Introduction
The Australian Government's Strategic Examination of R&D Discussion Paper (released today) aims to evaluate and enhance the country’s research and development (R&D) system. It highlights the importance of R&D in fostering innovation, economic growth, and global competitiveness. Despite Australia’s strong research output, the translation of research into commercial applications remains weak, leading to economic stagnation and reduced innovation-driven growth.
The Discussion Paper concludes that Australia must strategically reform its R&D ecosystem by:
prioritizing investment in industry-led innovation
strengthening commercialization pathways
fostering collaboration between research institutions and businesses.
Without immediate action, the nation risks falling further behind in global competitiveness.
The Case for R&D Investment
Australia has a globally recognized research base, contributing 3.5% of the world’s publications and 5.8% of global citations. However, national investment in R&D has declined to 1.66% of GDP, significantly below the OECD average of 2.73%. This underinvestment hinders economic complexity and limits Australia’s ability to develop and commercialize cutting-edge technologies.
Comparatively, nations like the U.S., Israel, Germany, and South Korea have successfully leveraged R&D for national progress. They implement strategic, mission-driven funding, strong industry collaboration, and incentives for business-led innovation. Australia must adopt similar measures to remain competitive.
Challenges in the Australian R&D Ecosystem
Underinvestment by Industry: Business R&D Expenditure (BERD) has been declining since its peak in 2008-09, largely due to reduced corporate incentives, regulatory barriers, and insufficient collaboration between research institutions and industry.
Weak Translation of Research: Despite a strong research base, commercializing new ideas remains a challenge. Australian businesses are less engaged in experimental development compared to their global counterparts.
Fragmented Funding and Policy Approaches: Government R&D investment is spread thinly across 151 programs, leading to inefficiencies and lack of strategic focus.
Workforce and Skills Mismatch: PhD graduates struggle to transition into industry roles due to rigid academic pathways and limited industry exposure.
Limited Growth of SMEs and Startups: Australia’s startup ecosystem lacks sufficient venture capital (VC) support, particularly in deep-tech sectors that require significant R&D investment.
Declining Role of Large Enterprises: Large Australian firms have reduced their R&D spending, shifting away from innovation-driven business models.
Key Recommendations
Increase Industry Engagement: Introduce stronger incentives for private-sector R&D investment, such as tax credits and co-funding programs.
Enhance Research Commercialization: Expand initiatives like Australia’s Economic Accelerator (AEA) and provide targeted funding for startups and SMEs developing deep-tech solutions.
Streamline Funding Mechanisms: Consolidate national R&D programs into larger, mission-driven funding pools with clear impact assessments.
Strengthen Workforce Mobility: Reform PhD training programs to include industry placements and interdisciplinary research experience.
Support SMEs and Startups: Expand funding avenues for emerging companies, particularly in high-impact sectors like clean technology, AI, and biotechnology.
Revitalize Large-Scale R&D Investment: Encourage major corporations to reinvest in R&D through procurement strategies, corporate venture capital, and innovation-led government contracts.
Leveraging Artesian's VCaaS to Address R&D Challenges
Artesian's Venture Capital as a Service (VCaaS) is an investment model that allows government organizations, corporations, and universities/research institutes to invest in a diversified portfolio of innovation-driven startups and/or scaleups for both financial and strategic return.
The VCaaS structured approach allows organizations to collaborate with the broader innovation economy, mitigate risk, accelerate commercialisation, and deliver sustainable financial and strategic impact from R&D investment for their stakeholders
How Organizations Can Leverage VCaaS
VCaaS: The Future of Collaborative R&D Investment and Commercialization in Australia
Artesian’s Venture Capital as a Service (VCaaS) is a flexible and strategic investment model that empowers organizations to expand their R&D capacity, accelerate research commercialization, and seamlessly integrate venture capital capabilities with minimal operational complexity and maximum control.
For organizations seeking to drive external innovation while fostering internal cultural transformation, VCaaS acts as a catalyst for agility and forward-thinking mindsets. By providing structured access to high-potential startups and emerging technologies, it enables businesses, universities, and government agencies to stay ahead of market shifts and technological advancements.
VCaaS has the potential to rapidly address Australia’s R&D challenges by unlocking strategic capital - an underutilized resource across government organizations, corporations, industry groups, universities, and research institutes. By channeling this capital into high-growth startups and scale-ups, VCaaS can double the venture capital available in Australia within a short timeframe, dramatically enhancing research commercialization, accelerating deep-tech investment, and fostering greater industry collaboration.
Artesian's Existing VCaaS Mandates
For more information contact jeremy@artesianinvest.com