Will the government’s Cyber Security Growth Centre succeed?

Australia’s cyber security startups need substantial support if they are to flourish

The government’s recent announcements of significant cyber security investments and the establishment of a Cyber Security Growth Centre are very encouraging.

The government has nine funding priorities for science and research and heading into 2016 cyber was the lowest on the list of priorities, with the lowest planned expenditure.

The total injection of $231.1m into cyber security, including the $30.5 million being earmarked through the National Innovation and Science Agenda, represents a substantial elevation of information security as a priority.

Source: http://www.science.gov.au/scienceGov/ScienceAndResearchPriorities/Documents/Science-Research-Priorities-Factsheets.pdf(November 2015)
Source: http://www.science.gov.au/scienceGov/ScienceAndResearchPriorities/Documents/Science-Research-Priorities-Factsheets.pdf(November 2015)


How will the Cyber Security Growth Centre grow?

One of the objectives of this new centre is to promote Australian cyber security products and services for development and export, and to work with business and the research community to better target cyber security research and development to meet Australia’s challenges.

While Australia’s domestic innovation and research industry is well regarded, we have a fledgling cyber security industry.

It is difficult to estimate the number of cyber security startups in Australia. However, in my capacity as a venture capitalist I’ve made it my business to locate such startups.

Unfortunately, while I’ve come across a number of cyber security service startups, not that many are building new innovative products.The sad truth is that an Australian with a good idea for a cyber startup is more likely to relocate to Silicon Valley, as there is little support in Australia.

Growing the local industry, then, won’t be an easy task.

Build from defence

Let’s take the Israeli model as one that we can try to emulate.That nation offers strong financial backing for their ex-defence personnel who transition from the army into a startup.There is nothing resembling this in Australia.

I’ve met numerous ex-special forces personnel that have moved into the IT industry — usually in services or perhaps running a data centre. A significant number of ex-defence personnel enter industry in the consulting arena.

While there is nothing wrong with this career, it is a very different proposition in terms of the potential economic payoff compared to their counterparts in Israel.

The answer, I believe, is to encourage former defence employees to work with university and industry to establish a thriving cyber security ecosystem.As with most things, we have to follow the money and perhaps some seed capital is required for cyber security startups that are building ‘products’.

Payback for our investment?

The government is planning to invest over $30 million to establish an industry-led Cyber Security Growth Centre.So what does this translate to in terms of new startups and creation of a new industry?

We don’t need $30 million of new government roles, but what would be useful is a cyber security incubator in at least two states with strong linkages to universities.

In addition, the Cyber Security Growth Centre will provide strategic coordination of a national cyber security innovation network. Instead, what we need are some hard growth targets.

True growth targets

Read more: Queensland govt funds ‘Startup Precinct’ project

What I mean is real targets that are ‘hard’ commitments to establish 60 to 80 new cyber security startups.There is no science behind my suggestion of numbers here, but you would hope that $30 million buys you at least that many great new startups.

This will require seed funding plus industry support to have startups’ MVPs tested in large enterprise environments.Any great new startup that has a viable product that is roadtested could then utilise the network of industry and government to expand to the international market.

Following this, we have to start measuring the new revenue and jobs that are created from these startups.Only by keeping score do we know if this is making any impact.

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