From Silicon Valley to Israel, dense, globally-minded networks have facilitated the movement of talent, attracted funding, directly affected collaboration and, ultimately, facilitated innovation. Multiple studies indicate shared cultural and physical ties between geographies are key to building some innovation ecosystems. There is a growing recognition that intra-network density is not the only indicator of innovation success. There is strong evidence to suggest that the best innovation occurs within dense networks which contain actors that are open and receptive to external and novel knowledge flows. The inverse appears not to be the case. It has long been held that networks which are geographically removed from industry-relevant clusters have significantly less innovative output, even when they are located in manufacturing hubs.
This study builds on an academic body of research into social networks between centres of innovation capital and geographically distant entrepreneurial ecosystems seeking funding. It aims to analyse this connection and ask the following questions: How developed are Australia’s networks in particular innovative sectors? Are Australian networks well connected, or are Australia’s entrepreneurs working in silos? And ultimately, how can policy help build Australian networks further?
According to our analysis of proprietary LinkedIn data on one of Australia’s burgeoning innovative sectors, AgTech (where agriculture meets technology), Australia’s networks are less cohesive and interconnected than US AgTech networks. In comparison, New Zealand’s AgTech networks appear to be smaller yet more cohesive, interconnected and — critically — more connected to the United States AgTech networks. As the largest AgTech market in the world — estimated to be valued at US$10.2 billion, and accounting for roughly 65 per cent of global AgTech investment4 — connections to the United States are vital but Australia is clearly missing out.
- The US AgTech network is bigger but also denser than Australia’s. The US network is more than three times as interconnected as the Australian network.
- Australia’s AgTech network is dominated by a few key players. Both the United States and New Zealand AgTech networks are more evenly distributed.
- New Zealand does more with less than Australia. New Zealand’s smaller AgTech network is not only more cohesive and interconnected than its Australian counterpart, but its total number of connections to the United States networks is on par with Australia’s, despite its smaller market size.
- The AgTech ecosystem in Sydney is more connected than any other Australian city. While it is unsurprising that Melbourne and Brisbane AgTech networks are smaller than Sydney’s, it is surprising that they are considerably less connected.
- More cohesive and coherent advocacy for Australian AgTech. Australia and New Zealand can both expand efforts to collaborate across the Tasman as well as leverage their unique strengths in AgTech in concert. Already a long distance away from most other markets, the two countries are more likely to draw attention when considered together rather than distinct from each other.
- Stronger engagement of venture capital as a key component of building networks and growth. Beyond AgTech, Australian venture capital per capita across all sectors of the economy is a third of New Zealand’s and an eighteenth the size of the United States’.5 Foreign venture capital firms can help address this challenge. But they also supply more than money, providing global networks and expertise in how to scale. Ranging from financial incentives to government-sponsored trips, the Australian government can learn from the efforts of other nations like Israel and New Zealand in attracting and welcoming such firms.
- Greater support for AgTech from the Australian government. The Australian government has accomplished a lot on AgTech but it can do more. Austrade can follow New Zealand Trade and Enterprise’s lead and consider subsidising the full costs of trips by qualified AgTech funders from overseas. Such funders could provide both the capital and know-how of global best practices.
- A wider understanding of the role of AgTech. AgTech is part of the knowledge economy and is, therefore, not limited by crop or land sizes — just like any other technology, the whole world is the market. The government should approach AgTech with that mentality and widen its understanding of AgTech, making particular note of its significant economic potential.