Chris Farquhar is the chair of the Entrepreneurs' Programme Committee, which is a subcommittee of Innovation Australia. He's also director of Reparo Proprietary Limited. He spoke to Nick Markham about his experience with WA's tech scene.
Could you give us some background on Innovation Australia?
The role I play as the chair of the Entrepreneurs' Programme Committee is basically the committee that oversees the awarding of grants under the federal government's Accelerating Commercialisation program. That program is a matched funding program delivered by the government for early-stage companies that are bringing innovative technology to market, and supporting them with finances and also resources to help them get to market.
How long have you been involved in the tech industry and how did you first get involved in it?
I have a technical background, so I started off with working in the mining industry with Rio Tinto and then BHP, mainly on the process side of things. This was basically on their process facilities, so actually at the industrial plant. My focus was control systems, and moved on to data acquisition. That's my technical background.
From a commercial perspective, I then went on to a series of start-up businesses. I founded three technology companies that I managed through to acquisitions with a total market value in excess of $300M, including two U.S. exits. I spent an extended period based in the Silicon Valley area of California, and companies I founded have sold products in over 20 countries globally.
Then I spent a couple of years working in the consulting space in Silicon Valley for companies like Symantec. I worked in product management go-to market, and also corporate venture roles. I did that until 2010, came back to Australia, then got involved in the Commercialization Australia federal government program. Then I changed over to the Accelerating Commercialization program Chair of the committee.
I also work in the venture capital space. I'm setting up a new fund at the moment in Perth, but I've been doing venture and structured financing in the last two to three years, just working through Southeast Asia, mainly in the biotech and medical and the associated digital space.
It sounds like you've worn many hats in your career, that's for sure.
Yes, predominantly as an entrepreneur.
What do you think the critical factors are for the growth of WA's ecosystem?
I spent probably six years living in the California, Silicon Valley area, but also about 10 years working in that market. When I came back to Perth, I wasn't expecting a lot and I was quite surprised about how active things were in the innovation and commercialisation space. I think that's still good now. I think there's a lot of people involved. It's a very active ecosystem, which is really positive. A lot of good people are involved in a lot of good ideas.
Capital is obviously one thing that's lacking. I'd say it's probably more past proof of concept, early revenue capital, and obviously before that is a bit of a struggle. I think also there's a lot of people doing a lot of things in Perth and it'd be good to find a way to coordinate some of that activity. I know there are different groups having their own accelerators and incubators, and that type of thing but it'd be good to find a way to bring those groups together.
The resources that are available are very thin themselves.
They are, yes. Probably the other thing I think that's lacking is finding entrepreneurs with a good track record that can come back in and participate in helping the next generation. Or even if they're working on the next venture, being brought into the community.
I also feel like there's a number of good tech innovations and companies that are out there that that don't generally participate in the community because they're just building their business. Reaching out, again, a bit further, to those type of companies that wouldn't necessarily be the ones you'd find at the innovation events, mainly because they're just too busy building their businesses.
I found that when I worked in the Commercialisation Australia program, where I had over 30 companies get grants from the government for and most of those actually stemmed from my connections and networks. I didn't really find a lot of them at the innovation events.
Do you see ways in which we can shift the access of funding from angel investors to VCs?
It's probably as good a time as any to try and attract more people into the venture area because tech's become a lot more front and center in the last couple of years than it probably ever has. We need people to see the opportunity that investing in tech can provide and so I think it's important to to talk more about the successful businesses and explain that this can be done from WA.
We hear of success stories quite often and yet very few people in the wider community have heard of them. We really need to start celebrating their successes and the fact that they have really innovative products.
The angel network that's established in WA is probably not as active as we'd like it to be. Having said that in last two years, there has been a decent amount of seed investment coming from private people but again, it's not well exposed and it's not coordinated from a traditional angel network.
I suppose angels typically don't like to get their name out there too often, in the fear that they'll be hounded with requests?
That's true but I think it's more than just that. I don't think it's so much naming it, I think it's just having the right mechanisms in place where these people can get drawn into the network without necessarily exposing their name. Just being in a position where when the deals do come in there's a coordinated way of addressing the opportunities.
You think there's a greater opportunity perhaps to get something like that up and running?
I think it's sort of up and running, it's just I'm not sure how well it's functioning. There are a lot of people who invest, but they don't necessarily want to be exposed as investors. Really, the network doesn't need to expose these people. They just need to say that they do have this sort of network available, and then being in a position to coordinate the delivery of deal opportunities to these investors.
I've heard in the long run there's also a benefit to the investors.
Absolutely. If the investors can get their hands on good opportunities then obviously it's a great thing for those people that do want to participate in investing in tech.
