I+ECONECTTHIRDPARTYCAPITALINVESTMENTATTRACTIONRESEARCH

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TableofContents

1. EXECUTIVESUMMARY 5

2. REDMEATINDUSTRYOVERVIEW 7

2.1 OVERVIEW 72.2 INTERNATIONALSUPPLY&DEMAND 82.3 AUSTRALIANREDMEATINDUSTRY-KEYTRENDS 92.4 AUSTRALIANREDMEATINDUSTRY-KEYRISKS 92.5 SUPPLYCHAIN 11

3. AGRIFOODTECH&INNOVATIONECOSYSTEM 143.1 AGRIFOODTECHANDINNOVATION 143.2 AGTECH 143.3 FOODTECH 153.3.1 DRIVERSOFM&AINTHEFOODTECHSECTOR 163.3.2 ALTERNATIVEPROTEINSOURCES 173.4 FOODINNOVATION 173.5 INNOVATIONFOCUSOFTHEAGRIFOODINNOVATIONECOSYSTEM 193.6 GLOBALAGTECHSTARTUPS 203.7 AUSTRALIANAGRIFOODSTARTUPS 21

4. AUSTRALIANECOSYSTEMPARTICIPANTS 22

4.1 THEREDMEATINDUSTRYINNOVATIONECOSYSTEM 224.2 GOVERNMENT 224.2.1 THEDEPARTMENTOFAGRICULTUREANDWATERRESOURCES 234.2.2 THEDEPARTMENTOFINDUSTRY,INNOVATIONANDSCIENCE 234.2.3 KEYFEDERALGOVERNMENTAGENCIESANDWEBSITES 234.2.4 KEYSTATEGOVERNMENTAGENCIES 234.2.5 REDMEATINDUSTRY 244.3 INDUSTRYORGANIZATIONS 244.3.1 KEYAGRICULTURE&FOODINDUSTRYBODIES 244.3.2 INDUSTRYPEAKCOUNCILSANDSERVICECOMPANIES 244.3.3 REDMEATSUPPLYCHAINCOMMITTEE 254.4 PEOPLE 254.5 UNIVERSITIES&RESEARCHINSTITUTES 264.5.1 NATIONALPRIMARYINDUSTRIESRURALDEVELOPMENT&EXTENSION(RD&E)FRAMEWORK 264.5.2 RURALR&DCORPORATIONS(RDCS) 264.5.3 UNIVERSITIES-AGRICULTURE 274.5.4 UNIVERSITIES-FOODTECHANDFOODINNOVATION 284.5.5 CSIRO 294.5.6 COOPERATIVERESEARCHCENTREPROGRAM 294.6 AGRIFOODSTARTUPS&AGILESMES 324.7 PRE-ACCELERATORPROGRAMS 324.8 ACCELERATORS&INCUBATORS 334.9 INVESTORS 344.10 CORPORATES 35

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5. ASIAECOSYSTEMPARTICIPANTS 37

5.1 INDIA 375.2 CHINA 385.3 SOUTHEASTASIA 39

6. ECOSYSTEMGAPS&CHALLENGES 41

6.1 CURRENTGAPSINTHEINNOVATIONPIPELINE 416.2 KEYCHALLENGESFORI+ECONNECTPLATFORM 42

7. CREATINGANINTERCONNECTED&INVESTABLEAGRIFOODINNOVATIONPIPELINE 44

7.1 REVIEWOFKEYGAPSANDRELATEDRECOMMENDATIONS/SOLUTIONS 447.2 INTERCONNECTED&INVESTABLEINNOVATIONPIPELINE 53

8. MAPPING&TRACKINGTHEECOSYSTEM 54

8.1 BENEFITSOFMAPPING&TRACKINGTHEECOSYSTEM 548.2 ASTRUCTUREFORECOSYSTEMMAPPING&TRACKING 548.3 REDMEATINDUSTRYECOSYSTEMMAPPING 558.3.1 HOMEPAGEFORREDMEATINDUSTRYECOSYSTEMMAP&ANALYTICS 558.3.2 INVESTORECOSYSTEMANALYSISPAGE 568.3.3 STARTUPS&AGILESMESECOSYSTEMANALYSISPAGE 57

9. CREATINGCRITICALMASSATTHEBASEOFTHEPIPELINE 58

9.1 BENEFITSOFASIDECARFUNDTOMDC&AGRIFOODSTARTUPPIPELINE 589.2 EXTERNALPRE-ACCELERATOR&ACCELERATORMODELSWITHECOSYSTEMPARTNERS 609.2.1 MEETUPS 609.2.2 HACKATHONS 609.2.3 INDUSTRYEVENTS 609.2.4 ACCELERATORS 619.3 ARTESIANACCELERATORMODELFORMDC&MLACORPORATECLIENTS 619.3.1 ARTESIAN’SVISONFORBEST-OF-BREEDCORPORATEACCELERATORS: 619.3.2 TRADITIONALCORPORATEACCELERATOR: 629.3.3 ‘INTRAPRENEUR’INCUBATION: 629.3.4 OUTSOURCEDACCELERATORPROVIDERVS.INTERNALEXPERTISE 639.3.5 BENEFITSOFACORPORATETAKINGCONTROLOFTHEIRACCELERATORPROGRAM 639.3.6 ARTESIANRECOMMENDATIONFORCORPORATEACCELERATOROPERATION 639.3.7 CORPORATEACCELERATORCOMPONENTS 649.3.8 CORPORATEACCELERATORPROGRAM 659.3.9 PROGRAMSTRUCTURE&DELIVERY 659.4 SUPPORT&STRATEGYFORMLACORPORATECLIENTS 679.5 SUPPORT&STRATEGYFORPORTFOLIOCOMPANIES 679.6 PRE-ACCELERATORSUPPORTFORMLAMEMBERS&ENTREPRENEURS 68

