying jobs and improving our lives. The path for Australia to transition from being leading developers of these technologies to creating new critical technology industries in their own right is fraught with many risks and challenges.
Robotics is a critical technology industry that first started to attract small (less than US$0.5 million) venture investment in around 2015. At the same time, anecdotal evidence suggests that many robotics entrepreneurs started to leave Australian shores to seek capital and set up companies overseas, mainly on the west coast of the United States.
Once an Australian entrepreneur creates a foreign-based company there is little way to track them or their progress except via word-of-mouth, so it is not possible to report on how successful these ventures are. However, it is worth noting recent activity where Australian startups such as SwarmFarm and Fastbrick robotics are moving into the US market and gaining traction. Meanwhile, established Australian tech companies are moving their headquarters offshore, which raises questions as to how Australia can protect its significant investment into early-stage research in quantum, AI and robotics and prevent this from occurring in the future.
Robotics Australia Group, the peak body for robotics in Australia, was formed in May 2020 to help build a sustainable robotics industry in Australia. Our aim is to ensure that the robotics talent and technology being developed in Australia is supported by an environment that gives them reason to set up their companies and stay in Australia. According to StartupAus, the precursor to Tech Council Australia, the three ingredients required to develop a high functioning startup ecosystem are: an abundance of capital, access to skilled talent, and a culture that encourages entrepreneurship. These represent the three major challenges to successfully establishing new critical technology industries in Australia.
Money, money everywhere but not a dollar for robotics and AI
The reason that quantum, AI and robotics are considered critical technologies is that they are transformative. Their potential rests on the ability of these technologies to impart scale and velocity to any application. Scale and velocity are certainly lacking when it comes to investment in robotics and AI in Australia.
As many commentators have noted, Australia is nowhere near the main competition, and risks being left out of the competition altogether thanks to a conspicuous lack of government and private investment. Despite having a huge sovereign wealth fund (US$180 billion), recent investments to the tune of US$15 billion in clean energy, and billions of dollars tied up in our superannuation funds (US$2.5 trillion), Australia is not investing in robotics and AI.
Ideally, capital to invest in critical technologies should come from both the public and private sectors. In the most recent budget, only AU$8 million of public funds was dedicated to AI for the next 12 months. While some of those funds may benefit robotics, there were no announcements on funding specifically for robotics. This is despite the robotics community making more than 100 submissions to a highly anticipated national robotics strategy. On the plus side, AI and robotics now have visibility in government with an AI policy branch and a dedicated robotics and automation section, so there is some hope for funded initiatives in the future, we just don’t know what those might look like.
One advantage of Australia being a slow mover in terms of policy and investments to encourage the development of our sovereign robotics (and broader AI) industry is that we can learn from the successes of other countries. Canada, a country of similar economic size, which also specialises in the same type of outdoor, robust, field robotics as we do, is an exemplar. Canada has invested 25 times the amount of public funds into AI, including robotics, compared to Australia in the last four years alone (US$2.1 billion).
Australia’s venture capital (VC) record is not much better. With the exception of a huge investment in Tiimely, an AI platform for home loans that has attracted more funding than OpenAI (US$18.4 billion vs $13.5 billion), Canada invests six times more VC funds into AI and four times more into startups than Australia. According to CB Insights, over the last nine years Australian robotics companies have received a total of US$287.5 million shared amongst 154 companies. $255 million of that was shared amongst just 10 companies, with the remaining $30 million smeared across the rest. No Australian robotics company has received more than $100 million in investment.
In comparison, Canada has more than double the number of robotics companies receiving investment from a pool more than four times the size. Three Canadian robotics companies have received over $100 million in investment and the top 10 robotics companies have received over $1 billion in investment. In the United States, the comparison is even starker with more than 3,000 robotics companies sharing more than US$60 billion in capital with 97 companies receiving more than $100 million investment. It’s a similar story if you compare Australia to countries closer to home such as China, Japan, South Korea and Singapore.
These differences in the scale of investment between countries lead to a range of knock-on effects. Greater investment means that there are more companies in the ecosystem. Those companies tend to be able to scale more quickly because they start with more employees, they can deploy more resources, secure more customers faster, and gain a long-term advantage over their competitors. Even when boot-strapped Australian robotics companies have better technical solutions, they are no match for the marketing and distribution power behind well-funded competitors from overseas. This makes it hard for Australia in the race to establish new critical technology industries when we are essentially racing from a standing start.
