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Defence Innovation Redesigned: Actions for innovators and entrepreneurs

Defence Innovation: Actions for entrepreneurs

Investment envisaged in the Defence White Paper (DWP) has the potential to kick-start not just a Defence-oriented entrepreneurial ecosystem but underpin the development of technologies that ignite innovation and entrepreneurship on a national level, across all sectors.

James Mabbott

National Leader, KPMG Innovate

KPMG Australia


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Defence innovation meeting

It is not typical to describe an innovation and enterprise segment – including startups and academia – in the Australian defence industry, but this Industry Policy maybe remembered for being the document that laid the groundwork for a revitalised defence innovation ecosystem.

If the Centre for Defence Industry Capability (CDIC) is well led, the DIH and Next Generation Technologies Fund (NGTF) are well managed and the cultural change described in the First Principles Review (FPR) is delivered, Australia could witness the growth of an export focused, collaboration-orientated group of national security entrepreneurs. There may soon be a wave of traditionally ‘defence-averse’ agile players entering the sector – with associated benefits for the broader Australian economy.

New Defence investment could provide the catalyst to realise the economic and capability value in the abundance of high-technology, high-growth businesses already active across multiple industries in the private sector. This could be the most exciting aspect of the entire DWP.

The startup community is beginning to gain traction in the Australian economy with industries including financial services, health and energy finding success through incubators to foster emerging entrepreneurs. If Defence can effectively inject hundreds of millions of dollars and support better collaborative research and commercialisation then bold national security entrepreneurs will emerge.

Startups can look to Israel and the United States to see examples of how a national security innovation ecosystem is well embedded into the wider innovation agenda, helping to foster world leading security companies.


Access to capital has often been cited as a barrier to the growth of innovators and entrepreneurs in early stage businesses. A customer that is willing to ‘take a chance’ on innovative new products and services has been a cross-sectoral challenge for Australian entrepreneurs.

Moreover, defence procurement policies, regulatory issues,long and uncertain timeframes and dealing with large multinational organisations amplify the barriers that even high growth SMEs often experience. The new support structures and policies could help to alleviate these potential barriers.

Actions for innovators and entrepreneurs

  1. Defence is not used to dealing with small and early-stage businesses. Investors, owners and entrepreneurs will have to work closely with Defence so that procurement challenges can be overcome.
  2. Be conscious that Defence will broadly not be accustomed to, or be able to facilitate, your quest for early capital injection. Innovators and entrepreneurs will have to consider multi-track funding arrangements.
  3. Industry and academia must collaborate to better understand the strategic drivers, define more informed research agendas and agree on joint research programs.

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