10. ECOSYSTEMCONNECTIVITY&COLLABORATION 69

10.1 ESTABLISHINGANAGRIFOODECOSYSTEMHUB 6910.2 EXAMPLESOFSUCCESSFULINNOVATIONHUBS 70

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11. CO-INVESTMENTSTRATEGIES 72

11.1 RANGEOFINSTRUMENTSFORSTARTUPINVESTMENTS 7211.1.1 EQUITY 7211.1.2 DEBT 7211.1.3 CONVERTIBLENOTES 7311.1.4 CONVERTIBLEEQUITY(SAFES) 7311.1.5 ROYALTY/LICENSEAGREEMENTS 7411.1.6 VCFUNDS 7411.2 INCREASINGCORPORATECO-INVESTMENT 7411.2.1 STRATEGICBENEFITSOFCORPORATECO-INVESTMENT 7511.2.2 MODELSFORCORPORATECO-INVESTMENT 7711.3 ARTESIANAGRIFOODSIDECARFUND 7911.3.1 CREATINGASUSTAINABLEAGRIFOODINNOVATIONECOSYSTEM 7911.3.2 INVESTMENTSTRATEGY/PROCESS 7911.4 ACCESSINGCO-INVESTMENTVIAEQUITYCROWDFUNDINGPLATFORMS 82

12. ARTESIANSERVICES 83

12.1 DUEDILIGENCE 8312.2 FUNDADMINISTRATION,DEALCOORDINATION&FUNDSMANAGEMENT 8412.2.1 ARTESIAN’SBACKOFFICECAPABILITY 8412.2.2 DEALFLOWMANAGEMENT 8412.2.3 PORTFOLIOMANAGEMENT 8412.2.4 HOSTINGANDBACKUPOFFRONTINVEST 8512.2.5 FUNDADMINISTRATION 85

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1. EXECUTIVESUMMARYArtesianVenturePartners(AVP)isaspecializedinvestmentmanagerwithaunique,highlyscalable,diversifiedportfolioapproachtoearlystageventurecapitalinvestments,targetingbothfinancialandstrategicreturnsforHNWI,corporatesandinstitutionalinvestors.AVP’sapproachprovidesinvestorswithapipelineofpre-screenedandde-riskedstartupinvestmentopportunitiesinwhichtomakelarger,late-stageinvestments.AVPprovidesawhite-labelplatformsolutiontoenableinvestorstobecometheirownVC.AVP’searlystageVCfundsincludetheSydneyAngelsSidecarFunds1&2,BlueChilliVentureFund,SlingshotVentureFund,CleanEnergySeedFund(withtheCEFCascornerstoneinvestor),theUoWiAccelerateSeedFund,theSproutxAgTechVentureFundandtheAustralianVentureCapitalFundofFunds.AVPalsofoundedVentureCrowd,Australia’sleadingequitycrowdfundingplatform,toprovideaccesstoAVP’spre-screened,curatedlate-stagedeals(onafractionalbasis)towholesale,andeventually,retailinvestors.MLADonorCompanyLimited(MDC)isafully-ownedsubsidiaryofMeat&LivestockAustralia.MDCattractscommercialinvestmentfromindividualenterprisesandothersthatshareamutualinterestwithMLAtoco-investininnovationthatwillbenettheAustralianredmeatandlivestockindustry.Sinceitbeganin1999,MDChasattractedinvestmentfromeverypartoftheredmeatandlivestockvaluechain,includingprocessors,value-adders,breedsocieties,largepastoralcompanies,internationalcollaboratorsandtechnologyproviders.TheAustralianGovernmentmatchesvoluntarypartnercontributionsinprojectsthataddressindustryandgovernmentprioritiesandbenettheAustraliancommunity.

TheMDCInnovation&Entrepreneurship(I+E)ConnectPlatformwasconceivedtofasttrackthedeliveryofcommerciallyviablesolutionsthatcreateuniqueanddefendablecompetitivepositionsthroughthecreation

ThevalueofMDCMDCfast-trackscommercialinnovations acrossthevaluechainsotheAustralianredmeatandlivestock industry canremaincompetitiveontheworldstage.