Following the money
Leading up to 2020, Australia had a good record of maintaining and even being an attractor for top AI talent. The COVID-19 pandemic ensured that we kept this talent but data from the 2023 global AI talent tracker suggests Australia is starting to lose talent from the graduate to postgraduate levels, largely to the US and China. While difficult to track, it seems likely that we are losing critical technology talent to markets where access to capital is less restrictive than in Australia. Once that happens there is little way for Australia to profit, except, as in the case of PsiQuantum with two Australian founders, we find AU$1 billion to bring them back home.
You have to spend money to make money
As well as losing tech talent that can be converted into entrepreneurial talent over time, the impact of low to no investment in critical technology impacts Australia’s ability to have an entrepreneurial culture. With less capital to deploy, there are fewer venture capitalists to choose from, and less experienced entrepreneurs available to mentor startups. Silicon Valley Robotics (SVR), run by my sister Andra Keay, is a good example of the benefits of mentoring by experienced robotics entrepreneurs. SVR was started by some of the early successful robotics companies in the area to support and encourage young up-and-coming robotics companies.
Lack of investment has meant that Australia is still too immature to benefit from the success and experience that early investment would have brought to our shores. This fundamentally hampers Australia’s ability to exploit our expertise in areas such as quantum, robotics and AI because we are building from scratch. Emerging technology industries have industry associations like Robotics Australia Group that are also in the startup phase and lack the capital and resources typical of more established industries. This lack of maturity often sees universities moving in to fill the gap. This is problematic, as universities are not industry and critical technology companies and need support with a commercial focus. There is also, arguably, undue pressure on universities to bring in industry income that starts to blur the line between whether they are helping critical technology companies and associations or using government funding to compete with them.
At one point Australia was using public funds to help support the development of entrepreneurial talent through a range of grants for incubators and accelerators, but this support was largely discontinued in 2019 and has only sporadically restarted within certain states. The cessation of this funding has been unhelpful but would be unnecessary if we saw incentives that would help to scale private investment into critical technology such as robotics.
At various times there have been suggestions that Australia has poor deal flow, or that Australian startups lack the ambition to go global. In other words, that the lack of capital invested in Australian startups is the fault of the startups, but our startup ecosystem is a product of its environment. Starve the ecosystem of capital and you can hardly expect to produce an Australian robotic unicorn (company with a valuation over US$1 billion). Sadly, chances are that our first robotics unicorn founded by an Australian will be an overseas one, with all the benefits accruing to another country.
Profit is the reward of risk
Australia has a curiously risk-averse approach to investment of government funding into technology compared to other nations. While Australia recognises the importance of critical technologies on paper, this is not backed up by investment of dollars. Public funds can stimulate the investment of private funds, and yet our Treasury and our Productivity Commission continue to treat technologies like robotics as if they are substitutable products, which means they can be purchased from anywhere, preferably for the cheapest price.
Clearly, other countries’ economists do not think the same way. If they did, we would not see such enormous disparities in public investment in the development of critical technology industries. For other countries the importance of sovereign capability in these technologies is self-evident. Perhaps we need to treat economists as substitutable products and bring some in from Canada, South Korea or other nations with economies of a similar size, that are leaving us behind in the race to develop new critical technology industries.
So far, the main hope for the development of critical technologies like robotics to support the development of a homegrown industry is via the US$10 billion National Reconstruction Fund (NRF), however, this appears to be absent of any coherent plan. Without clear guidance, there is nothing to ensure that Australia’s AI and robotics capability will receive any future support.
This seems reminiscent of the “underpants gnome” episode from Southpark, where a group of gnomes that steal underpants from people’s homes at night claim to be business experts. Their three-point strategy?
- Collect underpants
- ?
- Profit
We need to do better.
Despite relentless under-investment by both the public and private sectors, Australia’s homegrown robotics industry persists. Optimists keep starting up new companies in the space without any support, or with minimal and very hard-won support. Lack of investment simply slows us down and prevents us from scaling up our robotics industry as other countries are demonstrably doing. If economies of similar size, or smaller, than our own have successfully managed to unlock capital for investment in developing new technology industries the question remains, why are we unable to do so? It is tiresome to try and understand why Australia seems, by some accounts, to be so unique in our circumstances that we are unable to do the same. We need to stop talking about it and just do it.
Dr Sue Keay is the founder and chair of the Robotics Australia Group. She is a recognised leader in robotics, AI and automation who is passionate about helping emerging technology businesses, the companies adopting new technologies and their workforces. Sue is a fellow of the Australian Academy of Technology and Engineering (ATSE), a member of the Kingston AI Group and an adjunct professor at QUT.
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