Federal government plans innovation fund to give mid-market businesses a boost: “Innovation is not just about tech startups”

The Federal Government is moving away from its focus on startups in the latest phase of its “Innovation Nation” plans by looking to fill the funding gap for mid-size companies.

In an opinion piece in the Australian Financial Review today Minister of Industry, Innovation and Science Greg Hunt argues “innovation is not just about tech startups or IT. It’s also about established businesses doing things better.”

Hunt revealed the government will explore establishing a broader National Innovation Fund, targeting businesses valued between $20 million and $200 million. This expands on the government’s previous messaging about the role of new technology-driven startups in the future of Australia’s economy.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell told SmartCompany the shift in focus is a great thing for Australian business.

“We’re seeing significant employment growth in those larger businesses, and it would be a tragedy if these kinds of companies were left out of the mix,” she says.

“There are lots of businesses that are not necessarily tech focused but do use innovation to link people with the services they need – people running dog-sitting operations to people working to support others to stay living in their own homes – there’s a lot of interesting changes happening in those spaces.”

Peter Strong, chief executive of the Council of Small Business Australia, says the expanded focus is just what Australians needs.

“It’s fantastic to see that [Minister Hunt] gets it,” he says.

“The non-technology side of things has been ignored – think about things like an owner-operator truck driver who comes up with better processes, or the chance to develop better operations in a business – this kind of innovation does not always have to do with tech or startups,” Strong says.

“Safety processes are also a major part of innovation, but they’re not always tied to technology.”

The first key area of Prime Minister Malcolm Turnbull’s National Innovation and Science Agenda, launched in December 2015, was “Culture and Capital”, which focusing on incentives for early stage startups.

“Even if [these] businesses don’t succeed, we all benefit,” the Prime Minister said in the launch speech. Then Minister for Industry, Innovation and Science Christopher Pyne said that the platform’s policies were designed “to bring together all those in Australia who recognise that the future for our economy is in high-tech advanced manufacturing.”

However, Minister Hunt’s comments today give a greater focus to operations sitting beyond those startups, noting that innovation applies to “old and new businesses alike”.

The Australian Private Equity and Venture Capital Association (AVCAL) have been campaigning for the expansion of innovation grants to companies that are in periods of accelerated growth – often those that are established and looking to expand further.

“Business owners consistently point to challenges stemming from the lack of capital available to support that growth, coupled with access to the skills and expertise,” says AVCAL chief executive Yasser El-Ansary.

But researchers into innovation and business growth are keen to remind the community that “innovation” can include small acts of good planning.

“What we know about effective innovation is constantly expanding,” says senior researcher and the Australian Innovation Research Centre, Kieran O’Brien.

“Small innovation often has really big impacts, and research and development and grants are important, but also remember that innovation does not have to be completely new, it can just be new for your business.”

“The majority of innovation that occurs is low level stuff – say an accounting firm adopts a new cloud software, so they search for the options out there, find the best one and implement it – that’s innovation.”

Minister Hunt also highlighted this morning that he is focused on the “second and third” waves of the National Innovation and Science Agenda, including removing red tape and duplication of services, working towards a single entry point for businesses to make applications to governments. The hope is these changes will “improve the business environment”.

SmartCompany contacted Minister Hunt’s office for further information about the proposed innovation fund and did not receive comment prior to publication.