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strategicrelationshipsacrosstheglobalentrepreneurialcommunitytoattractandsupporthighgrowthdisruptiveentrepreneurialactivitywithintheAustralianredmeatsectorthroughachievingthefollowing:• Developingfuturetechnologyopportunities• Fasttrackingthenextgenerationof“bigideas”• Becominga“magnetfortheagtech,foodtechandfoodindustries• CreatinganewinnovationmarketplaceforagileSMEsandstartups• AttractingnewcapitalandnewinvestorsAcriticaldesigncomponentoftheI+EConnectplatformistheattractionofhighqualitythirdpartycapitalthroughnewfinancialinstrumentstoenablegreaterco-investacrosstheinnovationandnewventuredevelopmentcontinuumfromearlystagetocommercialization.AVPwillconductresearchondifferentcapitalinvestmentattractioninstrumentsspecificallywithinAustraliaandAsiawiththeobjectiveofgeneratingpotentialmatchedinvestmentopportunitiesandidentifypossibleco-investmentpartners.AVPwillproposemodel(s)toincreaseco-investmentactivityintorelevantAg/FoodstartupsthatmayattractmatchedfundingfromMDC.TheresearchwillidentifyandmapallpotentialecosystempartnersthatcanoptimisethegoalsoftheI+EConnectPlatformandcreatethehighestqualityflowofco-investmentdealflow.Thiswillincludeproposedmodelsforongoingaccelerationandsupportofstart-ups-eithernotpartofanexistingacceleratorprogramoratlaterorscale-upstageofgrowth.ThismaybethroughanMDCcontrolledinitiative,anoutsourcedsolution,orsomecombinationofboth.

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2. REDMEATINDUSTRYOVERVIEWThissectionlooksatthecurrentcompetitiverisks,challengesandopportunitiesfacingtheAustralianredmeatindustry,aswellasthesupplychainfromfarmtoplate.

2.1 Overview TheredmeatindustryinAustraliaisamajorcontributortoGDP,exportingover$16billionworthofredmeatproductsandhavingdomesticsalesapproaching$8billion.Thisindustrysupportsapproximately200,000jobsonfarms,atprocessingfacilities,andindistributionandsaleschannels.Australia’sherdsizehasgrownto29.1millioncattleand72.6millionsheepandproduces2.6milliontonnesofbeefandvealand0.8milliontonnesofsheepandgoatmeat.Theindustryincludesapproximately100processingand140exporthubsaroundthecountry.Australia’sprocessingfacilitiesaredominatedbyfourgroups,controllingapproximately20%ofthemarket.Processingprimarilyoccursontheeastcoast,withthemajorityoffacilitieslocatedinQueensland,andtoalesserextentinNewSouthWalesandVictoria.Asdemandforlivecattleexportshasincreasedovertheyears,keyexporthubshaveemergedinPerth,thenorthofWesternAustralia,theNorthernTerritoryandQueensland.Asia,theworld’sfastestgrowingmarketforprotein,providesmanyopportunitiesfortheAustralianexportofredmeatproducts.AlthoughtheAsianregionisprimarilyacommoditysegment,itsrapideconomicdevelopment,andtheemergenceofanincreasinglyaspirationalmiddleclass(seediagrambelow),willresultinitquicklymovingintohigh-qualityredmeatproductswhichtheAustralianredmeatindustryispositioningitselftoprovide.GrowthoftheMiddleClass(2009vsforecast2030)

WhileAustralianproducersarecompetingagainstlowerpriced

competitorsforthesupplyofredmeat,theAustralianredmeatindustryisrecognisedinternationallyforproducingdiseasefreeand‘cleanandgreen’redmeat.Australianmeatisofsuperiorquality,livestockareraisedongreenpasturesandagriculturalcropresidues,whereasmostoftheinternationalcompetitorscontinuetogenerategrainfinishedproduct.

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2.2 International Supply & Demand Australia’sliveandchilled/frozenexportsarelargelytotheUS,Japan,China,SouthKorea,TaiwanandIndonesia.WhileAustraliaistheseventhlargestglobalexporterofredmeat,theindustryfacesincreasingcompetition,especiallyonprice,fromBrazilandIndia.TheUSremainsthelargestproducerandcompeteswithAustraliaonbothpriceandquality.Europe,althoughthesecondlargestbeefproducer,mainlysupplieslocaldemand.Top10GlobalBeefProducers2016

Projected10-yearbeefimportgrowth(2015to2025)

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2.3 Australian Red Meat Industry - Key Trends TheAustralianMeatProcessorCorporationcompletedareporttitled“StrategicRisksFacingtheAustralianRedMeatIndustry”(August2016).Thereportidentifiedthekeytrendsimpactingtheindustry.Theseincluded:• Majorityoftheworld’seconomicgrowthoccurringintheemergingmarketsofAsia• Australia’sredmeatindustrybecomingincreasinglyreliantonexports• Othernationsincreasinglygainingexportmarketaccessviafreeandbi-lateraltradeagreements• Changingproteinconsumptionpatternsthatindevelopednations,havenegativelyimpactedredmeat

consumptionsincethe1970s• Increasingconsumerfocusonfoodsafetyandquality,particularlyindevelopingnations• Achangingglobalclimate• Anincreasinglychallengingglobalresourceenvironment• Increasingglobalstandardsofenvironmentalprotection,foodsafetyandanimalwelfare

Source:OECD/UNFood&AgricultureOrganisation(FAO)

2.4 Australian Red Meat Industry - Key Risks WhileAustralia’sredmeatindustryfacesrealstrategicrisks,puttinginplacepolicies,processesandmeasurestoenableeffectiveresponsescanbeadifficult.Whenconsideringstrategicrisks,thekeyrequirementofanindustryandorganisationistobeabletomanage,adaptandovercometherisks.Byunderstandingtherisks,Australia’sredmeatindustrywillbewellpositionedtorespondasandwhenrequired.

