Transcript Synced · select any line to jump ▾ 0:00 Adam Spencer: Let me tell you about our partner, Teamified. If you need to build a top-notch team quickly, Teamified is your go-to solution. They not only provide fractional CTOs, they can also do contractors and even remote team members tailored exactly to your needs. And whether you're looking for expertise in the Philippines, India, or Sri Lanka, Teamified has you covered. What's amazing is that Teamified uses a blend of AI and human expertise to cut hiring times by 50%, cent. The platform handles everything from automated onboarding to day-to-day management and even performance tracking. You can also handle rewards and recognition, buy equipment, and order training all through their platform. Simplify your hiring process and get the best talent fast with Teamified. Check them out now and transform your team. Go to dayone.fm/teamified. That's dayone.fm/teamified. T-E-A-M-I-F-I-E-D, and get started today. Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development. But a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you NTP for helping us bring— Thank you. Helpful content to founders and the startup community in Australia. Back to the interview. Hi, I'm Adam Spencer, founder of the Day One Network, which is bringing the history of the Australian startup ecosystem to you. I believe in founders. It's why I do everything I do at Day One and our media company, W2D1 Media. And that's why the Day One Network exists, to create helpful content for founders. We've got some great shows in development. But a large part of what we do couldn't be done without support from our partners and sponsors. And I couldn't be happier than to be working with NTP, who get community better than any other technology recruitment company out there. A Newcastle company like mine, NTP are invested in seeing the growth of the local tech community in Newcastle, Sydney, and more broadly Australia. So thank you NTP for helping us bring helpful content to founders and the startup community in Australia. Back to the interview. Hi, I'm Adam Spencer and welcome to Day One, the podcast that spotlights Australian startups, founders, and the organizations that empower Australian entrepreneurship. We go back to the beginning to tell a story of Australia's most inspiring founders and how they built their companies. You're listening to a special interview series as part of a documentary W2D1 is producing about the history of the Australian startup ecosystem. 3:16 Peter Devine: On the episode today, we have— 3:18 Speaker C: I'm Peter Devine. I'm the CEO of Uniseed, which is a venture fund operating out of some of Australia's leading research organisations, designed to not only, you know, help move stuff out of those organisations, but then to take them all the way through to exit. And we've had some big successes there. I've been involved initially with the biotechnology industry in Australia and more recently with more into the startup ecosystem for about 40 years now. And I've been in 4 Australian biotech companies. Probably the most successful of those was a company called PanBio, which was a diagnostics company that was sold to Invenesse Diagnostics, a multinational which is now known as Aller. You know, very well respected and regarded, I guess, story and exit for investors there. And initially started as a, in a research career and worked as an R&D manager in some of those companies. Mm-hmm. But then moved into the business development side, particularly with PanBio. You know, a lot of the selling was technical selling and training distributors all around Southeast Asia and South America. So that kind of got me out of the lab, you know, 20 years ago and into the business side of things. And then also had a stint at Progen, which was a publicly listed company, as VP of Business Development. And from there— ended up at Uniseed, and I've been involved with Uniseed now, you know, approaching up to getting close to 20 years. And so that, that's kind of my background, you know, starting off with research and companies and then moving into the venture capital side of things. 5:12 Peter Devine: You have a very, very rich history in the research side. I'm looking back through your education and some of your early experiences on your LinkedIn page, and I'm curious to understand what prompted the switch from the research side to the investment running the business side. 5:32 Speaker C: Yeah, it's an interesting one. I think if anything, it was, it wasn't a plan. At some point I made a decision to move that way, but being with a company called PanBio, we developed a diagnostic test for dengue fever, and it was the world's first diagnostic test, commercially available diagnostic test for dengue fever. And in some way, we had to go and educate the medical profession and the pathology labs. And that required a fairly technical, I guess, sell and education. And so I, as R&D manager, took on that role. And I initially, you know, met with the WHO and the FDA and the CDC and the Pan American Health Organization, you know, a lot of the leading organizations that needed to, I guess, accept that diagnostic test or endorse it. And then from there, moved on to train distributors all throughout Southeast Asia and South America where dengue fever occurs. So I took on that technical