Queensland fund investing in innovative places and precincts

The Queensland State government opened the Queensland Innovation Precincts and Places Fund on 20 July 2023 to invest in sustainable infrastructure to manage places and spaces. The fund delivers on the 2022 Queensland Innovation Precincts and Places Strategy to build capacity and capability in the underlying system that supports place-based approaches for innovative business incubation.

The Fund has three streams:

• Stream 1 (open now) supports planning for new business by funding third-party experts to support planning and strategy development (Up to $300,000 from a $4 million pool);
• Stream 2 (starting October 2023) builds capacity and capability across incubators by developing a leaders network among spaces and places ($1 million over three years); and
• Stream 3 (starting October 2023) provides funding for capital works and/or physical infrastructure (Up to $1 million from a $10 million pool).

Stream 1 supports initiatives across two pillars:

• Place - strengthening planning pathways including support for future business cases that assist Development and Activation; and?
• Purpose - enabling innovation precincts and place’s strategic and operational planning, fit-for-purpose governance arrangements and investment attraction activities that directly contribute to Leadership, Growth, and Capability development.?

The definition of innovation precinct or place for the purpose of the program include:

• a brand/identity as an innovation precinct or place?
• an existing, clearly defined, established physical site in Queensland?
• the site co-locates two or more entities who have a shared vision/agreement and/or common interest, at least one of which is a commercial and/or research entity?
• an objective to foster innovation and collaboration across the precinct or place partners.??

Example guides coming out of the project can include governance frameworks, investment attraction strategies, and operational assessment strategies.

Assessment for projects is based on:

• Significance of the opportunity to the innovation precinct or place?
• Strength of the collaboration
• Value and Viability of the project?
• Sustainability and resilience?

This post is intended to share considerations for those delivering incubation services and for experts who will partner in response to the Fund.

Queensland and Australian incubator context

There are over 150 spaces, hubs, and precincts in Queensland, including 100 coworking spaces, 46 innovation hubs, and 5 precincts - give or take. Counts and classification are somewhat subjective. Incubators can close without removing public-facing websites, operate as 'zombies' pending new funding opportunities, and new spaces may open with little fanfare as large multi-site operators continue to expand. The lines can also blur between a coworking space running innovation events and an innovation hub with an explicit mandate and value proposition of advancing innovation-driven entrepreneurship. This distinction becomes even less clear in rural communities where the one local hub has a broad remit to support all emerging business activity and a diversity of incubator options are not supported by smaller and more distributed populations.

Queensland has a slightly greater share of innovation hubs per capita for Australian states and territories, with 24% of the total count of Australian innovation hubs supporting 20% of the Australian population. A likely contributing factor for the larger share is the need to support a greater distributed regional network. Half of the state's population, businesses, and revenue are in regions outside greater Brisbane, distributed across a large geography in multiple regions each with unique industry sectors and demographic make-up.

The Australian innovation ecosystem has grown rapidly, with over 800 incubator spaces added in the last decade. Much of the growth was fueled by government funding adding to corporate, philanthropic, university, and private activity between 2015 to 2018 with the most hubs added in 2018. Around 15% of Australian innovation hubs are government-owned and around 20% are university-owned, acknowledging most innovation hubs operate with support from diverse revenue models. The growth of new incubators began to slow in 2019 prior to the COVID-19 pandemic, with the pandemic contributing to accelerated closures.

The pandemic's influence on incubation spaces was significant in terms of immediate closures due to social distancing and lockdowns as well as new approaches to remote working. However, these pandemic impacts mask a rationalisation that was already occurring in a heavily subsidised business model.

An unwritten presumption associated with early government funding for innovation hub establishment was that once the incubator was established, then government funding could be reduced or removed as the hub became self-sustaining. This misguided view is not isolated to Australia, with the recent closure of London's Tech Nation a prominent example. By 2019, three-year grant programs had run their course. Political wills changed with new parties or leaders and government support for innovation and entrepreneurship became less novel - at best commonplace to compete with other priorities or at worst politically dangerous.

The Australian innovation ecosystem is by definition a complex adaptive system, operating in uncertainty, constantly changing and adapting through dynamic feedback loops. The part of the system focused on physical incubation space has experienced pressures from accelerated growth, a pendulum swing of political support, and an external crisis of a pandemic.

In parallel, we see the emergence of support structures such as peak advocacy bodies like Flexible Workspace Australia and Tech Council of Australia. Competition from international incubator brands has entered the Australian market to improve quality and learn from other models even as local operators create scale and export their models to other countries. Incubators increasingly specialise based on industries such as health, food and agriculture, or mining and resources. We reach into the underserved with incubators specific to First Nations, women, youth, and rural communities. Hubs are designed around specific challenges such as drought. Dedicated technology hubs focus on artificial intelligence, advanced manufacturing, quantum, and creative industries including music and content creators. Larger, more strategic precincts are being developed and connecting globally through the Global Institute on Innovation Districts.

Government agencies are also adapting, becoming more sophisticated in their investment. This review of the Queensland Innovation Precincts and Places Fund and 2022 Queensland Innovation Precincts and Places Strategy is a case in point, as well as Advance Queensland's evaluation framework. Other examples can be seen in New South Wales, Victoria, and South Australia.

