I see the role of government in these processes as very much catalytic. You have academe as the feeder system of these important discoveries and ideas, and obviously the government has a role in funding those. There is industry and more established sources of funding to move these products further down the pipe.
The challenge is to build the right collaboration models in the middle that can translate between these very different worlds. I think the role of the governments is in training the people who have those straddling skills between business, academe, and finance, because it is a translation function, and then providing the very critical proof of concept funding models that get you through the de-risking of the technology.
One of the things about our funding system is that technologies emerge from our academic sector earlier than they would in the United States. John alluded to the SBIR program in the U.S., which takes that fledgling technology and funds it through the point where you can be pretty sure it's going to work. Then it becomes more attractive either to grown-up industry or to funders to take it further through a start-up.
It's an area where the market doesn't really work. If you look around the world, this is where government steps in typically. I think the trick for government is to create commercially viable businesses that can stand on their own so that it doesn't fund a bunch of co-dependent hothouse flowers. I think that's where you have to be very thoughtful in how you structure the partnership.
There are models that I think are very well proven. The seed fund, for example, that we administer, is prepared to go early. It goes in as a convertible debenture so it doesn't distort the cost of capital. It does the grunt work to de-risk the technology and actually create the package that's ready for investors. On its own investment committee, it has all the key investors present. The investors see the technology as it comes through that early pipeline and can therefore take it up. They've had a very good success rate even though this is an early portfolio, five times leverage of private capital.
I think there are good examples where government played that catalytic role either in training people or de-risking important opportunities, but making sure the market is the driver of the decision-maker ultimately so that those things can emerge as stand-alone viable entities.