Spotlight on Scaling Up event wrap-up

Focus and finance were the dominant themes at Spotlight on Scaling Up, a recent half-day seminar by @AuManufacturing in partnership with AMGC, BDO, and the Australian Business Growth Fund.

Keynote speakers Alf and Nadia Taylor shared their adventure from husband-and-wife engineering consultancy to an international food packaging and processing solution provider with a headcount of over 600 and offices in 30 countries, which began with one invention for bagging snack food quicker than anything else available.

There were zero packaging equipment makers in Australia and 22 suppliers globally. Alf’s breakthrough “robag” invention, first drawn on a beer coaster, upped the international benchmark  from 55 cycles per minute to 120.

The plan was always to remain family owned and go international from day one.

“We thought ‘yeah, we’ll export,’ but never ever did I expect the success we’ve achieved together and [with] the team of people that work with us,” explained Nadia Taylor.

TNA Solutions grew from building super-fast bagging machines to “massive systems that are worth tens of millions of dollars” via a series of seven acquisitions and a determination that they could do better than the equipment they were integrating with theirs on processing lines. Among awards for the solutions provider was the Manufacturing and Advanced Materials category win at the Australian Export Awards last November

“Australia’s population is small,” explained Alf.

“We knew we could never sell the number of machines domestically to become really successful so we had to export.”

AMGC Chairman Paul Cooper moderated a panel focusing on the missing middle. He was joined by Alfred Lo, co-founder and Chief Commercial Officer at protein specialist Harvest B and Demi Stefanova, interim CEO at composites business Quickstep to discuss how they each grew from small to medium sized business.

Alfred believes that the non-dilutive funding available here is very important, and that while Australia is a strong performer in R&D, it needs to put more emphasis on commercialisation.

“It’s not our natural forte to be great salespeople. I don’t think this country breeds that sales culture, that marketing culture. My business partner is American, and she laments about the sales quality in this country,” he shared.

“And we don’t put that forward first…. So, I think we should spend more money on that. We need to build that capability. That’s a capability that we need to have in this country.”

Demi Stefanova, interim CEO at composites business Quickstep, agreed, citing a visit to the Paris Air Show last month, where “zero Australian companies” could be seen.

“And that’s where the scale[up] is obstructed or limited because you don’t go to those markets. You’re not exposed,” she offered.

“Every single company has to allocate budget to just go to those trade shows in their specific industry, be there, and just be aggressive for themselves. Because the demand is there. Australian companies are not.”

AMGC’s Managing Director, Dr Jens Goennemann moderated a panel focussing on the clean tech companies of tomorrow. He was joined by Dr Warren McKenzie Founder and Managing Director of HB11 Energy, Dr Ebbe Dommisse CEO of Iondrive, and Dr Thomas Nann CEO of Allegro Energy.

With novel technologies being applied to fusion energy generation, battery materials recycling and long-duration energy storage, each was focussed on a different (and significantly-sized) problem, though each possessed high ambition, a willingness to work with research institutes on R&D, and an acceptance that their journey will be a long one.

Dommisse, whose company’s IP is based on University of Adelaide research, is addressing the dominance of Chinese EV battery manufacture and supply chains feeding into this process. It is initially targeting US and European partners.

“The only way for them to get access to these critical minerals is to recycle those batteries when they come to the end of life,” he explained.

“So that’s where the market opportunity is, is to develop recycling technologies that are competitive with Chinese practices.”

BluGlass, Calix, and MicroBioGen shared a panel on the topic of patient capital and origins as platform technology providers.

BluGlass was spun out of Macquarie University research on a new type of semiconductor manufacturing in 2005. It listed on the ASX the year after and has moved through pivots including building reactors for sale, licencing technology to LED makers, and many things in between. Its specialty for the last seven years has been laser diode design and manufacture.

The long timespan between invention and commercial success can be managed, even for an ASX listed company, but the right investors were obviously important, agreed BluGlass Chairman James Walker, Calix CEO and Managing Director Dr Phil Hodgson.  

