When I was studying physics at Macquarie Uni in the 80s, nobody told me a scientist could be a CEO. During my summer internship at the CSIRO, I learned that science can solve Australia's greatest challenges by partnering with industry, but I didn't know it could create brand new industries. Then I went to Stanford to finish my PhD, and I met scientists who were CEOs in the making, wanting to create new industries. So that's what I decided to do.
I came home about 25 years later believing Australia's scientific excellence had the potential to create a new economic pillar for us in the same way it had in the US, but we needed a way to bridge the gap between lab bench and business. There is a great debate about what's wrong and who's to blame – the fact is that Aussie universities aren't materially different from Stanford. Professor Bob Byer was my PhD examiner and Dean of Research at Stanford and he told me that Stanford didn't need to do translation because they were surrounded by an ecosystem that did it for them. The difference is Australia sees translation as a risky business and they're right.
In the fast few years, CSIRO has helped bridge the gap with Australia's national science accelerator called ON, and the Australian government's first VC fund, the CSIRO Innovation Fund, which is managed by Main Sequence Ventures. In the past two years, ON has helped thousands of students, entrepreneurs, and small and medium businesses find science that can change business. At the same time, the Fund has invested in 20 companies with strong links to the Australian research system to speed up their translation from benchtop breakthrough into buyer-ready business, from robotics to healthcare to biosecurity and more.
The model so far has been deep-tech venture – supporting Australian companies leveraging transformative technologies. But innovation doesn't stand still, and this week a new business was launched, formed in a new way for Australian innovation. Instead of hearing pitches from founders with an idea, the deal creation model starts by identifying a great challenge and a global opportunity, then assembling the science capability to tackle it, introducing a pathway into market through a leading industry player, and injecting venture investment to create a brand new company.
We call it 'Venture Science'. It's not easy, but it's how Silicon Valley was formed, and it's a lot easier when you can draw on the resources of the national science agency and its network, which includes every Australian university and more than 3,000 businesses. CSIRO has been solving the greatest challenges through innovative science and technology for over a century, so pairing our research with global opportunities and industry partners is not new. But when you introduce a capital injection from venture managers who understand how science-driven businesses grow, the resulting deal flow has phenomenal potential.
The result this week is the launch of meat-alternative company v2food. The global challenge is developing more sustainable food so we can feed 10 billion people with the resources of one planet. One of the opportunities is to develop meat alternatives for consumers who want to reduce their meat consumption without reducing their protein intake or giving up the taste of meat. Recent analysis from CSIRO forecasts that Australian consumption of alternative proteins could be worth $4.1 billion by 2030, with another $2.5 billion in export opportunity by 2030.
With decades of expertise in food science, nutrition, and sustainability analysis, CSIRO offered the science to develop Australia's first plant-based recipe that looks, cooks and tastes like meat. The pathway into market is provided by Competitive Foods Australia, parent company of Hungry Jacks; the capital comes from Main Sequence Ventures; and CSIRO has earned equity in the new company in exchange for contributing research and development.
The company launched their business in Sydney this week with a selection of traditional recipes cooked up with their new beef meat alternative, from hamburgers to meatballs to san choy bau. Their first product will be in Hungry Jacks stores soon – but the vision for products and value chain is much larger than that.
v2food is using some of their capital to build processing facilities, because Australia doesn't currently have the equipment required to convert its own legumes into the form that is needed for plant-based meat-alternatives. Currently v2food's primary ingredient is being imported, but v2food is working on processing locally-grown legumes for its products here in Australia by the middle of next year. This will not only dramatically improve the sustainability credentials of their food, but also create a new, higher value market for Australian farmers currently growing legumes for lower value animal feed.
I'm excited to see how v2food will grow their business, as well as opportunities for Australian farmers and agribusiness – but I'm even more excited by the potential of this new model.
CSIRO's equity holdings have grown in value by 60 per cent in the past three years as we've backed more of Australia's scientists to become founders and CEOs, and more of our science to fuel new businesses. Australia's venture capital system has also begun to bloom in recent years, growing in both number of deals and value of deals over the past five years.
A strong innovation ecosystem is critical to supporting big, bold ideas – the kind of ideas scientists specialise in – especially because Australian businesses still prefer to invest in "new to business" innovation, which means adopting someone else's idea, rather than "new to market" innovation, which is the introduction of new and novel products.
After 28 years of uninterrupted growth, we can't blame Australia's business leaders for not feeling the imperative to invest in innovation. After all, not all CEOs can be scientists.