We look forward to Innovation being a priority on the Australian Agenda. THis bodes well for Australia twards 2025!

1. 1
Building our FutureBuilding our Future
Nurturing the InnovatorsNurturing the Innovators
Ivan
BSI
““Oxygen”Oxygen”

2. 2
 The money is not going into innovation & it’s NOT the fault of the
Government
The Government is coming to the party with a range of excellent
programmes supporting innovation.
The bottleneck is with the Gatekeepers of Investment Moneys
 There are VC companies, Superannuation Funds and people with
money to invest

There is money out there… LOTS OF IT
Where is the money?????Where is the money?????

3. 3
Adding Value vs DestroyingAdding Value vs Destroying
ValueValue
•Needs to be nurtured
• Needs oxygen to survive
• Needs +++ TLC
•By definition – has opprtunity
for exponential growth
•The heart of innovation
SEED
The Babies
There are 3 types of Businesses
Seed, Early Stage And Mature
Early Stage
Companies
“The Teenager”
•This is where Funds are looking to put
their money
•They have started generating money
•Apparently the model has been
proved
•There is perceived less risk
•Feeding the teenagers with large
chunks of money who become
overweight.
•The investor invariably puts more
money in than the business needs,
because there criteria is not to invest
less than $xm
•Joe Public puts his money here;
•Funds put their moneys here
• In “sound investments” like ‘Onetel’, ‘HIH’,
‘Microsoft’, ‘Oracle’, ‘Worldcom’, and
‘Telstra’ - Destroying value
• Much of the funds are going offshore to
find best returns
• Not allocating any funds to feeding the
babies
•Does investment in mature companies
riding out the harvest “add value or destroy
value?”
Mature Companies
“The ADULT”

4. 4
Who is looking after our babies?
Who is looking after the innovators?
Who is investing in the future of our country?
Where is the moneyWhere is the money
Federal Government is supporting them
 State Government is supporting them
 Where is the Industry?
 Where are the Super funds?
 Where are the big 4?
Are the gatekeepers Adding Value or Destroying value???

5. 5
Government InitiativesGovernment Initiatives
Alignment withAlignment with
IndustryIndustry
COMET– Gr8 program – but no group interested in
investing.
There needs to be commitment from industry to take
advantage of opportunities
BITS– Gr8 program – but no group interested in
investing.
There needs to be commitment from industry to take
adavantage of opportunities
Problem – Gatekeepers are
not interested in investing in
the babies

6. 6
THE PROBLEM
INVESTORS AND
GATEKEEPERS OF FUNDS
UNDER MANAGEMENT ARE
NOT INVESTING IN
“THE BABIES”
They were burned in the
internet frenzy

7. 7
In order to survive, grow and add value, one needs oxygen,
manure and innovation.
Small Companies/Innovators: In the past 3 years have had it
tough
 The little funding that was available from R&D Start
Grants have dried up.
Banks are not interested
 The high profile VC’s and Investors/VCs are not
coming to the party
The ProblemThe Problem
Nanyang – 3 investments in 3 months
Allen & Buckeridge – 1 investment in 12 months – looking after a
“huge” portfolio of 26 investments with a team of 13.
Superfunds and fund managers are not interested in start ups and
innovators.
JB Were raised $150m to invest in young companies – Gave ½ backto
shareholders and have invested in 6 companies
Etc etc etc

8. 8
The Internet “Boom Bust”
How many times in the past year have I heard:
“ tell me when you need $3m to roll
out and we’re there!!”
My view is that the internet boom
bust was fueled by this paradigm.
These “babies” who only needed a
“little oxygen” say “$1m” , were
given $10m.
This money was largely
squandered because:
•Only a small portion of the money
was needed
•The “babies” were not ready to
receive the money YET
•The valuations (if there were any)
did not make sense
It was, and is easy for the fund
managers to invest $10m for a
$12m return in 1 investment than
make 3 investments for between
$500k to $1.5m. The logic is that
even if these investment doubled, it
will not make a huge impact on the
value of the portfolio.
Based on this logic, fund managers
invested $10m in companies that
only really needed $1m……”floored
logic”

9. 9
You are not taking advantageYou are not taking advantage
of a fantastic opportunityof a fantastic opportunity
•pull yourselves towards yourselves
•Feel good about yourselves
•If you have not got confidence in the
babies – neither will the public.They will
follow your lead.
•What you are doing is creating a self
perpetuating gloom and despondency on
investing in innovation and our future.
•Investments and behaviour are cyclical.
We are currently in an environment where
funds are licking their wounds from the
mistakes of the last boom bust.
•There are excellent technologies, seeds
and babies that you can invest in at
realistic values and realistic amounts.
• Many of these “babies” will become
“teenagers” by the time perceptions
change, and will be sought after by the
investment $$.
Investors, Gatekeepers of funds and VCs
Its been said: “ give an innovator too much money and you will destroy
him/her.”
There is a fine balance between giving too much and not giving at all. The
investors who find this balance will be the winners.