New South Wales is taking an intentionally strategic approach to state-specific precincts and innovation districts. Examples of Victoria's investment include the Fishermans Bend Innovation Precinct and Melbourne Connect, with growth for innovation precincts included in the state's Innovation Statement. The support for precincts in South Australia goes back to clustering in the 1990s, the identification of innovation constellations in the early 2000s, and more recently the investment into Lot Fourteen and alignment of established precincts of Lot Fourteen, Tonsley, and Adelaide BioMed City with opportunities arising out of the AUKUS agreement.

The brief review above provides context for current strategic approaches to supporting Australian and Queensland incubation. It is also important to understand what is meant by incubation and where strategic investment can best support sustainable and resilient models.

Innovation hub models

There can be confusion over the terms used to describe support for innovation and entrepreneurs. The overview below is informed by academic and research-driven perspectives. I also acknowledge there are perspectives defined by government policy or conventional usage that may not align.

The term 'incubator' describes a family of physical and virtual places and programs supporting innovation and entrepreneurs. Examples of incubators include coworking space, innovation hub, hackerspace, makerspace, accelerator, precinct, and science or technology park. The term incubator is also used by some in lieu of the term 'innovation hub' or as a form of innovation hub focused more on early-stage firms.

The coworking space model provides member-based services from established small businesses that pay to rent working space with added benefits of community and concierge services. Innovation hubs, their cousins of hardware or creative hackerspaces, makerspaces, and artspaces, and their larger counterparts of precincts and science and technology parks provide additional services to intentionally support innovators and entrepreneurs.

These innovation services come with a cost. Innovators and entrepreneurs who receive these services are often seeking revenue and do not have funds to pay for support. Innovation hub services are then subsidised by one or more of the following five sources: government, venture capital, corporate, university, or philanthropic / individual. Each source has its own expected return on investment from supporting place-based incubation.

Functions performed by innovation hubs can be considered to fall into four categories. The first category is considered Core to the hub. Core functions are those that generate revenue or a direct return on investment, such as entrepreneur support, research translation, mentoring, event hosting and management, and venue usage. The second category is Internal functions that are unpaid but necessary to deliver core functions. Internal functions include staff leadership development, governance structures, investment attraction efforts and business development for the incubator, measurement and evaluation systems and frameworks, venue physical infrastructure including capital works and innovation hardware, and other internal management systems.

The third incubator function category can be considered as those that directly Influence the incubator but are outside the incubator's core remit. These functions relate to ecosystem building such as developing capacity in local schools, building a local angel investor network, developing talent and skills in the local community, providing advocacy for entrepreneurship, and developing community and culture in the local region. Finally, the fourth category of functions is those that Concern the hub but in which the hub often has no direct involvement apart from perhaps input. Concern functions can include policy development, infrastructure such as local Internet connectivity or livability assets, research including mapping of other innovation ecosystem assets, and developing international and cross-sector connectivity with the local region and new markets.

This functional breakdown is a broad generalisation, informed by observations over the past decade and over 300 interviews with leaders across the ecosystem about who does what and how. The description does provide a good framework to understand how to develop sustainable strategies. Hubs can get caught out by focusing on core functions attached to funding and neglecting internal functions such as developing new products or implementing sustainable measurement and reporting systems. Hub leaders can also experience burnout focusing on external influence and concern functions that, while necessary for a hubs operation, are largely volunteer in an already financially-challenged business model.

Strategy considerations for innovation hubs

I write this post to support hubs across Queensland as they prepare to engage third-party experts to develop their strategy and in preparation for the release of the Fund's streams 2 and 3. There will be different perspectives and there are always new approaches developed across Australia and around the world. The application process will also be competitive insomuch as there is a limited pool of funds.

However, sharing and collaboration through the application process would be ideal to maximise value across the system and leverage the Fund to realise a significant step change. One could wonder if the Fund's Stream 2 for leadership network development might have been better to launch as Stream 1 or in parallel to support the development of collaborative strategies.

Strategies for innovation hubs would be expected to support five broad outcomes of the innovation ecosystem. Each hub will determine how to best deliver against these outcomes given its current and potential funding model, mandate, and local context. The first outcome is to provide clarity and understanding, ensuring information and knowledge about the innovation ecosystem are visible, accessible, relevant, applicable, and useful. This includes mapping work and internal measurement infrastructure. The second outcome is connection and connectivity, ensuring individuals and organisations can efficiently and rapidly identify and access other individuals, resources, and knowledge to advance their innovation and entrepreneurial activity. This includes events and other boundary-spanning and network-building activity.

The third outcome is building capability and capacity, delivering innovation and entrepreneur support that is high quality, consistent, reliable, available, fit for purpose and sustainable. This is often the majority of effort in enabling successful entrepreneurs and innovators. The fourth outcome is collaboration for purpose, achieving success through combined effort toward collective impact on shared challenges and opportunities. More than general entreprenurship, this helps focus attention, target funding, and realise return on investment. Finally, the fifth outcome is to provide advocacy and promotion, making the case for those investing in and funding innovation and entrepreneurship, raising awareness, and promoting innovators and entrepreneurs. This also helps in the ongoing sustainability and collective effort across hubs.