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Source:AMPCStrategicRisksFacingtheAustralianRedMeatIndustryTobecomecapableofrespondingtothestrategicrisksatanindustrylevel,theAustralianMeatProcessorCorporationrecommendedthatAustralia’smeatindustrywillneedto:• Establishstructuresthatfacilitatesharingandcollaborationwithintheindustry• Coordinateasanindustrytopreparefor,andrespondto,risks• Buildthecapabilitytounderstandandadapttomeetdomesticandinternationalmarketneeds• ExpandandmaintainrelationshipstobenefittradeagreementsandworkwiththeAustralianGovernmentto

reducetechnicalbarrierstotrade• Collaboratewithgovernmenttoeffectivelyrespondtostrategicrisks

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• Identify,understandandcapitalizeonleadingglobalknowledgeinallaspectsoftheredmeatvaluechain• Whereappropriate,explorevalueaddandpremiumstrategiestargetedatkeymarketopportunities• Establishastrongandeffectiveadvocacypresenceatanationalandinternationalleveltopromotethevalue

oftheindustryinAustralia,toAustralians,andthequalityofAustralianredmeatininternationalmarkets

• Improveproductivitythroughoutthevaluechainwhilereducingtheindustry’senvironmentalandsocialimpacts

• Identifyandaddressprioritytechnicalbarrierstotrade• Defineanddevelopacompetitionresponseplantotheliveexportmarketandtootherproteinsegments

2.5 Supply Chain TheRedMeatsupplychaincoversinputs,production,processing,distribution(wholesale&retail)andtheendcustomer.AgTech,FoodTechandFoodInnovationcantargetinnovativesolutionsthroughoutthesupplychain.Thesupplychainhasreliedonaproductioncyclethathasn’tchangedfornearlyadecade.Thelackofverticalintegrationfromtheproducertotheprocessorshasasignificantcosteffect,whichresultsinanestimatedadditionalcostof$100aheadforbeefcattle.Additionalcostsarealsoincurredduetotheabsenceofdataanalyticsthatcouldbeperformedalongthesupplychain.Anotherfactoridentifiedtobecausinginefficienciesandpreventinggreaterindustrycollaborationisalackofloyaltyandtrustbetweenproducersandprocessors.1. Pre-production

• Serviceproviders-Cattleproducersmainlyrelyonthirdpartiesfortechnicalhelpandadvice.Theirtasksvaryfrompurchasingstock,providingmarketingadvicetoassistingintheimplementationofspecificstrategies.

• Genetics-AlthoughAustralialacksoptimalscaleofintegratedstudstockproducers,theirroleiscrucialas

theyprovidefavourablegeneticstoproducers,enablingthemtomaintainqualityandprofitability.Techniquessuchasartificialinseminationandembryotransferenhancethequalityofthemeat.

2. Cattleproduction

Australiancattleproductionincludesbothsmallandlargeproducers.SmallerherdsaremainlyconcentratedinthesouthernregionsofAustraliaincludingkeyproductioncompaniessuchasMinnamurraPastoralCompany,WatervalleyandSundownPastoralCompany.Larger,corporatestylecattlebusinessesoperateinthenorthernregions,includingmajorindustryplayerssuchasAustralianAgriculturalCompany,ConsolidatedPastoralCompany,NorthAustralianPastoralCompanyandParawayPastoralCompany.Thekeyadvantagethesemajorcompaniesenjoyisareductioninclimaticriskderivedfromtheownershipofanenvironmentallydiversecattlearea.

FOODINNOVATION

FOOD

TECH

AGTECH

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3. Feedlots

Feedlotshavegainedpopularityoverthepastdecadesastheyhavethecapacitytofeedalargeherdnumbers(>1M)atanyonetime.Giventhemultiplediettrends,fadsandanincreaseintheoptionsavailabletoconsumers,theprevalenceoffeedlotsinAustraliaisexpectedtoincreaseasdemandforgrain-fedmeatincreases.Concentrationoffeedlotsandprocessingcompaniesisquitesignificantcomparedtocattleproduction.Forinstance,Cargill,theworld’slargestagriculturalcommoditiescompany,hasacquiredvariousfeedlotsandprocessingplantsthroughoutAustralia.4. Livetransportation

LivetransportationisprogressivelybecomingmoresignificantasrapidlygrowinginternationalmarketssuchasEgypt,IranandIndonesiahaveincreaseddemandforlivecattle.5. Processors

Consolidationintheprocessingindustryhasoccurredoverthepastyears,resultinginmarketconcentration.Fourkeyprocessorscontrollingabout20%ofthetotalmarketdominateAustralia’sprocessingfacilities.Whilemostprocessingfacilitiesarelocatedontheeastcoast,newhubshaveemergedinWAandNTtomeetincreasingdemandforlivecattle. 6. ColdTransportationAnotherkeyelementofthesupplychainiscoldtransportation.Meatproductsmustberefrigerated/chilledorfrozenafterprocessing,andbeforeshipment,topreventspoilageandgrowthofpathogens.Thechallengeliesinguaranteeingaproperrefrigerationtemperaturetillproductdelivery.Australia’sAgriFoodSea&LandFreightNetwork