selling role and then I guess got a bit of a liking for it and made a conscious decision to— Yeah. To move out of the laboratory. And the next job I got after that was with UniQuesta, which was the technology transfer arm of the University of Queensland. And from there into a role of VP of Business Development with a publicly listed company that was developing a cancer drug. So it was kind of just getting exposure, having a PhD. And at the time when I started to do this type of work, doing an MBA to kind of supplement that and, you know, making that, getting exposure to it and then making a conscious decision that, you know, this is really where I want to go. 7:22 Peter Devine: You mentioned, you know, your 40 years experience. You've even been at Uniseed for coming up on 20 years in a couple of years. 7:31 Speaker C: Yeah. 7:32 Peter Devine: That predates what we would, even your time at Uniseed even predates what we would understand as today as the Australian startup ecosystem. Most people date the beginning, or as we kind of understand it to be today, the beginning around 2010, 2012. 7:50 Speaker C: That's interesting. 7:51 Peter Devine: Yeah, well, why is that? Why is that interesting to you? 7:55 Speaker C: Well, look, I think, you know, I did honours back, you know, finished honours, God, back in 1982, but went from there, you know, after having a job about a year at the uni, I went to a company called Biotech Australia, which was an interesting— I think at the time, you know, it was set up in some ways to be Australia's Genentech, which is the leading recombinant DNA biotech company in the world at the time. And it was set up by a big mining company, CRA, who put up, you know, $5 million a year for many years. And that, back in those days, was a lot of money. So And from there I went, you know, this was in the early '80s. And from there I went to another biotech called Medical Innovations, which was a listed biotech company. So I guess there was a lot of activity. There was still a lot of biotechs around at the time. I don't think there was as active of— there wasn't an active venture capital industry in Australia, but certainly there were companies around being funded either by the public markets or by in the case of Biotech Australia, by large mining companies just kind of, if you like, diversifying into biotech. So, and since that time I've been involved with biotech companies, you know, from the early '80s all the way through to now. So I think the industry goes back a fair way, a fair bit further, perhaps. 9:24 Peter Devine: Yeah. And Uniseed is kind of described as a venture capital fund or firm on its LinkedIn page. Is that how it started out as a venture capital No, no, it's evolved. 9:36 Speaker C: It's an interesting story. Initially, UniSEED was set up in 2000. It was before my time, but it was set up by two universities, Queensland and Melbourne, who put up $10 million each and really gave that money to the technology transfer offices to set up UniSEED. And the idea was it was set up to solve a problem, which was to bridge the gap, you know, this valley of death between an invention at a university and what we now say, you know, to a point where something's investable. So the idea was Uniseed would put small amounts of money into these projects and develop them a little bit further so then they could raise money from the more traditional, you know, investment market. I think what, when I came along, you know, Uniseed had spent most of that $20 million. Mm-hmm. And that was only 5, you know, not many years later. But what I think they'd learnt was that they'd lost a lot of money and that model of just seeding things, putting a little bit of money in, very important that proof of concept work gets done. So effectively it was a proof of concept fund, but really not a way to make money. So I got involved and we changed the model, you know. Mm-hmm. We employed a management team to do proper due diligence. We increased the investment limit so we can invest all the way through the whole cycle of the startup's life. We beefed up the investment committee to make better decisions and started a new fund in 2016 where we brought in New South Wales Uni and also at the time a super fund in Western Australia called Weskene. Weskene. And you know, that fund ran for 10 years and was very successful in that it had some high-profile exits in Fibratech, which got sold to Shire, a UK pharma company, in a deal worth over $500 million US. Spinifex, which was a UQ company that got sold to Novartis in a deal worth about $1 billion Australian. And then Hatchtech, which was a a head lice treatment out of the Uni of Melbourne that got sold to Dr. Reddy's Labs in 2015. So, you know, I'll preempt something, but I think that period in 2014-15 when we had those successes really changed the whole landscape and triggered a whole lot of change in Australia, which was very positive. Mm-hmm. But yeah, so Uni-Seed started off as something else, but morphed, has evolved into into what we call a commercialisation fund. And the reason we say that more often than venture fund, we act just like a venture capital fund, but it's to highlight that part of our mandate is to invest and make money and return the money, but it's also to help facilitate commercialisation of the intellectual property developed by our partner research organisations. 