SME INVESTMENT FUND
CSIRO invests in SMEs: a new form of partnership
Throughout the past 10 years or more CSIRO has trialled a number of initiatives to support SMEs. These have had mixed success with most programs relying on SMEs having both the wherewithal to navigate what can be an overwhelming organisation, as well as the financial means to pay for the top-flight R&D for which CSIRO is famous.
As a result, many technology-dependent SMEs who might otherwise expect to easily form productive partnerships with the country’s leading R&D provider have struggled to develop meaningful engagements with CSIRO.
SMEs are a somewhat disparate group and while there’s unlikely to be a one size fits all solution, in early 2008 CSIRO began a pilot program designed to provide ‘star-SMEs’ with the resources to kick-start a new type of partnership with CSIRO. This initiative, dubbed the Australian Growth Partnerships (AGP) program, has funding set aside to be invested in technology receptive SMEs.
AGP is a pilot program that provides investment funds in the range of $0.5-2.0 million per company, where those funds allow the SME to purchase customised R&D capability from CSIRO. The investment is made on terms that compare favourably to those that a company might obtain from a venture capital provider, although they are still structured to drive the company to fully exploit the technology that is developed and, in so doing, offer CSIRO a return that’s targeted to make the program self sufficient.
While CSIRO offers other more general support services to SMEs through its SME Engagement Centre, it hopes that the AGP scheme can provide the much needed capital to companies with industry changing potential, but which may fall outside the traditional venture capital investment domains such as IT and biotech. When the program is selecting investees, AGP also looks at whether the SME is in an industry that can complement CSIRO’s efforts in national priority areas that are the focus of our Flagship Programs.
Since the program opened for business, it has invested in nine SMEs. The first placement made in mid-2008 was in HySSIL Pty Ltd – a Victorian based company that is developing light-weight concrete for use in pre-cast panels for residential construction. HySSIL is using its AGP funds to pay for a collaboration with CSIRO to develop another greenhouse friendly building material that it hopes will give it a strong competitive advantage as the cost of traditional cement-based products sky-rocket under the carbon-constrained economies of the future. HySSIL’s General Manager, Leigh Gesthuizen, said “The AGP funded work looks like providing HySSIL with an exciting second generation product, that we were unlikely to have been able to pay for until our current product gets significant traction, and by then the window of opportunity may well have shut”.
CSIRO (through AGP) provided funding of up to $2 million to ASX listed company Avexa Ltd (ASX: AVX) so that AVX could work with the research team at CSIRO Molecular & Health Technologies (CMHT) to develop new treatments for the Hepatitis C virus (HCV) in a program aligned with CSIRO’s Preventative Health (PH) Flagship.
Also supported by the PH Flagship is AGP’s investment in Avipep Pty Ltd. Avipep is a CSIRO start-up that has since its incorporation in 2005 produced results in cancer imaging that are arguably the world’s best. To accelerate the company’s path to Phase 1 clinical trials, Avipep completed an equity investment with AGP in order to fund a R&D program that will identify scalable methods that improve the stability and yield of the company’s proprietary recombinant proteins.
With the program now bedded down, the challenges ahead are concerned mostly with maintaining a full quality pipeline and managing the portfolio. AGP is here to give technology receptive Australian SMEs a helping hand, and welcomes new applications.
More information about the program can be found at http://www.csiro.au/Portals/Partner/Collaborate/AGP.aspx .
Investment Portfolio Manager
CSIRO IP and Licensing
Phone: +61 2 9490 8202