If you’re a scientist looking to start a company, then 2022 is going to be a great year for you.
Earlier this week the federal government announced a $2.2 billion spend on its University Research Commercialisation Action Plan. This is a giant step in the right direction — finally, we have a clear policy statement that entrepreneurial researchers are the key to the successful commercialisation of science.
Australia’s research commercialisation sector is in a state of market failure. This doesn’t stem from a lack of skills or capital, but rather from a distinct lack of incentives.
Australia ranks highly on research outcomes not because we are great at research, but because that’s where the individual incentives are for researchers. The expected value of the effort and risk of commercialisation isn’t attractive compared to the alternative of publishing papers and pursuing grant funding. For most Australian researchers, supporting commercialisation activities is currently a sub-optimal career decision.
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To change this, the government’s action plan calls for a radical culture shift for how Australian academics work and are rewarded within universities. However, what’s missing from the plan is a recognition that the most powerful force in research commercialisation is ownership.
Every business owner understands that the fact they own the results of their work is a large part of what sustains the intense effort required to build a successful business. Equity is a superpower for aligning incentives. The key to greater and better commercialisation outcomes is giving scientists the support to find the commercialisation opportunity and to build the conviction to quit their job and start a company.
There are several routes the government could take. These incentives could come in the form of subsidies for commercialisation capability development, delivered in a program that would be a prerequisite for commercialisation grants.
A government-funded commercialisation fellowship where academics can create a startup without having to immediately quit their job would also go a long way.
Finally, the New Zealand policy approach shows us that non-recourse loans from the government to research commercialisation startups are also extremely effective.
Part of the solution to incentivise researchers is reducing risks and making it easier for them to raise capital, which means shifting the mindsets of investors who may be hesitant to invest in first-time founders. Breaking down these barriers and reducing this friction could help reduce the risk and act as a greater incentive for individual researchers moving to entrepreneurship.
It’s great to see that some of this new funding will seed the third venture capital fund of Main Sequence, but given the gaps in the current plan, I suspect we could save a lot of pointless stress and hassle by just giving it the full $2.2 billion budget.
This week’s announcement of the action plan is certainly to be welcomed. It’s now up to each university to create greater incentives for the individuals who take the risks and do the hard work of commercialisation to enable researchers to turn their research into commercially viable businesses.
Successful research commercialisation is far more about people than patents, and this attitude will go a long way in assisting in changing the behaviour of research entrepreneurs who are the key to unlocking more science commercialisation.