12:36 Peter Devine: Yeah, in that answer there, you did mention Near the beginning there's gaps. And I just wanna, drawing on all of your experience today, what do you see as some of the biggest gaps within, I wanna say, you know, the whole startup ecosystem as you see it, but maybe also more from your perspective as an investment firm? 12:59 Speaker C: Yeah, look, I think, look, if I initially focus on research organizations, I think the problem is there's a lot of really smart people in these organizations who invent things, but those inventions are just not at a stage where an investor is ready to put money in. And that's all related to that balancing the risk versus reward. 13:25 Peter Devine: Mm-hmm. 13:26 Speaker C: And so I think one of those gaps is just getting those inventions to a point where people are ready to put their hard money up. And that often just means, you know, some de-risking steps, you know, experiments or whatever. And so that's probably, you know, technically a gap. A lot of those inventions are what I call solutions looking for a problem. You know, they— 13:53 Peter Devine: Mm-hmm. 13:53 Speaker C: They're really exciting bits of tech, but it's like, well, You know, what's the market? Who's the customer? And I always like to say, what I've learned over the years is to say, it's gotta be something a customer needs, not something they want. You know, it's gotta be a need to have, not a nice to have. And so it's developing up that business plan or really where are we gonna focus this technology to make our money? So that's probably one gap. I mean, I think, you know, some of the others, In general, in the startup ecosystem, I think there's often a skills gap, finding people who are experienced, and this has improved over the years, but people who are experienced and have done it before, doesn't mean they were successful before, but at least have been through the process and can help drive that company forward. I think funding is still a problem. You know, I think at the early stages funding is difficult, but even getting large licks of money, depending on what it is, there's a lot of money around for, you know, SaaS and B2B for IT. But, you know, if you're developing what we like to call deep tech, there isn't as much money around as perhaps there can be. So finding those big chunks of money to really accelerate development is often a gap. 15:18 Peter Devine: Yeah, when we're talking about deep tech, is that because the people feel that the risk is higher and also how long it takes to develop? 15:27 Speaker C: I think that's the time is definitely it. I mean, often with IT, you know, and we've had a lot of the success stories at Atlassian and Canva, you know, they're in that space, you know, you're getting massive, you can get massive scale and massive reward fairly quickly. I think with deep tech, it's a much more challenging problem. First of all, you're building something, often it's a big piece of kit, but then you've got to go and start selling it and rolling it out. And that sales process is often a lot more difficult and a lot longer than an IT type project. 16:07 Adam Spencer: Yeah. 16:07 Speaker C: So I think that the rewards can be there. I think it's the time and every bit of deep tech is different. You know, that's the other thing. It's not a standard model of how you commercialize these things and how you make money out of them. So you've got to figure that out quite often. 16:28 Peter Devine: I am in the next couple of weeks having a chat with a guy named Peter Davidson. He's one of the founders of Fishburners and I got a really long email from him with some divisive views in there. He's got some very strong opinions about where we are today. 16:48 Adam Spencer: Right. 16:49 Peter Devine: And I'm just curious to know if you have, not necessarily unpopular opinions, but things that, is there something that you just wholeheartedly believe to be true within this space, but it's, no one seems to be on the same page as you? 17:06 Speaker C: Oh boy, that's a tough one. I think I probably, because I'm playing down particularly at that early stage, even though we take companies all the way through, as you can imagine, a lot of them fail before they get there. And that's the whole purpose of our model, right, is to fail early. But I think, you know, I do get a little frustrated. I think there's a little naivety about, you know, university or research organization output. And there have been some really great successes, but I think that people just think there's, you know, pots of gold, you know, in terms of intellectual property lying around that is untapped. 