In an era where innovation drives economic growth and technological advancement, Australia faces a critical opportunity to enhance its sovereign capability and foster new industries through small business innovation research (SBIR) programs.
These programs, which have seen substantial success in the US, offer a strategic framework for supporting startups and small businesses, enabling them to develop and prove their technologies.
As we look to shape a Future Made in Australia, the expansion and robust funding of SBIR-type programs are essential.
The importance of SBIR programs
SBIR programs are crucial because they balance funding with the need to prove the viability of a product or service.
Startups are inherently risky, and Australian organisations (including government departments) are often conservative about taking risks, preferring proven solutions from overseas that are not often fit for purpose. This conservative approach limits local innovation.
SBIR programs bridge this gap by providing necessary support to startups and small to medium-sized enterprises (SMEs), allowing them to demonstrate their value and attract customers. This not only benefits individual businesses but also strengthens Australia’s economic and industrial base by encouraging local innovation and building expertise and capacity.
Shaping Australia’s economic and industrial landscape
SBIR programs have the potential to significantly shape Australia’s economic and industrial landscape.
By inviting startup companies and SMEs to develop innovative products and technologies to solve local problems, these programs create new market channels, domestically and internationally.
For instance, government departments can address challenges with Australian solutions, helping businesses grow by establishing their first customer and proving their technology. This transition from startup to medium enterprise is crucial for the growth of the innovation ecosystem in Australia.
Furthermore, by developing sovereign capabilities in critical sectors, SBIR programs enhance Australia’s resilience and self-sufficiency, preparing the country to tackle future challenges.
Building sovereign capability
One of the key benefits of SBIR programs is their contribution to building sovereign capability.
Many technologies we use daily originate from space industry and defence applications. By solving specific challenges domestically, SBIR programs not only build capability for those applications but also for other sectors. This broadens our ability to tackle various problems within Australia, enhancing overall resilience and self-sufficiency.
The relationship between the government and small businesses through SBIR programs is particularly advantageous. Having the government as a first customer provides credibility, which is significant for startups that typically lack the extensive documentation and references required to secure government contracts. This credibility opens doors to other customers and investors, helping businesses overcome the so-called “Second Valley of Death” in business growth.
Overcoming challenges and ensuring success
For SBIR programs to be successful in Australia, they require bipartisan support at both federal and state levels.
Long-term programs need consistent support to avoid disruptions when new parties come into power and change funding systems. Consistent bipartisan support also ensures stability for businesses and continuous innovation, as seen with the Cooperative Research Centre (CRC) Program, which has run successfully for decades in Australia.
Evaluating the effectiveness of SBIR programs is also crucial.
In the US, metrics such as job creation and the growth of companies have demonstrated the success of SBIR programs. Australia should adopt similar metrics, focusing on job creation, the development of high-knowledge jobs, and growth in emerging sectors.
The increase in companies progressing from startup to SME to large enterprises, export dollars generated, and the establishment of Australian headquarters are key indicators of success. An increased and broadening skills base in the labour market is another important metric to consider.
Addressing implementation challenges
The history of SBIR programs in Australia has shown promise, with various federal and state departments, implementing pilot projects. However, the funding has often been insufficient and short-term.
For these programs to be effective, they need solid commitment, well-resourced teams, and adequate budgets. Effective implementation requires a strategic approach, where departments view challenges as a cost-effective way of getting a customised solution as well as building opportunities for industry growth, aligning with initiatives like “Future Made in Australia.”
SBIR programs, provide significant government support with real challenges for small businesses to work on. This aids in the commercialisation of new technologies with substantial first customer-funded engagement. These programs are more focused on solving a specific problem for a first government customer compared to other grant programs, which help businesses grow strategically.
SBIR-type programs hold the potential to transform Australia’s economic and industrial landscape by fostering local innovation and reducing reliance on overseas solutions.
By providing startups and SMEs with the necessary support to develop and prove their technologies, these programs contribute to building sovereign capability and preparing Australia for future challenges and emerging industries. With consistent bipartisan support, strategic implementation, and robust funding, SBIR programs can play a pivotal role in shaping an exciting future; made in Australia.
Natalie Chapman is managing director for gemaker. This article was produced by InnovationAus.com in partnership with gemaker.
Do you know more? Contact James Riley via Email.