Calix was formed in 2005 to develop a new variety of kiln or furnace based on an indirect heating method and achieved its first sales eight years later.

Hodgson said the biggest challenge remains “balancing optionality with focus” and successfully combining “the grey ball” of money-making projects with “the shiny ball” of newer, high-potential ones.

He also advised caution to investment-hungry companies presented with certain financial instruments, citing his first two years as CEO spent trying to unravel a $30 million convertible note before listing on the ASX.

MicroBioGen CEO Geoff Bell said that Australia was a surprisingly accommodating place for companies needing patient capital. Bell shared the company’s origin story, forming in 2001 based on scientists developing improved genetics for baking yeast. Its Series A raised  $6.8 million in 2005, and investing over12 years and somewhere between $25 million and $30 million to get to its first sale.

Key enablers were grants from ARENA and AusIndustry, the R&D Tax Incentive, and running a lean operation.

“I do hear people moan and whinge a bit about the Australian environment for startups. Actually, we have some pretty good programs here to help you out,” said Bell.

“The other thing to say is that we spend 85 per cent of every dollar on R&D. So one of the things we have really focussed on is minimising head office management cost. Which sadly is management salaries as well, which includes me. But it’s really, really important. Because okay, you’ve got to get commercial deals, but the real thing that makes your product or company work is your R&D team.”

The last panel of the day included ANCA, Finisar, and Lovells Group, three homegrown examples of world leadership.

Going international has always been important for grinding machine business ANCA, which exports 98 per cent of its products, but CEO Martin Ripple said this needs to be thoughtful and based on solid research and advice.

“You can very easily, quickly pick the wrong country, pick the wrong industry or industries,” said Ripple.

“We have found success in unusual places I’d say. Pick Korea for example or pick Poland, which are good markets for us. I see too often that people who want to scale go the classic route of the US or the UK. I think that’s a cultural preset in Australia.”

Maybe the most animated discussion of the day came via the subject of what governments should do or not do to help the industry.

Ripple believes that governments have tried to do more and more since COVID and should remove themselves where possible.

Jon Bulman, the Senior Director of Manufacturing at Finisar, said there was a role for governments, and that international competitors were certainly helped by theirs, but wasn’t confident about any particular prescriptions for assistance.

“Having been in several startups, I actually think the key ingredient to getting going is some passion: passion over an idea and a team that wants to drive that idea,” he said.

“Governments can’t create that. That’s actually a group of people or an individual seeding that. So I’ve been fortunate to be in those groups several times.”

As for Simon Crane, CEO and majority shareholder of 95-year-old industrial and automotive supplier Lovells Group, he said the one time his company chased a government grant represented a headache.

According to Crane, Lovells set up a new division to build electrical systems for the OSCAR trains for the NSW government, lost $25 for each dollar of grant money received, and then the government cancelled the project.

“To this day I feel that it distracted me from thinking about whether this… new division of Lovells was really a good idea. I became so fixated on getting this rotten little grant that I didn’t really sit down and think ‘is this a long-term, viable business?’” he recalled.

“Never have more than 10 per cent of your business with one customer. That is asking for trouble. Well I had 80 per cent of this company’s business with one customer, the [then-]NSW government.”

Crane was emphatic, however, that the nation’s biggest problem is a lack of belief, and that “the one thing that the government could possibly do is work on simply creating a culture of believing we could do it.”

Perhaps the day’s final word belongs to one half of its opening keynote team, Alf Taylor.

He believes that the nation can spawn globally relevant, large-sized manufacturing businesses, something that TNA is living proof of.

It’s not a matter of being a deep tech business, but a deeply focussed one.

“In the end, if you’re really dedicated and you want to do it, it is actually very achievable… Just look at one thing. Starbucks, what are they selling? A cup of coffee. Oh really? And they’re absolutely global,” Taylor advised.

“So in the end it doesn’t have to be high-tech, super-sophisticated gear… But it does take determination.”