The NSW Innovation Blueprint finally dropped on Monday – 18 months after innovation, science and technology minister Anoulack Chanthivong first announced it in September 2023.
And if you’re wondering if it was worth the wait, the feeling is ¯\_(ツ)_/¯
The Minns government needs to get cracking, and quickly. It has lost ground to make up after such a long wait. Accompanying reports confirm that fact.
Over the next decade, the Blueprint’s ambition is to see the tech sector grow by $27 billion in value – a figure the industry could almost deliver in a single day depending on the ASX’s reaction to the behaviour of WiseTech founder Richard White – and create 100,000 jobs.
The NSW Innovation Blueprint 2035 has five key actions that probably could have been sorted out and agreed on in a two-hour workshop on a Tuesday afternoon.
They are:
A strategic approach to funding: Ensure existing and future programs are easy to navigate, more equitable, and support key industries identified in the Industry Policy.
World class places: Enhance access and use of NSW’s world-class facilities and continue to develop Tech Central as a flagship innovation district.
Talent development: Support people in the ecosystem through increasing collaboration and enhancing innovation hubs, including supporting founders from diverse backgrounds, Western Sydney, and rural and regional areas.
Global attraction: Explore launching an annual Tech Week and engage with global and local investors to bolster international venture capital investment into NSW.
But there’s no money or commitments for, and no timelines to, any of these ambitions.
A media release from Minister Chanthivong hailed it as “a landmark strategy to cement NSW’s position as the innovation powerhouse of Australia and a leader in high-value industries”, that “will help NSW grow more unicorns like Afterpay, Atlassian, Canva and Safety Culture in the years ahead”.
Without irony, he accused the former Coalition government a “decade of Liberal-National delay” – so precisely the era when Afterpay (which hails from Melbourne), Atlassian, Canva and Safety Culture all became the multi-billion-dollar “innovation-intensive firms” with billionaire founders politicians now love to have their photos taken with. (The former government released the NSW Innovation Strategy, back in 2016).
The Blueprint is meant to complement the recently released NSW Industry Policy, which focuses on three key areas: housing, net zero & energy transition, and local manufacturing.
Minister Chanthivong said the NSW Innovation Blueprint 2035 was “about more than just tech – we are supporting innovation across all industries, to make a more productive economy and help build a better NSW”.
The Innovation Blueprint 2035 suggests two new funds – one for commercialising research, and another, similar to the Victorian and Queensland models, as a fund-of-funds for support VC investment in areas such as deep tech, advanced manufacturing and clean energy.
But the commitment only goes as had as saying the government will “consider the establishment of a standing Emerging Technology Commercialisation Fund” and “investigate the development of a NSW Government Strategic Investment Fund”.
Perhaps the May budget will be a pleasant surprise.
As part of developing the Blueprint, the government enlisted former Tech Council of Australia CEO Kate Pounder to assess the NSW innovation ecosystem to identify current challenges and opportunities.
Kate Pounder’s review
The Pounder Review, released alongside the Blueprint, found that while NSW has the lion’s share of Australian workers in innovation, and scored 57% of VC in the last 24 years, competition for talent and innovation has grown both nationally and globally.
NSW has produced 17 unicorn (worth $1 billion+) companies, more than any other state, Pounder found, with 28 future unicorns in the pipeline.
That figure’s worth noting the context of LaunchVic’s 30×30 unicorn program, which hopes to see the state produce 30 unicorn companies by 2030.
Her review paints a picture of a state resting on its laurels while others, such as Victoria and Queensland invest heavily in their startup ecosystem.
Kate Pounder
It’s worth remembering that Labor is now halfway through its first term, having been elected this time two years ago.
The torpor in the NSW tech ecoystem did not occur under the Coalition, but two years of inaction and review by Labor.
The review points this out as diplomatically as possible.
Pouder said the state faces two strategic challenges.
The first is fierce competition from other governments for its key industries and jobs. She points out how others have local and international governments are intervening to attract and crowd in private investment to priority areas, and public funding to complement private market gaps. They’ve made it easier to do too.
“While NSW is well-positioned to be a global innovation leader, it has not moved as fast as other jurisdictions to release an ambitious, integrated innovation strategy that can help its local innovation ecosystem thrive and continue to secure the state’s current leadership position,” Pounder wrote.
