Author: David Chin
“Welcome to the ideas boom” opens the Australian Government’s much anticipated Innovation Statement, which contains broad ranging initiatives to encourage innovation as a long-term driver of Australia’s economy.
To promote greater access to venture capital, particularly for startups and the research sector, most of the dramatic initiatives seek to build a culture that embraces and rewards risk. These measures include significant tax incentives for early stage investment; changes to bankruptcy and insolvency laws; greater allowances for businesses to change direction; and a crowd-sourced equity funding scheme. Proposed changes to research grant requirements are also likely to heavily incentivise researchers to collaborate with industry more than ever before.
With the anticipated influx of venture capital in Australia, it will be exciting for us to see more home-grown technologies transform the way we live. Think the bionic ear, Relenza, black box, baby safety capsule, Google maps … think the humble budgie smuggler.
However, not all failures are created equal. While the initiatives from the Innovation Statement may make it easier to do business in Australia, it will not be any safer.
With the increase of emerging technologies that become available, investors – from VCs, collaborators to employees – should remain acutely aware that investing in early-stage technology is inherently very risky and that investment decisions need to be supported by measures to manage the risks appropriately. Under the Innovation Statement, the Australian Government seeks to boost the quality of projects by building entrepreneurial networks; supporting incubators and accelerators; and investing in STEM education. However, the effects of these initiatives are likely to be seen only in the medium to long term.
Until Australia has a robust and sophisticated startup ecosystem, many startups will continue to fail for other common reasons, despite greater access to capital. Some of these reasons stem from the failure to:
- understand and evaluate a startup’s business and marketing plan and ensure it is supported by a sound IP strategy;
- secure a technology’s competitive advantage through IP protection (eg, patents, designs, trade marks, copyright, and trade secrets) in appropriate markets in Australia and overseas;
- assess a technology’s IP position before investment;
- negotiate and manage appropriate IP licences/acquisitions and R&D agreements; and
- appoint a strong management team.
The risks are acute when dealing in an unfamiliar sector or cultural environment. However, Wrays has legal and commercial experience across a broad range of technology disciplines and can assist you with the complete spectrum of IP and business management.
It is also important to note that the Innovation Statement does not contain any initiatives to change IP laws in Australia. Instead, the Productivity Commission is currently undertaking a public inquiry into Australia’s intellectual property system and its report is due on August 2016.