Chalmers wooing Wall Street won’t help Aussie tech, says Synchron boss

Australia is experiencing a ‘quiet collapse’ as it struggles to diversify its economy from mining and misses an opportunity to capitalise on top tech talent who are leaving to build valuable businesses overseas.

Synchron co-founder and CEO Tom Oxley.

One of Australia’s top tech entrepreneurs has criticised a push for superannuation funds to deepen their investments in US companies, saying the move will further fuel local ‘‘brain drain’’ and “Australia’s quiet collapse”.

Jim Chalmers was in Washington last week for the Australian Super Summit as part of a push to expand investment opportunities in America. The summit is aimed at bringing to the attention of the US congress, the Trump administration and corporate America the scale of Australia’s $US2.6 ($4.18) trillion pool of retirement savings.

Dr Chalmers is pushing for an exemption to Donald Trump’s proposed steel and aluminium tariffs, which are scheduled to start from March 12, and declared Australia’s relationship with the US “was strong and enduring, and one that benefits both sides”.

But when it comes to tech, it appears to be a one-way street, according to Tom Oxley, chief executive of brain computer interface company Synchron. Synchron was founded in Melbourne but struggled to raise money from Australian venture capital funds before it moved to the US and has since vaulted ahead of Elon Musk’s BCI company Neuralink in a $9bn market.

Dr Oxley, who is also a neurologist, is one of more than 25,000 Australians who call New York City home – a population that has increased fivefold in the past 20 years and earned its own ‘‘Little Australia’’ neighbourhood in Manhattan.

Dr Oxley said Australia has a “huge delta between incredible science and engineering” but fails to commercialise that know-how, with investors more focused on the resources sector than deep tech.

This is driving Australian entrepreneurs overseas in search of capital offshore, and unlike what happens in Israel – a hotbed of tech innovation – they rarely return. It is also fuelling what Darin Soat, a former investment banker who created the How Money Works YouTube channel, calls “Australia’s quiet collapse”.

Synchron has developed a brain computer interface to help people with severe paralysis – a market worth about $9bn.

Mr Soat has criticised Australia’s reliance on mining, saying the country has become “so wealthy by getting lucky in a few key industries and then by going all in on keeping those industries alive by any means necessary – including its own long-term viability”.

Dr Oxley said Australia’s exports were “narrow” and called for reinvestment from mining into “infrastructure investments that spark new industries. In my own experience, we did great science but I couldn’t raise $1. I’ve got a list of all the investors who said ‘no’ to me here,” Dr Oxley said.

But within six months of arriving in the US, he completed Synchron’s first funding round.

“Martin Dieck, who is still our chairman, led the first funding round. His group is called Neuro Technology Investors. He was the guy who wrote the first cheque.

“Aussies are loved here because they work very hard. They speak very good English, in terms of a non-US person. They’re generally highly regarded here and straight-shooting normally.”

Synchron co-founder and CEO Tom Oxley.

A big difference between Australian and US investors is risk appetite. Failure is viewed in the US as almost a rite of passage among entrepreneurs – the knack is to do it quickly and learn from it – while in Australia it can get you black-listed.

“It’s definitely risk appetite,” Dr Oxley said. “But how come Israel has been able to do it?”

“People say it’s about scale. That’s not a fair argument. If you look at the innovation that’s going on in Israel and the ability to hold capital there and build new companies, the economy there is diversified incredibly.

“So there’s a huge opportunity going missing with tech in Australia and manufacturing. It’s got to come from government leadership and come from infrastructure investment.”

To this end, Dr Oxley was critical of the push for super funds to deepen investment in US companies. “That’s not good. All the superannuation – huge funds – all that money is going overseas. Is there investment from the superannuation funds back into Australian stuff? Is it enough?”

Before Dr Chalmers travelled to Washington for the Super Summit, Tech Council of Australia boss Damian Kassabgi called for changes in the way super funds invest. He said if a fraction of the capital was invested in tech, it would deliver significant economic benefits and would not risk Australians’ retirement savings. “Just 1 per cent of superannuation is about $30bn worth of capital, so we’re not talking about risking retirement savings,” he said.

“When we look at the returns on VCs (venture capital funds), we see there are very good returns from the tech sector on companies that do R&D. But we do think there is potentially more room around transparency of how superannuation money is spent,” Mr Kassagbi said.

Jim Chalmers is encouraging Australian super funds to deepen investment partnerships in the US.

The Albanese government is encouraging super funds to deepen investment partnerships in the US, with Dr Chalmers speaking with Blackstone CEO Stephen Schwarzman and Citigroup CEO Jane Fraser on the margins of the Super Summit. He is also to speak with JPMorgan CEO Jamie Dimon.

Dr Oxley said Australia needed to create an ecosystem to support deep tech, similar to what New York State had achieved at the former Brooklyn Navy Yard, which Synchron now calls home.

“This whole precinct was a huge investment by New York State to attract manufacturing. That’s why we are here. They subsidise the rent, and people come – there’s a whole community emerging here.

“That’s part of it – manufacturing infrastructure. That’s why California has been really successful. They have parks where you start small and then you grow big. You have to build out these hubs and ecosystems of places where you can start small and then grow and attract talent.

“You’ve got to build, like Israel has built this bridge to America and back, and then you have founders who come and go. They come back and they invest in new things. It’s building an ecosystem. It’s being more collaborative.”

Originally published as Chalmers wooing Wall Street won’t help Aussie tech, says Synchron boss