17:44 Peter Devine: Mm-hmm. 17:45 Speaker C: And I don't think people really appreciate the risk and, you know, the large number of failures that occur in this space. And I think there's a lot of people sort of attracted to it a little naively now, perhaps, and I know the government have recently announced an initiative to look at commercialising university IP, which is great, but I think we need to go into it with a realistic view of the world, and I think also our position in the world, a lot of people would disagree or criticise this point, but I think we're a pretty small country with 1% of the world market and trying to build a company in Australia to feed that market is really difficult. You've got to focus on an international market and it's a lot, possibly a lot easier for companies coming from overseas where they, in the US for example, their market is right next to them. All the big players are right next to them. 18:47 Peter Devine: Mm-hmm. 18:47 Speaker C: So I think there's some limitations. It doesn't mean we shouldn't do it, but I think we have to be realistic about where we sit in the world. A lot of people get critical 'cause we, you know, these companies end up going overseas and they say we're exporting IP, but I think there's a little bit of realism gotta come into that. That's probably sometimes when I get a little frustrated. 19:07 Peter Devine: That's really interesting. Yeah, I suppose given your role, you deal with founders and entrepreneurs all the time. You see them come and go. This is a kind of a standard question I'm asking everyone and it's just interesting to compare answers. But if a brand new founder come to you tomorrow, what would you tell them? What one bit of advice would you give them that would slightly increase their chances of success? 19:33 Speaker C: Oh look, I think, you know, depending on what they're trying to do, but I'm assuming most of them wanna raise money. That's probably the start for them. And the advice I give is to understand the investor and what they're looking for and then try to tailor their pitch to meet the investor's needs. I think a lot of them, and I see a lot of inventors and founders out of universities, which is probably even one step further removed. 19:58 Peter Devine: Mm. 19:59 Speaker C: But you know, they've got to understand, you know, how, if they're looking at venture capital, how venture capital firms work, how these managers are rewarded and remunerated. You know, the reality is they've got to show, for a venture firm, they've got to show a lot of upside They gotta show that ability to return at least 10 times the money that's invested because they've gotta, if they are successful, they gotta make up for the failures that that VC fund has as well as the management fees they have. And VCs only make a lot of money if they're very successful and they share in the upside. So, but you know, and then again, if it's a high net worth investor or family office, they might have a different bent on the way they look at investments. So just really understand, it's the old story, understand your customer, right? 20:50 Peter Devine: Mm-hmm. 20:51 Speaker C: And so if you're raising money, well, your investor's your customer at that point in time too. So if you don't understand your customer, you're not gonna be successful. So I think that's probably advice I'd have. I see a lot of pitches that are just not tailored or that they might focus too much on the technology. These people are in love with the tech because they've been working on this piece of technology, but in the end, the technology is possibly the least important thing. You know, the market and the customers that they have and the upside is probably more important. 21:28 Peter Devine: Could we be doing something better as a community? And if so, what area would that be? Would make the biggest improvement? 21:36 Speaker C: Yeah, look, I think if you look at, I sort of look at that, you know, you say ecosystem, I kind of like to look at it as an innovation supply chain, right? You know, and if anyone's ever done supply chain theory, you know, one of the central parts of that is that if there's any bottleneck in the supply chain, the whole chain is broken, the whole chain's disrupted. So if you start right at the start, it's that source of invention, be it the entrepreneur or be it the inventor. Look, I don't really know if, particularly in research organisations, the culture is there or the reward systems are there to properly motivate and support these people. You know, they've traditionally been supported by the old publish or perish paradigm. But it's all very well to change the reward system, but we've got to give them the people around them. So one of the things we've kind of suggested in the government review is this idea of having entrepreneurs in residence who can assist researchers in this journey. And so that's that initial phase. But then you do need the other people around. It's finding ways to, getting all the systems right, the employee share schemes, getting systems to be able to bring back experienced talent to help companies, getting the rewards in there for people to invest money. And I'm not saying there are no systems that do that. We have the Early Stage Investment Company scheme now designed to try to encourage investment. But it's really taking a holistic view, not just saying this is one thing wrong. And looking right through that whole supply chain and trying to get the whole chain to be efficient. 23:29 Adam Spencer: Mm. 23:29 Speaker C: Yeah. 23:30 Peter Devine: Yeah, I love that answer, comparing it to a supply chain. Just to follow up on that, you might have just touched on this briefly, but where are some of those bottlenecks that you see? 23:42 Speaker C: Yeah, look, I think, you know, and this relates to things, and I didn't say it, but it's government policy as well, right? I mean, I'm not talking about government necessarily throwing money, but policy. But I think the government should take the same approach. But as I say, I think some of those, you know, that early-stage funding is really hard because it's very high risk. And why would anyone who's rational and has money to invest, invest money at a riskier point in time unless there's a reward there? 