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Saved in the NICTA of time by merger

Tuesday, 1 September 2015 | By Denham Sadler
Merging NICTA with the CSIRO might have been the only way the organisation could be saved, following multiple funding cuts.


Australia’s chief IT research facility has been swallowed up by the CSIRO and will be rebranded as Data61. NICTA had been in a constant state of uncertainty since the government announced to would be discontinuing its $42 million in funding from July next year.


In its 13-year life span NICTA has spun out 15 startups that have raised a reported $100 million in capital collectively.


One of those startups is personalised marketing service Ambiata and its CEO Rami Mukhtar says he’s not surprised by the move.


“It’s something that had to happen given the circumstances with the NICTA funding,” Mukhtar says.


“It could be very, very positive, or it could encumber it. It depends on how the organisation goes forward, how it’s structured, and how they operate.


The funding cuts and merger may have come at the worst possible time, Mukhtar says, with the organisation only recently perfecting its model.


“It took NICTA about 10 years to get the operating model right,” he says.


“In the last few years it really had it right and was successfully building and creating startups. My hope is that this new entity continues to leverage all of this and is successful going forward.”


Don’t rely on research organisations to produce startups

StartupAUS founding board member and prominent investor Steve Baxter says it’s important not to rely on research-based organisations like NICTA or the CSIRO for churning out startups.


“The world has been transformed by innovative business model revolutions, and very few of these have been spearheaded by research-heavy efforts and probably fewer through government-ordained research or higher education institutions,” he says.


“Research is required, and we need to do more of it, but if we believe that we can beat research to death with the stick of government money to try to materialise a business from it then I’m not sure there is any hope.


“I think that making NICTA part of CSIRO was a valid decision.”


Data61 will be led by tech entrepreneur Adrian Turner, who has spent the last 18 years working in Silicon Valley. He hopes to combine NICTA’s startup culture with the CSIRO’s multidisciplinary strength.


In a statement, the Minister for Industry and Science Ian Macfarlane says the two organisations working together will be a “force to be reckoned with”.


“Both CSIRO and NICTA have an impressive track record on digital innovation and have demonstrated their ability to take home-grown technologies to market,” Macfarlane says.


NICTA was created by the Howard government in 2002 and has been funded by the commonwealth and universities in partnership. Large funding cuts to the CSIRO were announced last year, while NICTA’s entire funding has been discontinued from July 2016.


Other startups to emerge from NICTA include audio-focused company Audinate and logo image recognition software TrademarkVision.


According to Senate estimates, up to 200 of NICTA’s 350 employees could lose their job as part of the merger.


The CSIRO Staff Association has reacted angrily to the announcement.


“The government wants to take credit for the creation of a ‘digital powerhouse’ with no additional funding whatsoever,” Staff Association secretary Sam Popovski said.


“They’re too stingy to hook the house up to the grid and the end result may be more jobs lost in the process.”


Adding to the talent pool

But Baxter says this could mean talented people begin to take more hands-on roles in the startup community.


“I think locking up 300 high-calibre IT people inside an organisation to do more research, especially in a world where research by startups is done in real life by iterating business models at the coal face, is counter-intuitive,” he says.


Baxter says it’s we’ll have to just wait and see to find out how helpful Data61 will be for the Australian startup community.


“I think we will only know if NICTA will be a more effective entity once it all happens – there is nothing yet to grade them against,” he says.


Ambiata’s Mukhtar agrees, saying it’s important to keep an open mind.


“We should all think positively and give it the opportunity to demonstrate what it is worth,” he says.


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