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Investment in R&D helps business find the market

FROM the wheel to fibre-optic cables, satellite communications and the industrial particle accelerator, all deployed research and development has one thing in common, the very reason R&D exists in the first place – it solves a problem. The way we say that in modern, white-collar terms is that a system or device “has a market”.

With most of humankind’s basic necessities now met (however unequally they’re distributed throughout societies), commercial advances are reliant on the value returned by the R&D industry.

Together with big commercial mining and energy companies, IT research and development is at the forefront of WA’s economy.

In many ways it seems there’s never been a worse time to develop or invest in IT&T, not just in WA but all over the world. Fallout from the dot.com collapse is still reverberating through the global employment market as industry giants like Cisco, Lucent, Motorola and Compaq continue to slash jobs and profit forecasts.

But that most powerful of human institutions – the idea – continues to prevail. Many an engineering or technology student still spends lonely hours on the PC or garage workbench hoping for the next Amazon.com, Windows XP or Palm Pilot, and it’s from these quarters that true technological innovation springs. Indian-born US immigrant Sabeer Bhatia developed the model and software for Hotmail

with a modest venture capital investment and, 18 months after its launch, Microsoft paid the

30-year old technology graduate $US400m for it.

Perth is a long way from Seattle or Silicon Valley, but the IT vine is ripe with ideas waiting for commercialisation. As Peter Why, chief executive of Netherlands-based venture capitalist Zernike Australia explains: “There’s money on every street corner. If someone came along with a great idea that had a market, it would be financed locally without a doubt.”

Of the R&D landscape for IT in WA, the one thing everybody talks about is support – the fact it exists, how much there is and how much more there should be. The R&D field is a community of contacts with a level of intimacy unheard of in most industries.

“At the beginning it’s very lonely, sitting in your garage or your room upstairs,” says Pieter Struijk, general manager of Entrepreneurs in Residence, a seed capitalist and incubator located at Bentley’s Technology Park.

“We provide support with things like office space, but more importantly within our network, people we know worldwide to whom they can sell their products.

“There always needs to be more sharing of resources.”

Peter Why agrees, describing a local inventor /engineer/programmer (IEP) who needed develop-ment software that he located in Sheffield, UK.

“We have an office in Cambridge,” Mr Why said. “We were able – on his behalf – to negotiate a licence for the software at a damn good price. That support was available within our network.”

Collections or ‘clusters’ of organisations like Technology Park (alongside Curtin University) are ideal environments for R&D because of the intellectual, physical and financial resources available. Their success, according to Peter Why, depends on density – the more people are together, the more resources they can share.

Mr Why also thinks we need a more liberal approach to forming networks.

“In Europe, governments and universities are participating in (cluster) parks and seed funds. Amsterdam Science Park is owned by the University of Amsterdam, City of Amsterdam and Rabo Bank,” he said.

“Imagine the uproar if the Town of Victoria Park contributed to a seed fund? It’s a matter of changing that thinking.”

Sooner or later production and marketing also come into play. The modern IEP, having developed the latest gadget or program everyone needs, comes up against two problems, according to EIR’s Peiter Struijk.

“The first is financial – they run out of money,” he said. “And they don’t know where the market is.”

Once again, networking is king and R&D partners, like an incubator, seed or venture capitalist will have open doors to some serious mass production and marketing muscle long after a lone inventor’s resources would have dwindled. And despite facing consistent government cuts, univer-sities are still hotbeds of creativity.

Gareth Cottam of Curtin University’s ITSSA (Information Technology and Systems Students Association) believes our learning institutions are full of outlandish inventions and projects (such as a Coke machine taking commands over the Net).

“While people are studying they’re putting their knowledge to good use in student clubs and associations, and by the time some people graduate they can tell employers they’ve already managed a mail server or built an Internet firewall,” Mr Cottam said.

But the first step is always the biggest. The seed of the R&D forest is the idea.

p Continued next week

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