Dr Rowan Gilmore is the CEO of the Australian Institute for Commercialisation, which works with entrepreneurs to develop intellectual property into thriving businesses.
Gilmore, who has held the role at AIC since 2003, has worked in Europe, the US and Asia, in a range of product and business management roles for leading oil, telecommunications and electronics companies.
Gilmore talks to StartupSmart about the AIC’s role, the major mistakes start-ups make and how budding entrepreneurs can commercialise their ideas.
What is the Australian Institute for Commercialisation and how can it help start-ups?
We work with any business which offers a product with knowledge as its foundation. I guess that doesn’t include fish and chip shops, but it can encompass any intellectual capital.
We help businesses grow across various sectors. We do a lot of business model innovation, work with customers and supply chains. We help skills with business ‘boot camps’, there’s innovation coaching and help with networks, partnerships and developing IP. We act as an advocate for the sector to the government.
On another level, a sector-based level I suppose, we create new value chains. For individual businesses, we help align them with others with complementary assets.
What is the environment like at the moment for start-ups?
Speaking mainly for tech start-ups, as that’s who we deal with mostly, any business that requires capital is clearly hurting at the moment. The VC market has dried up and the model appears to be broken.
The pre-revenue investment made by venture capitalists is far less than it used it be. We see that less than 10% of VC investment is made pre-sale (before a start-up has taken a product to market) and 90% is made once the company has customers. If you are starting up without immediate sales, it’s very difficult.
There is a risk aversion to start-ups and the returns have been average.
So is it harder than ever before?
Not necessarily, no. Certain sectors are growing, such as mining and IT, where it is cheaper to get proof of concept.
So what other barriers do start-ups face?
We often see a lack of skills to commercialise an idea. For start-ups, there is the dimension of the technology or idea itself, but then there’s a commercial dimension and a marketing dimension.
Too often, the case is there is a great piece of technology but it’s not in parallel with the commercial side of things and the IP isn’t protected. Skills really are needed in this area.
We see lots of good ideas, but good ideas are worth zero dollars. You can’t sell an idea – you sell a business. People expect to come up with an idea and for everyone else to pull out their credit cards.
What can businesses do to help them commercialise their ideas?
Well, in terms of funding, try and look for other sources other than VCs. Try the three f’s (friends, family and fools) and government grants.
For example, the Queensland government has launched the What’s Your Good Idea grant, which is worth $50,000. There are funds out there for certain start-ups.
One other secret is to know where you sit in the value chain. A lot of start-ups have no idea. You’re not a vertically integrated multi-national – you’re a start-up business.
Do your market research and understand your customer. You’ll be surprised when you find out the relationship between them and what you make or deliver. A lot of that research can be done before you spend a cent. You can go on the net, which is free. You don’t need a big focus group.
Step two is to forget a business plan – do a commercialisation plan. It’s hard to predict revenues years in advance, so think about your paths to market. It’s less about revenue stream, it’s more about how you will market your product and how you will deliver it.
Step three is to seek advice. We get inventors calling us all of the time and we tell them to go away and read some basic advice on business. That filters out three quarters of them.
Where will the new opportunities be in the next few years?
There’s a lot of hype about the National Broadband Network. I’m pretty sceptical about it myself, but it will hopefully spur new industries in regional areas.
Then there’s clean energy, which could also provide huge opportunities. If you follow the money, it’s clean energy and the NBN.