In the midst of an extraordinary year for all of us, I thought it timely before Christmas to begin to look back on the past 12 months.
The Spiegare Team has been fortunate to maintain our strong partnerships with our clients and associates and to also develop what we hope will be new enduring relationships. Our clients have been terrific this year, adapting (as we all have), to the testing circumstances and presenting new challenges for our team to address. I am very proud of the way that our teams have risen to the task of developing new ways of viewing and addressing the challenges being met and the opportunities being pursued.
We have found that adaptation of some ‘classical business models’ has served us well in exploring different perspectives on the domestic agriculture (and perhaps broader) innovation challenges. These approaches have got us thinking more around ‘productisation’, as an outcome of the commercialisation process. However, the question that has been challenging us is how much value can be attributed to the part of the product that arises from the technology being commercialised? It’s rare to be developing or commercialising an entire platform – frequently innovations are providing additional/incremental value to existing technology platforms. With the challenges in path to market and the number of partners through which a technology must pass from licensor to consumer, how do we ensure that there is appropriate obtainable value accessible to each actor in the chain?
The world of incubators, accelerators and venture capital continues to draw much energy and media attention. However, what happens post-accelerator in the absence of follow-on capital? From our vantage point it appears that the lack of capital to support post-accelerator runways and new ventures capital in Australia, compounded by a lack of global channel partners, may be contributing to stranded accelerator ‘graduates’ with no resources or viable path to market. We could not hold out that we have a thorough diagnosis here, but there are a few contributing phenomena that we have noted in previous blogs.
More specifically on venture capital, we have formed some hypotheses on why agriculture is different to other, more mature, venture capital investment segments such as med-tech and IT. Notable comparisons include:
• Medical technology is relatively more homogeneous in global regulatory terms. There is a consistent global language and expectations around technology stage gates and investor exits. While there are efforts to do similar (for example through TRL’s) in agriculture, there appears to be less homogeneity on what these inflection points are.
• The addressable market for medical technologies is a sophisticated, well educated, registered cohort (of doctors) who drive the uptake of technology – agriculture whilst maybe meeting some of these descriptors is far more heterogeneous and less orchestrated and there is no formal or statutory program for keeping farmers up to date.
• The final consumer (‘patients’) are a far more homogeneous market to address than ‘farms’ who have dramatically varying conditions in which they consume the final product.
• There are comparatively quicker turnarounds in the IT investment sector, with agriculture innovations, particularly biotech-based innovations, typically taking 15+ years from conception to commercial adoption.
• In Australia specifically, and perhaps in general globally, there is limited awareness and understanding around agriculture venture capital investing, given the aforementioned uncertainties.
Over the past year, while there have been many impacts arising from COVID, we noticed a sharp increase in discussions around deficiencies in local manufacturing and our resulting high dependence upon global supply chains. We coined the phrase ‘economic nativism’ this year, to try to capture the emergent reactionary shift in strategy towards increased domestic production and greater sovereign economic security. Import-Substituting Industrialisation (ISI), also recently described (in China) as domestic economic growth and engagement with the world as ‘dual circulation‘, is not a new concept. It does need to be developed and executed with care. Nonetheless, replacement of imports with internalised domestic production of many business inputs and consumer products, not only provide potentially enhanced supply security, but also highly significant opportunities for Australia’s natural resource, primary production and emerging renewable energy sectors.
Further reflecting on rising economic nativist policies around the globe, market access to agricultural commodities could become impaired as many sovereign nations seek to shore up their local production systems. While presenting as a short-term challenge, it perhaps catalyses the discussion around higher value crops and post farmgate value-adding opportunities for Australian production. Seizing of the value-adding opportunity is evidenced through examples such as V2Foods and faba bean fractionation. Launches of innovative products such as high oleic safflower oil and DHA-canola are demonstrations of higher value crop commercialisation arising through patient collaborations. While there is currently much ado around alternative protein, broader opportunities around fibre, healthy oils, micronutrients, etc. will follow in due course.
We see Australian agriculture as being presented with an extraordinary opportunity to provide the renewable, sustainable feedstocks upon which a domestic manufacturing sector could be built. This could contribute not only to the NFF’s 100 billion dollar farmgate value target but also the broader downstream value adding opportunities. There is a clear mid-term need for renewable diesel, marine fuels, and sustainable aviation fuels and an ongoing need for renewable carbon for plastics and chemicals production. Agriculture presents as a major starting point for renewable fuels and the sole source of renewable carbon, and the greater local value adding we can do through manufacturing, the better!
In relation to this bio-industrial opportunity, this past year has also seen a new collaboration formed with CSIRO Agriculture & Food, whereby Spiegare in partnership with Allan Green at AGRENEW are identifying and nurturing new partnerships for the CSIRO Biomass Oil technology. This has been an exciting development for us with the broad impact that we see this technology can make in delivering scalable and affordable plant oil feedstocks for a rapidly expanding global renewable diesel market. It has also allowed us to develop new models through which we can work with research organisations in identifying and stimulating paths to market for their technologies.
While unable to publicly call out all of our client partnerships, my thanks goes to all involved in continuing to trust our counsel and veracious approach to advising and supporting your respective commercialisation and technology transfer activities.
I would also like to thank all my colleagues throughout the year, particularly Faisal Younus, Bill Taylor and Gina Drummond, who are integral parts of the Spiegare team. I would particularly like to thank Rohan Rainbow (Crop Protection Australia) and Leecia Angus (Snowy Advisory), who are also my co-founders at AgTechCentric, for their ongoing support. I would also like to publicly thank two of my former CSIRO colleagues with whom we have worked very closely with this year in Allan Green and Maurice Moloney.