‘We are unprepared’: tech program to boost nation’s defences

Six start-ups will receive hundreds of thousands in funding in a bid to address Australia’s lack of sovereign defence capabilities.

A new tech accelerator program is addressing Australia’s lack of sovereign defence capabilities, offering six local start-ups seed investment, R&D capabilities and commercialisation expertise as part of a $240m initiative aimed at improving national security.

The UNSW Founders’ Defence 10x accelerator is the nation’s only defence-focused accelerator program and six founders will receive $350,000 each in funding, according to UNSW’s director of entrepreneurship David Burt, who said he was recruiting founders who had technology that would strengthen Australia’s sovereign capability and defend its critical infrastructure.

The program, part of the $240m Defence Trailblazer initiative, broadly defines defence to include “dual-use” technology. Its recruiting efforts could include capabilities such as weapons, equipment, quantum, artificial intelligence, or systems that protect critical infrastructure such as energy and water.

“The situation is that Australia’s lack of sovereign capability means that we are not well-prepared to sustain a conflict in our region,” Mr Burt said.

“Australia’s inability to domestically produce military equipment and armaments at scale is particularly problematic. Closing this gap requires us to launch and support a new generation of Australian-based defence companies that can tackle this gap, and that’s why we’ve launched Defence 10x.”

Mr Burt said Defence 10x aimed to speed up the development of sovereign capabilities, and tech start-ups and a vibrant innovation ecosystem had a key role to play.

Researchers have warned Australia’s critical infrastructure will increasingly be targeted by ransomware and nation-state actors, particularly given Australia’s support for Western allies’ sanctions on Russia and its provision of military supplies to Ukraine.

“What a lot of people don’t understand is that the origin of Silicon Valley was US Cold War defence spending,” he said.

“Most military technology has dual-use applications, but the initial military interest is what drives and funds the early innovation. We see clear evidence of this in communications and space technologies, and domains like robotics and autonomy are the next most promising areas.

“While large foreign defence firms are important for Australia to access scalable manufacturing and systems integration, locally-based innovation and industrial capability are critical to developing solutions that are specific to Australia’s needs.”

Australian defence start-ups often struggle to raise investment because of the longer sales cycles and lower margins compared to software companies. Investors often want to see revenue-generating contracts in place before they invest, while exit valuations in defence are usually a function of contracting value, which makes it difficult for these firms to be acquired at the valuation multiples targeted by many venture investors.

UNSW’s director of entrepreneurship David Burt is recruiting founders with technology that is expected to strengthen Australia’s sovereign capability and defend its critical infrastructure. Picture: Supplied

“In Australia, there is a severely limited number of investors who both understand and are comfortable investing in the defence space,” Mr Burt said.

“Our accelerator is deliberately tailored to account for this market dynamic, and each start-up selected for the accelerator will receive $350,000 in seed funding. We bring the defence-specific expertise, specialist equipment, funding and networks that are required to increase the speed of commercial development.

“By focusing on the commercialisation of R&D, capitalising on the infrastructure of universities, providing support and incentives for researchers and access to the relevant investor networks, the technology with the most product potential will have a much stronger pathway to market.”

The tech wreck has seen many start-ups in Australia and elsewhere forced into lay-offs or to close entirely, but Mr Burt said all five 10x accelerators were proceeding this year as planned.

“This is fortunate because we know that great innovations are built in down markets and now more than ever early-stage start-ups are seeking support from accelerator programs to equip them with the education, capabilities, networks and capital they need to succeed,” he said.

“We’ve had some amazing applications for Defence 10x already and look forward to seeing who else might enter between now and May 29 when submissions close.”

Sanjay Mazumdar. Picture: Calum Robertson

Applications are now open and teams will be short-listed for a due diligence phase, with six start-ups then selected for the full-time accelerator starting in August 2023.

Sanjay Mazumdar, executive director of the Defence Trailblazer, said there was an urgent need for change within the defence innovation system.

“Accelerating the development of sovereign capabilities in areas such as quantum, AI, cyber, hypersonics, autonomous systems and space technology will produce the cutting-edge technology our nation needs to be self-reliant.

“UNSW’s Founder 10x programs are a proven method for accelerating commercial development, and combining this with the deep networks of the Defence Trailblazer will enable us to uncover Australia’s next big defence solutions.”