24:13 Peter Devine: Mm-hmm. 24:13 Speaker C: So, you know, that might relate to tax incentives to do it. Which the government has tried to do, and capital gains tax breaks and things like that. But then it's about having the appropriate skills. But then as we go forward, being able to raise large amounts of money and having the support networks and the schemes to assist that. I think at the moment for me, there's a bottleneck very early in getting that early funding of stuff. But there's also when you get later down the track to when you really need large amounts of money. I think a lot of companies look to the ASX because that's the place they can raise a big chunk of money. I don't think necessarily for a lot of them that's the right place to be. 'Cause often a lot of them are very early and they end up getting there and they sort of get in limbo, you know, beholden to their share price. And so I think there's, they're probably the two main bottlenecks I see. Mm-hmm. That early stage capital and the, you know, that later expansion, what I call expansion capital. When they've got a product on the market, they've got some customers, they might be in that early million dollar a year revenue, but growing to a $50 million a year revenue company is a huge challenge. And you know, that's that expansion capital where you need significant input of capital. 25:34 Peter Devine: If I was to open, just open it up now for you to talk about anything, there's something that you think about on a daily basis, something that you're really passionate about, passionate about, just something that you think absolutely needs to make it into this series about the history of the Australian startup ecosystem and the future of the ecosystem. Does anything come to mind? 25:55 Speaker C: Well, look, I think if I was telling the story of the Australian startup ecosystem, I'd probably see, as I said, those, and it wasn't just our exits, but that period of 2014, 2015, of being really pivotal. You know, we go through cycles and we had the global financial crisis in 2008 and after that the whole, and I tend to look at things a lot about the money, right? The money, money makes things happen, but— 26:27 Peter Devine: Mm-hmm. 26:28 Speaker C: The whole financial market's kind of contracted and super funds moved away from startups and venture capital. The venture industry contracted. And I think the industry was in a lot of trouble. And then in 2014, we had the Fibretec deal with Shire. In 2015, Spinifex deal with Novartis and Dr. Reddy's acquired Hatchtech. But on top of that, we also had Starpharma signing a deal with AstraZeneca worth $650 million. Atlassian did an IPO on NASDAQ, which was the largest float of an Australian company on the US market. So we had a lot of really positive things happen, and on the back of that, I just felt the whole ecosystem change. And so the government then committed significant resources, you know, the Medical Research Future Fund in 2014, and that National Innovation and Science Agenda, December 2015. You know, superannuation funds kind of came back to the sector. Even universities changed. Historically, universities were really focused on research and teaching, which is appropriate, but on the back of that, I think a lot of people started saying, "Hey, we can make money out of early-stage innovation." And universities themselves saw students as more of a strategic asset and started to put incubators and accelerators into place. Programs like Incubate at Sydney and Cicada Innovations and On Program at CSIRO. But every, every research organisation is now affiliated with an incubator or an accelerator. So, and then on the back of that, venture funds started to get formed. You know, the government committed to the Biomedical Translation Fund program, which formed 3 large managers in the biotech space. But we've had— Yeah. You know, over the years now, massive raising from Blackbird and Airtree and these significant funds. You know, so I see that as the, I guess, a pivotal time. Something I take pride in as Uniseed because I see us having a really important role in that. You know, not the only catalyst for it, but, you know, one of the catalysts that I think really changed things. And that has continued to, despite COVID, I mean, the venture industry and the startup industry has continued to grow and a lot of these incubators, you know, that have, accelerators that have evolved have come post that as well. So I think there's been this real groundswell and growth in this industry. And that might be why originally you said to me, you know, a lot of people see the industry starting, you said 2010, 2012. 29:12 Peter Devine: Mm-hmm. 29:13 Speaker C: You know, I think that sort of aligns pretty well with that. 29:23 Adam Spencer: I hope you enjoyed that interview. More interviews are on the way. Follow the podcast wherever you're listening right now. Stay tuned for more interviews with many, many more amazing people from the Australian startup ecosystem. Thanks for listening and see you next time.