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7. Marketing&DistributionAustralia’scleannaturalimageandreputationasareliablesupplierofhighquality,safeandnutritiousredmeat,underpinnedbystricttraceabilityandquality,underpinstheredmeatindustry’sinternationalmarketingactivities.Australiaexportsredmeattomorethan100countries.8. RetailerThelastbitofthesupplychainconsistsofeitherfinalprocessedproductsbeingshippednationally/internationallyorbeingsoldtothedomesticmarket.Branding,packagingandmarketingallplayanimportantroleingainingtheattentionofcustomerswithmyriadchoicesofmeatproductsandcompetingproteinrichfoodsources.Astastesandsocialacceptabilitychanges,andasnewchallengesarise(includingalternateproteinsourcesandlabproducedmeat)thesustainabilityoftheredmeatindustrymaydependuponitsabilitytoidentifynewproductextensionsandtomarketthemsuccessfully.

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3. AGRIFOODTECH&INNOVATIONECOSYSTEMThissectionlooksatthethreekeyverticalsthatconstitutetheoverallagricultureandfoodinnovationecosystemincludingtheirinter-connections,participantsandstakeholders

3.1 AgriFood Tech and Innovation AgriFoodTechstartupsandinnovationscanbedividedinto3overlappingsubcategories:1. AgTech:istheuseoftechnologyinagriculturewiththeaimofimprovingyield,efficiency,andprofitability.

AgTechcanbeproducts,servicesorapplicationsderivedfromagriculturethatimprovevariousinput/outputprocesses.

2. FoodTech:theapplicationanduseoftechnologytoimprovefoodproduction,thesupplychain,thedistributionchannelsandultimatelyconsumption.

3. FoodInnovation:Foodinnovationinvolvesthedesignanddevelopmentofnewfoodproducts,theimprovementorcombinationofexistingfoodproducts,researchintofoodtrendsandfoodmanagement.

ThediagrambelowshowsthekeycomponentsoftheRedMeatsupplychainandtheirrelationtoAgTech,FoodTechandFoodInnovationcategories.

3.2 AgTech Morethan$800Mhasbeeninvestedintheagtechspacebetween2012and2016.Probablynotcoincidentally,thatactivitypickedupsignificantlyin2014afterTheClimateCorporationacquisition,withaspikeinQ1’14.Seed-stageagtechcompaniesaccountedformostdealsthrough2014,butsincethenwe’vestartedseeingmoreSeriesAfinancings.TherehavebeenahandfulofSeriesBandlater-stageroundsinrecentyearsaswell.

REDMEATSUPPLYCHAIN

AGTECH FOODTECH FOODINNOVATION

Production Processing Distribution Retailing Eating

FARM

BreedingProperty

FatteningProperty

Saleyard

FeedlottingProperty

ProcessingAbattoir

LiveExportMarket

Wholesaler

DOMESTICMARKET

Butcher

Supermarket/ChainRetailer

FoodService

End-consumer

EXPORTMARKET

Increasingsupplychainverticalintegrationisreducingtheroleandinfluenceofaseparatewholesalefunction

Mostofthelargeprocessorsdistributeendproductsbythemselves

Theuseoffeedlotremovedmostoftheseasonalityintheweightgainoflivestockbyprovidingayear-roundsupplyoffeed

Meatissoldthroughmajor supermarketchainsandbutchers

Thesaleyardprovidesakeymarketmechanismtodistributelivestockbetweendifferentstagesinthesupplychain

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Corporatesarebecomingmoreactiveplayersintheagtechecosystemwithmanysettinguptheirownventurearmstoinvestinstartups.Corporatestook3ofthetop10spotsformostactiveinvestors,withMonsantoandSyngentabeingthemostactivethroughtheirinvestmentarms.Corporatesnowparticipateinnearlyaquarterofalldeals,upfromasfewas3%ofdealsin2013.Someoftheagribusinesscorporatesareconfrontingindustryshiftsheadon,whileothersareacquiringcompaniesandconsolidating.(Thespaceisseeingmegaconsolidationsatthetop,includingBayer-MonsantoandDupont-Dow.)It’susefultothinkaboutagtechcompaniesusingafewdifferentframeworkstofigureoutwhothey’retargetingandwhatvaluethey’readding.• Thefirstistolookatwhetherthey’retargetingtheoperatingcostsofafarmorifthey’remoreinvolvedwith

theoverheadcosts,whichtendtocoverthephysicalassetsonafarm.• It’susefultoalsothinkaboutwhereintheactualsupplychainthesecompaniesaretargeting.Aretheytrying

tohelpfarmersgettheirmaterials,connectconsumerstofarmers,orimprovethedistributionofgoods?• Andfinally,arethesecompaniesreplacingprocessesthatalreadyexistedinfarming,makingthoseprocesses

moreefficient,orcreatingentirelynewprocessesthatmaynothaveexistedbefore?