The second strategic challenge she identified is that the state government’s current suites of policies and interventions “don’t always target the most pressing needs or gaps in the innovation ecosystem or the state’s top priorities”.
Since coming to power in March 2023, Labor’s been on a go slow. It paused the popular minimum viable products (MVP) grants program soon after, before When the program returned, six months later was reduced to $50,000.
Last year’s budget allocated $4 million in FY25, compared to Victoria’s $40m for its startup agency, LaunchVic.
The most decisive action taken by Minister Chanthivong was blindsiding the sector in December when he announced the Sydney Startup Hub would be forced to relocate in October this year from the CBD to an undetermined site somewhere in the Tech Central area near Central Station.
NSW also canned the $10 million Carla Zampatti VC fund a mirror of LaunchVic’s highly success Alice Anderson Fund, which has co-invested in more than 30 startups led by women.
Pounder delivers the evidence of the impact of that decision, writing that “female founders in NSW receive just 7% of VC funding, less than half the 16% share they receive in Victoria”.
In the debate over backing female founders, it’s clear NSW is dragging its heels.
Investments by other states, including Queensland have, in recent years, lured NSW startups to cross the border and set up there, as well as supporting women to break into VC and providing funding for NSW VCs to open their doors in the Sunshine State.
Pounder points out that VC investment in NSW is “heavily skewed to business-to-business (B2B) software-as-a-service (SaaS), fintech and, more recently, clean energy companies” at the expense of critical sectors as advanced manufacturing, deep tech and health tech
“This means that companies involved in areas of innovation critical to the state’s priorities, such as innovative manufacturing and deep tech, may face investment shortfalls if they remain headquartered in NSW,” she wrote.
“There is also evidence of a gap in growth capital, with 70% lower allocations for Series D funding and beyond in NSW on a per capita basis compared with peer markets. That gap becomes more important as the state scales more pre-unicorn companies that may be under pressure to shift their headquarters and operations to other markets to better access capital and customers.”
NSW innovation, science and trade minister Anoulack Chanthivong
Startup Daily doesn’t want to go told you so Minister, but none of this is news. Plenty of people have been shouting about it for the past two years of the Minns government. Pounder has simply confirmed it.
And the ‘What We Heard’ Report, a summary of ecosystem stakeholder feedback for the Blueprint, says as much too.
She’s positive about the state’s abilities, saying: “Innovative companies in NSW punch above their weight in growing the economy and creating high-paid jobs for NSW workers. Despite being just 1.8% of companies in the economy, they generate $39 billion in Gross Value Add (GVA) per annum and employ 136,000 people – more than the mining and agriculture sectors combined.”
Remember that this government gave the Star Entertainment Group, currently teetering on insolvency after inquiries concluded it was unfit to hold its licence in NSW a $300 million tax break over four years on poker machine taxes if it guaranteed 3000 jobs until 2030. That’s less than 1% of total employment in the NSW startup ecosystem.
Imagine what NSW startups could do with $300 million in tax breaks.
Reaction
Investible’s Ben Lindsay took to LinkedIn to say the NSW Innovation Blueprint “lacks innovation and gravitas” adding that “there is no question that NSW still lags behind other states” despite having a majority of the nation’s VC funding.
I’m a big believer in what Investment NSW can do. Before I moved into VC, my startup received an MVP Grant. It wasn’t a huge cheque, but it was crucial to our early product development,” he wrote.
“Every time I reflect on that part of my journey, I am grateful to the team there for helping us out.”
Lindsay added that “we know what needs to be done. Delivery is what matters now. Maybe the Blueprint doesn’t need to aim higher — but NSW needs to stop talking and start doing. I remain hopeful, but cautiously so.”
“Sadly, in this outline of having a plan, software and digital barely rate a mention. There is one acknowledgment that such industry is good for NSW, but then it’s back to all things physical and dreaming of deep-tech unicorns, sweet, sweet manufacturing and tall tales of how their yet to be defined initiatives ‘COULD support/foster/feature/offer/boost/drive’ all sorts of wonderful outcomes,” he said.
“I sincerely hope they do of course. There’s plenty of opportunity out there and we’re in a great position to leverage it. But, we’re once more kicking the can down the road and being seen to be doing something rather than actually taking definitive action. And, until we do, our innovation future is going to look just like the shiny new Tech Central buildings on page 24 – an artist’s impression.”
Read the NSW Innovation Blueprint 2035 here.
