The Australian deep tech sector is experiencing strong growth, but faces significant obstacles when it comes to scaling, according to a recent report from Cicada Innovations, a leading deep tech incubator.
Key Findings of the Report
The Cicada x Tech23 Insights Report 2024 paints a picture of a burgeoning sector. The data, drawn from an analysis of 141 deep tech applicants, reveals that a substantial 72% of these startups were established in the last five years. Furthermore, 78% of these companies have successfully secured funding. However, the report also highlights a critical funding gap. Venture capital, a crucial source of funding for technological advancement, accounts for a mere 17% of investment. This is significantly less than the 20-30% observed in overseas markets, indicating a potential bottleneck for growth.
Government grants play a substantial role in the early stages, contributing 38% of early-stage funding. The report also revealed that Australian corporates are on par with international corporates in industry partnerships, each with around 58 and 57 collaborations respectively. The report noted that most startups operate in areas aligned with Australia’s critical technologies list, including artificial intelligence, hardware, advanced manufacturing, clean energy, and biotechnology.
Scaling Challenges
While government grants, along with early-stage funding from sources like friends and family (34%) and accelerator programs (34%) support the initial progress of these startups, the study identified difficulties in securing later-stage capital and local procurement opportunities. A concerning trend emphasized within the report is that numerous startups are securing international government contracts before gaining momentum in their home market.
What the CEO Said
Sally-Ann Williams, chief executive officer of Cicada Innovations, commented on the report’s findings: “Australia has a strong foundation of deep tech talent, but startups are still struggling to scale. So we have to ask ourselves, why are international companies and governments seeing the value in Australian deep tech before our own local corporates and government do?”
