Analysis and Commentary

Finally, venture capital wakes up to innovation in manufacturing

Analysis and Commentary

Analysis by Peter Roberts

For a very long time now in Australia it has been possible to get venture capital for a yet-another gold mine or some fintech app.

But when manufacturing innovators go looking for capital, other than a few angel investors, the cupboard has been bare – this despite us sitting on one of the world’s largest pools of savings in our superannuation system.

However just as there is a sense that there is a technology-based manufacturing revival underway, there are the beginnings of a venture capital sector that understands manufacturing, the people working in it and the potential it offers to create global businesses and indeed, wealth.

In the past week alone there has been news on three very promising fronts.

CSIRO-backed Main Sequence Ventures revealed its venture science model, which starts by identifying a global challenge, and brings together state of the art technology, private investment and industry expertise to make an impact on a large scale.

One of its first investments was to back Tritium founder Paul Sernia to found hydrogen production and storage manufacturer Endua.

Main Sequence Partner Martin Duursma said: “A core focus of our new fund is helping uncover scientific discoveries, and finding the right partners to turn them into real, tangible technologies so we can reverse our climate impact.”

Also this week agrifood VC Tenacious revealed it has raised $35 million to support early stage startups with tech-enabled new business models that are helping agriculture transition to a climate change resilient future.

It was founded by agrifood expert Matthew Pryor, co-founder of farm water monitoring and control system developer Observant, and Sarah Nolet of agrifood tech advisory firm AgThentic, who were frustrated by a lack of conviction in the investor community.

(Join the club!)

Tenacious has invested in waste management startup Goterra, and SwarmFarm Robotics.

But the most developed – and exciting is Adelaide VC Innovyz which is the company behind three listed manufacturing success stories – additive manufacturing equipment manufacturers Titomic and Amaero International, and ultra-fast welding technology developer K-TIG.

Innovyz has worked with 80 innovations since 2009 through Innovyz Commercialisation Programs, creating companies it manages based on university research, but only after they have been through a process of technical, scientific and market analysis.

It recently expanded into the United States and is now raising a new $30 million venture fund, according to Innovyz executive chairman Brett Jackson.

He told @AuManufacturing: “It will allow us to accelerate our commercialisation of university and other research in the areas of advanced materials and manufacturing.

“In the current geo-political environment, sovereign manufacturing capability is only going to become more and more important and we’re proud to be at the cutting edge of that.”

There are certainly significant tax concessions offered by the federal government for early stage investment to find and commercialise innovations and bring them to market.

Interestingly, Innovyz is based at the Tonsley Innovation Precinct in Adelaide (pictured), the former Mitsubishi vehicle assembly plant, which has emerged as an incubator of manufacturing skills, technology and companies.

Tonsley’s mixing of campuses of TAFE and Flinders University with innovative businesses ranging from BAE Systems to Sage Automation and Micro-X, actually employs more people on-site than were employed by Mitsubishi in its heyday.

Combining great technology, leaders and managers and finance – as these three venture capitalists do – should give us confidence that manufacturing can rise from its nadir, stronger, more innovative and technology-intensive and profitable.

Picture: Tonsley Innovation Precinct

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