Within these functions, there are a range of initiatives and focus areas. My own launch strategy at Fire Station 101 in 2017 was grouped into five areas: Build the ecosystem, Deliver member outcomes, Deliver community outcomes, and Develop the innovation pipeline. I will also say that we tried to do too much that was not attached to direct funding. Lessons from those early years have informed many of my current perspectives.

I have found the five ecosystem outcomes of clarity and understanding, connection and connectivity, capability and capacity, collaboration for purpose, and advocacy and promotion to be helpful in working with others and in subsequent work across other roles in the innovation ecosystem. Within each of these, hubs determine initiatives that are core, internal, and external concern and influence. These are being validated by feedback, of which yours is most welcome.

Third-party experts

There are a number of third-party experts in Australia available to support the development of innovation hub and precinct strategies. The number of hubs and precincts in Queensland, the size of the fund, and short timeframe mean that no single operator will be able to service the need.

An obvious source for experts will be existing out-of-state operators, particularly those with experience in multi-site expansion. Examples that come to mind include Stone & Chalk, Tank Stream Labs, Fishburners, and Spacecubed. External expertise I am aware of that has provided local support also includes New Zealand's Callaghan Innovation. Major precinct support may come from other global successful precincts with the Global Institute on Innovation Districts being a good resource. For rural hubs, the Australian Centre for Rural Entrepreneurship and The Exchange may offer support. There will also be a number of consulting agencies with existing relationships and that operate in this space.

The list above is by no means exhaustive. Please comment and share to add your voice if you are available to provide expertise. The greater visibility of Australian expertise, the better the overall innovation ecosystem.

Disclosure of a third-party expert

Full disclosure as I write this post - I would be considered by some as a third-party expert when it comes to innovation ecosystems and innovation hubs in particular. There are not many times in life I feel comfortable taking that statement on board as there is much to learn and expert seems like one has arrived at a destination.

I got into the incubation game in 2016 courtesy of Ipswich City Council engaging me to grow and develop the Fire Station 101 innovation hub. The experience was transformative as I observed both the benefits and challenges of incubation and the innovation ecosystem overall. My questions led me on a journey that included mapping the Australian innovation ecosystem, a three-week tour of US and Canada (highlights summarised here), spending a few months on the ground across regional Australia, working in the Queensland Chief Entrepreneur office, and completing a PhD on the contribution of innovation hubs toward community resilience which saw me on (you can find the thesis here).

I spent a season attending and presenting at conferences to learn and share including the Kauffman Foundation's ESHIP Summit in Kansas City, the AusPost Regional ecosystem activators workshop in Wagga Wagga, the G20 Roundtable on Entrepreneurship, state conferences including Queensland's Qode and South Australia's SouthStart, and the Global Entrepreneurship Congress in 2019 in Bahrain and 2022 in Riyadh. I also formally supported reviews and feasibility studies for spaces in Goondawindi, Logan, Lot Fourteen, and the federal incubation support program.

The experiences led me to my current portfolio of three roles. Primarily I am a Research Fellow (Innovation Ecosystems) with the Rural Economies Centre of Excellence at UniSQ. Much of my work focuses on building capacity and capability in rural innovation ecosystems, with examples being monitoring and evaluation work for the Future Drought Fund's Drought Resilient Leaders program and the Southern Queensland Northern New South Wales drought innovation hub and supporting the development of new collaborative structures in regional communities.

My other role is as founder and CEO of Startup Status, a not-for-profit mapping and measuring the Australian innovation ecosystem. The business developed to hold the technology I was developing to support incubators to asses their impact, bring efficiency to reporting processes, and build sustainability into hub models. We are also expanding into policy mapping to better track institutional intent to ecosystem outcomes.

My third role is as Managing Director of the Global Entrepreneurship Network Australia (GEN AU). GEN AU is a not-for-profit that acts as the local representation of the Global Entrepreneurship Network based out of Washington DC. With a mission to support the Australian innovation ecosystem, the main focus is supporting the Global Entrepreneurship Congress coming to Melbourne in September 2023.

Collective impact and a collaborative approach for incubator leadership in Australia

Ideally, the application process will be collaborative while acknowledging the competitive nature of limited funds. There may already be collaborative networks I am not aware of. If so, I would be keen to be involved. Otherwise, it would be great to leverage this opportunity to self-organise shared learning and a leadership community leading up to the Stream 2 network release in October.

If you are leading a Queensland-based physical incubator (current sample list here), please connect if we are not already.

Likewise, if you are considered or would like to be considered an expert providing services, please raise your hand and awareness.

I would be keen to get together in a virtual meetup in August for those where it would be of value to review approaches and ideas. Again, being conscious of competition, balanced with the value of collaboration and sharing.

Finally, I would love to see you all in Melbourne at the GEC in Melbourne, 19 to 22 September. It will be a unique opportunity to meet each other and your global counterparts, share ideas, and create new opportunities and connections.