3.3 FoodTech Thefoodtechlandscapein2016saw377companiesemerge,withfundingactivitydippingby28%andnumberoffundingroundsdecliningby22%frompreviousyear.AverageticketsizeinearlystageshowedthesharpestuptickforSeriesB(29%)withfundingamountsfallingforbothseed(33%)andSeriesA(20%).Ele.mescoopedthelargestfunding($1.3B)fromChinesegiantsAlibabaandAntFinancial,followedbyDeliveroo($275M,SeriesE).500StartupsandSOSVwerethemostactiveinvestors.Theyearsaw16acquisitionsofwhichdealvaluesofonlyfourweredisclosedamongwhichAnovaCulinary'sacquisitionbyelectroluxgroup.comfor$250Mclosedatthehighest.

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3.3.1 DriversofM&AintheFoodTechSectorDriversofinvestmentandacquisitionintheFoodTechsector:• Newsales&distributionchannels• IntegrationwithdatabasesandAPIs• Accesstoyoungerpopulation• Accesstomobile&sociallayers• Geographicalexpansion

2016’sHottestTechSectorsinEurope(Source:Tracxn)

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• Expansiontonewproductcategories• Contentacquisition• Talentacquisition3.3.2 AlternativeProteinSourcesFoodTechStartupsarelookingatalternativesourcesofproteinthatwillcomplementorreplacemeatbasedprotein.Examplesincludebothalternativesourcesaswellaslab-grownfoods:Insectprotein:hasrecentlyseenmoremediaattentionasalessresourceintensiveproteinsourcethantraditionalmeats.Whileinsect-eating(alsoknownas“entomophagy”)hashistoricallybeenfrowneduponinmanyWesterncultures,a2013reportfromtheUnitedNationssuggestedthattheconsumptionofwasps,beetles,andcricketscouldhelpalleviateworldhungerduetotheirhighproteinandmineralcontent,andtherelativelylowenvironmentalcostsofproduction,includinglowerwaterandfeedneeds.Indeed,thereportfoundthatcricketsrequire12timeslessfeedthanlivestocktoproducethesameamountofprotein.StartupsoperatinginthisspaceincludeChapul,Exo,EntomoFarms,TinyFarms,SixFoods,CrikNutrition,AspireFoodGroup,BittyFoods,Flyingspark,LivinFarmsandCritterBitters.Lab-grownMeat:it’spossibleweskipthefarmaltogether.Thecostoflab-grownfoodshasdroppeddramatically,withsomecompaniescreatinganimalproductsinlabsandmealsinabottle(Soylent,Ample).Thesemethodstheoreticallycanproducefoodsmoreefficientlywithoutalltheinputsthatfarmsrequireandinamuchshortertimespan.StartupsoperatinginthisspaceincludeModernMeadow

3.4 Food Innovation Inthefoodindustry,justasanyotherindustry,productandprocessdevelopmentisconsideredavitalpart,indeedthelifeblood,ofsmartbusinessstrategy.Failuretodevelopnewandimprovedproductsrelegatesfirmstocompetingsolelyonpricewhichfavourstheplayerswithaccesstothelowestcostinputs(land,labouretc).Foodinnovationisprimarilyfocusedonproductdevelopment.Thereareessentiallyfourbasicstagesinthesemodelsforeveryproductdevelopmentprocess.Theseare:

PatentforLab-grownMeat

Title:Driedfoodproducts formedfromculturedmusclecellsCompany:ModernMeadowDategranted:May9,2016Datefiled:February5,2015

ModernMeadowaimstousebiotechnology tocreatesyntheticanimalproducts.Currently,theyareusingDNAeditingtobiofabricatecollagentocreateanimal-freeleather.InMay2016theyweregrantedapatentforsyntheticanimal-freefoodproducts, titled“Driedfoodproductsformedfromculturedmusclecells.

”Theprocess inthepatentuses culturedanimalmuscle cells,combinedwithaplant-basedhydrogeltonurturethecells, andaddedflavoring.Thefoodproductisthendehydrated,andthepatentsaysitcouldbeshapedintoanydryfoodproduct, including chips, bars,orjerky.Thefoodwillbehigh-protein, gluten-free,andlowinfat,accordingtothepatent.Unlikesomeothermeatsubstitutestartups,whichtrytomaketofuorplantproductstastelikemeat,ModernMeadowactuallyuses animalcells, thoughthefoodwould comefromalabratherthandirectlyfromananimal.Seetopandside viewsofthedehydratedchipbelow.

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• productstrategydevelopment;• productdesignanddevelopment;• productcommercialization;• productlaunchandpost-launch.Therearemanywaystoclassifythedegreeofnewnessofaproduct.Generallythiscanbedividedintosevencategories:• creativeproducts;• innovativeproducts;• newpackagingofexistingproducts;• reformulationofexistingproducts;• newformsofexistingproducts;• repositionedexistingproducts;• lineextensions.SupermarketsinAustraliaandNewZealandhavearound12,000to25,000foodandbeveragestockkeepingunits(SKUs)ontheirshelves.Typically,inAustraliaandNewZealand,therearebetween5,000and10,000“new”productsofferedtothesesupermarketseachyear(about18,000ayearintheUSA)andabout10%arechosentobedisplayedontheshelves.