10. 10
The funds who start investing in the seeds
Will be applauded and rewarded *
 Where no one is going, they should tread. The $ invested in these
companies, will provide oxygen to the “babies”, some of which will eventually
one day line the pockets, and maybe be the cornerstone of the fund,
 These investments worth let us say $10m
 What are they?
 What are these opportunities?
Could some of them be worth more than $10m?
 I know of 10 that have awesome potential!!
 What % of HIH was spent on investments into the babies verses mature/fat
cat stuff
 Where did the $5 billion of HIH go?
The money is sitting some where!!
ControversyControversy

11. 11
 Super Funds are playing in equities - Mainly off shore
 Their perception is that they will earn better returns
 How much money was invested in “Worldcom”, “Tyco” and others off
shore?
 What would have happened if a small percentage of that money was
invested in our Australian Babies (seed companies)?
 These who have made money out of technology stocks over the year, and
there are a few sitting on 100m
 that money is not going back into the babies
 that money is going into properties and lifestyle, money made from the
internet boom is now out of the system
The paradigm has got to change
How can we get some of the money fromHow can we get some of the money from
the gatekeepers??the gatekeepers??

12. 12
THE SOLUTION

13. 13
Identify the conflict and the common GoalsIdentify the conflict and the common Goals
Make more
money now &
in the future
The Conflict
Only invest in “well established”
businesses with security behind
them and established revenue
streams.
Funds and Banks
Innovators
Need capital for R&D to
develop their innovation,
commercialise it and to build
up a team
The Common Goal
Invest in secure
organisations with
track records to get
good returns
Invest in innovation
so they can get
good returns
The Methodology
The babies only needs a small
% of the money out there:
High chance of failure, but
Exponential returns if they work

14. 14
–MANAGEMENT
There are basic core “things” necessary for ANY company to survive & thrive.
This is what is lacking by our babies
These things can take much risk out of the seed companies:-
Identify the CORE THINGS NECESSARY IN ANY BUSINESSIdentify the CORE THINGS NECESSARY IN ANY BUSINESS
VISION
People
Set of
Values
Plan Systems
Walk the
talk

15. 15
Making the gatekeeper feel warm and fuzzy to investMaking the gatekeeper feel warm and fuzzy to invest
““small amounts” into our babiessmall amounts” into our babies
•Ensure as a bear minimum the Core “things” are
addressed
•Have a % of every fund go to provide “oxygen to our
babies
•Identify and nurture the “Oxygen Tanks” – Incubators,
and ensure that they do not run dry
•These “Oxygen Tanks” need to be able to provide small
quantities of Oxygen to nurture the babies. Large
quantities can smother them

16. 16
BSI – An Oxygen TankBSI – An Oxygen Tank
For BSI to to be an effective supplier of Oxygen, it has to provide a full range of
services that are delivered by the “brightest and the best”.
The Problem!!
To do this BSI needs to afford to pay the team with a regular cash flow.
BSI cannot burn cash. The “babies” cannot afford to fund the team
The Solution
BSI splits its services between SME’s, Large Companies and Start Ups. It has
the ability to earn money for services from all areas through various models.
From fee for service to success fees.
BSI is well placed to be an “Oxygen Tank” for the
“babies”.
It has the resources, critical mass and experience
to provide this facility to make them successful.

17. 17
BSI’s ConflictBSI’s Conflict
Make more
money now &
in the future
The Conflict
Provide service to mid sized
companies, because they can
afford to pay, and can easily
implement our “value add”
solutions.
Service Mid Sized Companies
Innovators
Provide services to
innovators, to ensure that
they have the core
necessities and management
to run an effective business
The Common Goal
Provide service for
fees
Provide service for
equity stakes,
success fees and
gov’t assistance
The Methodology
BSI is to split services between
SME’s , Mid Sized Companies
and fledglings.

18. 18
 Business Planning standard is low
 Few global type opportunities – generally
local focus
 Business models usually vague or
complex
 Start up business system not developed
 Result : Too much time spent on too few
opportunities
Typical problems faced by Australian
VC funds
 Getting capital
Then
 Recruiting suitable people
 Making the business profitable
 Keeping on track
 Developing systems
 Managing growth
Typical problems faced by
small business/ entrepreneurs
• Expertise driven business
planning
• Assist with Government grants
• Capital raising and getting
proposals investor ready
• Broad ranging business services
• Recruitment and soft skills training
• Implement business monitoring
systems/ technology support
BSI value proposition can assist in
exploiting growth opportunities
Integrating Small/Medium Business, Australian Venture
Funds And BSI Value Proposition

19. 19
Where is BSI Focusing?Where is BSI Focusing?
TCFTCF
IT&TIT&T
BiotechBiotech
NanotechNanotech
BY IndustryBY Industry
INVESTMENTSINVESTMENTS
By ServiceBy Service
LineLine
HR
Network
Sol’ns
Fin
Mgmt
R&D
EMDG
B Dev
GloballyGlobally
FocusedFocused
The exportThe export
opportunityopportunity

20. 20
The Export OpportunityThe Export Opportunity
1992 2002
$20 million $2 billion
WINEWINE
$20 million $???
ITT and BIOITT and BIO
If an industry is going to grow, it will have to look at a
model in which its products or services have got global
opportunity.
BSI is focusing on industries and organisations that can
realise exponential returns from providing a product or
service to the export market