From your perspective, who do you think is making the important contributions to WA's ecosystem at the moment?
I probably can't name all of them, because there's probably too many. I think from a funding point of view, the federal government through the Accelerating Commercialisation program is very important. Also, YUUWA Capital. .
On the accelerator side you've got groups like KPMG doing their accelerator, and Amcom. I think a key centre point for a lot of these early businesses is Spacecubed and what Brodie's been doing with them. Then also probably, although it's early, I think what Justin Strharsky is doing on the hackathons with corporate players.
I know Curtin is very active as well with things like OzAPPs and also the IOT or the Internet of Things centre of excellence that they just set up with Cisco and Woodside.
Do you see any opportunities for greater collaboration within the community?
There's definitely got to be more collaboration.One of the things I think is a challenge is there's just not that much capital in the market. I think there's opportunities for a lot of people to participate. It should really be looked at as there's some competition there, but there's also a way for these groups to all work together to grow the ecosystem. The more healthy it is, the more opportunities there will be for the different groups.
We've only got one active VC firm currently in Perth, and that is YUUWA and they have a full portfolio.
Yeah, that's right. There's not really much from a choice standpoint.
We've seen research from Stanford about the importance of proximity for venture funds and how that correlates strongly with success. Given that Perth companies have to go east funding doesn't bode well, would you agree?
Absolutely.. I think locality is always going to be a major issue and why we need to attract capital here. Unfortunately, by the time a lot of companies get to the Valley or get to some of the bigger centres, maybe Southeast Asia, they've diluted down the foundation. That also creates an issue for people investing at that stage.
What role do some of the other cities in Australia play in the WA community? Do they have a big pull on talent? They control obviously a huge amount of the money. What role do you see them playing?
I think without a doubt the east coast of Australia is better situated for a place for people to go and get deals funded and set up ventures. It doesn't mean we can't do it here. I was talking to someone on the phone yesterday and they were basically saying that when you're in Sydney or Melbourne you're basically in Sydney or Melbourne. I mean it's just a flight from one to the other. It's just part of everyday life that you spend time in Melbourne, you spend time in Sydney. You don't need to be located in one or the other.
Whereas in Perth, it's a lot harder. There's capital there, there's opportunity there and there's a good network there, driven from the angel networks, and I think that does attract people over there. It's always going to be that way. I think it's finding what we can do here in WA, and what opportunities to bring some capital in that can allow people the opportunity to stay located here. Then also the networks, when they do need to take their business forward they can start to jump into those bigger markets like Asia, and the US, and Europe.
What do you think of the idea of people clustering and developing localised, specialised technology in order to become successful? Do you see Perth needing to go down that route or do you think a more blanket approach is the way forward?
It's one of the challenging questions. I think Australia as a whole needs to find out what it can do well and not focus too much on becoming totally niche. When you become totally niche, you can sometimes rule out opportunities. Australia is not a big market so being completely niche could limit you.
We've got some natural benefits around resources. It's potentially something to look at as a starting point but they could broaden it a bit further to think about what that can mean outside of resources and whether some of the technology can be applied to other industries that start off in resources. I have to admit I don't have an answer for it, but I do think some level of thinking about what we're strong at and playing to those strengths is in order.
I think a lot of people often think our proximity to Asia is a very strong benefit for Perth, but do you see Asia having a strong role in shaping Perth?
Yeah, I do, absolutely. I do believe there are a lot of opportunities up there. There are challenges - cultural and language challenges, and even tech challenges. For example, in Asia obviously people just aren't necessarily equipped with the same level of credit access. For example, not as many people by percentage have credit cards. You've got businesses that need to transact using credit cards and that's a challenge. There are local issues to overcome, but I think the advantage is that it is a big market, which means that there are opportunities to grow your business in a bigger market.
Culturally my experience is that Asian economies are quite receptive to overseas people coming in. Australia is reasonably well respected up there so having the risk takers coming up, taking the risk in some ways for the locals, there's good opportunities in that regard as well. I have a lot of belief that we need to be tapped into that market and do more to build those networks.
Do you see governments playing a central role in facilitating some of that?
Potentially, as a way of getting some of those things going. Government can help with some of the mechanisms but it needs to be set up with private people that have got commercial interests that can build those networks as well.
OK, lastly, how have you seen the WA startup community change over the last five years?
When I came back after having lived in the Valley for six years, I came back thinking the worst but I was really surprised at how active it is. It's really good to see some of the corporates getting involved now, some of the industry players getting involved as well. I think there's a lot of focus on the web, social app side of things, which is good, but I think there needs to be more on real businesses that take longer to build. Probably not in what I call the sexy space, that we talked about that maybe aren't on the invite list to these innovation events but are out there doing good work in the background, just trying to build their businesses.