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InFoodInnovation,Australianeedstoexploitadvantagestobuildexportmarketsincluding:1. Safeguarding&reinforcingclean/green

• continualdevelopmentofimprovedsystems• pro-activecombattingofthreats• credibilitythroughtechnicalleadership

2. Provenance,tourism,uniquelyAustralian

• linkingeatingqualitytofoodorigins(“terroir”)• leveragingtourismtobuild“Australiancuisine”• foodswithuniquelyAustralianattributes

3. Addingvaluetohighqualityagriculture

• fromcommoditiestospecialties• enhancementofnutritionalattributes• “forktofarm”not“farmtofork”• internationalstudentsasfuturetradingpartners

3.5 Innovation Focus of the AgriFood Innovation Ecosystem ThediagrambelowsummarizesthecurrentkeyfocusareasoftheAgTech,FoodTechandFoodinnovationsectors.

Source:DeloitteAccessEconomics

Australia’scurrent,nextandfuturewavesofgrowth,2013–33

Australianeeds tobuild onouradvantagestogrowexportmarketsiffoodinnovation/production

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3.6 Global AgTech Startups Thediagrambelowshows100oftheleadingglobalAgTechstartups

• Robotics/AutomatedFarms/UTVs

• Guidance• Precision Agriculture• Equipment/Asset Tracking• Nutrient/Fertilizer• VariableRateTech• Irrigation• Soil• Climate• ImagerySystems• UAVPlatforms/Systems• SatelliteImagerySystems• Data/Analytics• FieldMonitoring• Traceability/Safety• FarmManagement• LivestockManagement• EnterpriseResource

Planning(ERP)• Trading• MarketInformation• Collaboration Technology• LabGrownFoods

• ERPPacking/Processing• Supply Chain/Logistics• QualityManagement• Packaging

• Supply Chain/Logistics• Marketing• Farm-to-table• Perishability• Marketplaces

• Marketing• Grocery/CPGMobile

Solutions• ProductGuides&

Discovery• Online Grocery• Ordering&Delivering

Marketplaces

• Recipes&CookingCommunities

• RecipeBox&Search• Publishers• DigitalContent• BrandAdvertising&

MarketingPlatforms• Nutrition/Wellness• Delivery:ReadytoCook

Meals• Delivery:PreparedMeals

&Catering• Culinary/Experiential

Marketplaces• Food3DPrinting• Next-genfood/Meal

replacement

AGRIFOODINNOVATIONECOSYSTEM

AGTECH FOODTECH FOODINNOVATION

Production Processing Distribution Retailing Eating

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3.7 Australian AgriFood Startups Thediagrambelowshows71oftheleadingAustralianandNewZealandAgriFoodstartups

Australian&NZAg&FoodTechStartups

Created by:

Marketplace

Farm Management Software

New Farms

IoT, Remote Sensors, Monitoring

RoboticsFoodTech

Biological Control & Biomaterials

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4. AUSTRALIANECOSYSTEMPARTICIPANTSThissectionlooksatthekeyparticipantsintheRedMeatInnovationEcosystem

4.1 The Red Meat Industry Innovation Ecosystem TheRedMeatIndustryinnovationecosystemcanbedividedinto9keycomponents:

4.2 Government TheFoodandAgribusinesssectorisanimportantpartoftheAustralianeconomyandmakesasignificantcontributiontotheeconomiesofregionalareasthroughemployment,businessandserviceopportunities.TheAustralianGovernment’sIndustryInnovationandCompetitivenessAgendaidentifiesFoodandAgribusinessasanareaofcompetitivestrengthforAustraliaandprioritisesitasagrowthsectorthroughtheFoodandAgribusinessIndustryGrowthCentre.TheAustralianGovernmentiscommittedtocreatingtherightconditionsforAustralianbusinessestoinvestandgrow,by:• LiftingcompetitivenessandproductivityoftheFoodandAgribusinesssector• Providingadviceandsupporttosmallandmediumbusinesses• Providingtaxincentivestoencouragebusinessestoinvest• Helpingbusinesstodeveloptheworkplaceskillstheyneed

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• BuildingAustralia’scapabilitiesintradeandinnovation4.2.1 TheDepartmentofAgricultureandWaterResourcesTheDepartmentofAgricultureandWaterResourcesisresponsibleforpolicyandprogramsthatsupportagloballycompetitiveandsustainableAustralianfoodindustry.Keyareasoffocusincludethedevelopmentofcompetitiveagriculturalpolicy,foodvaluechainpolicyandfoodregulationreform.ThedepartmentworkswithotherAustralianGovernmentagenciessuchastheDepartmentofHealthandFoodStandardsAustraliaNewZealand(FSANZ),aswellasstateandterritorygovernments,tosimplifyandstreamlinefoodregulationandlabelling.Theaimistoensureamoreefficientandeffectivedomesticfoodregulatorysystemthatprotectspublichealthandsafetywhilerecognisingtheneedforaninternationallycompetitivefoodindustry.TheDepartmentofAgricultureandWaterResourcesworkswiththeDepartmentofIndustryandScience,whichhasafocusonthefoodprocessingandmanufacturingsectors.TheDepartmentalsoworkswithindustrytoaddresspotentialgapsorvulnerabilitiesinthefoodchainsafetyandsecuritysystem,andarecommittedtoensuringthatAustralianinterestsareconsideredinthedevelopmentofinternationalfoodstandards.4.2.2 TheDepartmentofIndustry,InnovationandScienceTheDepartmentofIndustry,InnovationandScienceisafocalpointforthedevelopmentandanalysisofFoodandAgribusinessindustrypolicyissueswithintheAustralianGovernment.InadditiontoprovidingpolicyadviceandsupporttoportfolioMinistersonFoodandAgribusinessindustrymatters,thedepartmentisalsoresponsibleforpromotingandmaintaininglinksacrossAustralianGovernmentdepartmentsandagenciesinvolvedinimplementingelementsoftheGovernment'sFoodandAgribusinesspolicies.4.2.3 KeyFederalGovernmentAgenciesandWebsitesThekeyfederalgovernmentagenciesandwebsitesrelevanttotheagricultureindustryinclude:• DepartmentofAgricultureandWaterResources• DepartmentofInfrastructureandRegionalDevelopment• DepartmentoftheEnvironment• AustralianCompetition&ConsumerCommission(ACCC)• DepartmentofIndustry,InnovationandScience• AustralianPesticidesandVeterinaryMedicinesAuthority(APVMA)• Nationalpests&diseaseoutbreakswebsite• NationalWaterCommission• Murray-DarlingBasinAuthority• CleanEnergyRegulator• ClimateChangeAuthority• NationalWaterMarketwebsite4.2.4 KeyStateGovernmentAgenciesThekeystategovernmentagenciesrelevanttotheagricultureindustryinclude:• ACTTerritoryandMunicipalServices

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• NSWDepartmentofPrimaryIndustries• NTDepartmentofPrimaryIndustryandFisheries• QLDDepartmentofAgriculture,FisheriesandForestry• SADepartmentofPrimaryIndustriesandRegions• TASDepartmentofPrimaryIndustries,Parks,WaterandEnvironment• VICDepartmentofEnvironmentandPrimaryIndustries• WADepartmentofAgricultureandFood4.2.5 RedMeatIndustryTheredmeatindustryhasprimaryresponsibilityforitsownaffairsandstrategicfuturedirection.TheAustralianGovernmentprovidesmatchingresearchanddevelopmentfunding,collectsanddisperseslevymoniesandfacilitatesthemanagementofissuesofnationalimportance.Governmentworkscloselywiththeindustryonmarketaccessanddevelopmentopportunitiesandinfurtheringtheinterestsoftheindustryindealingwithoverseasgovernmentsandinmultilateralnegotiations.Theindustry’sstructuralarrangementsaresetoutundertheAustralianMeatandLive-stockIndustryAct1997.TheRedMeatMemorandumofUnderstanding(MOU)underpinsthesearrangements.

4.3 Industry Organizations 4.3.1 KeyAgriculture&FoodIndustryBodiesTheRedMeatMOUisanindustry4.3.2 IndustryPeakCouncilsandServiceCompaniesTheRedMeatMOUisanindustry-governmentpartnershipdocumentbetweentheRedMeatAdvisoryCouncil(RMAC)Members&RMACStakeholders.RMACisthecustodianoftheRedMeatMOU.TheRedMeatMemorandumofUnderstanding(MOU)setsouttheagreedindustryarrangementsfor:• Policydevelopment&advocacy• Crisismanagement• Industryengagement• Researchandmarketingactivities• EngagementframeworkbetweenRMACMembersandStakeholders• GovernancearrangementsfortheRedMeatIndustryFundRMACisthepeakindustrybodysittingabovetheIndustryPeakCouncilsandIndustryServiceBodies.

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4.3.3 RedMeatSupplyChainCommitteeTheroleoftheRedMeatSupplyChainCommittee(RMSCC)istoprovidecoordinationanddirectionforthedevelopmentandadoptionofsupplychaininformationstandardsandguidelines.Thecommitteefocusesonidentificationandinformationtechnologiesandsystems,fromlivestockproductionthroughtodomesticretailersandinternationalmarkets.

4.4 People Whenmappinganinnovationecosystem,itisimportanttotracknotonlyalltheorganizationsbutalsothekeypeopleacrosseachoftheecosystemsectors.Keysectorcategoriesinclude:• Boards• Management• Researchers/Inventors

Cattle:grassfed Goats(meat) Sheep(meat)Cattle:grainfedLiveexport:cattle,sheep,goats

Redmeatprocessing

MLAisaproducer-ownedservicecompanytodelivermarketing,promotion, R&Dandotheragreed jointfunctions forthewholeofindustry.

BothAMPCandLiveCorpoperateindependently of,butinconjunctionwithMLA

POLICY

&ST

RATEGY

SERV

ICE

PROVIDE

R

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• Entrepreneurs/Founders• Professionals• Investors• Regulators• Advisors• Operators

4.5 Universities & Research Institutes 4.5.1 NationalPrimaryIndustriesRuralDevelopment&Extension(RD&E)FrameworkTheRuralR&DCorporations(RDCs),alongwiththeAustralian,StateandTerritorygovernments,CSIRO,BureauofMeteorologyanduniversitiesarejointlyimplementingtheNationalPrimaryIndustriesRD&EFrameworktoencouragegreatercollaborationandpromotecontinuousimprovementintheinvestmentofRD&Eresourcesnationally.UndertheFramework,primaryindustriesRD&Eisnowmorecoordinatedandcollaborative.Nationalresearchcapabilityisbetterfocusedandusedefficientlyandeffectivelytoachievethebestoutcomeanduptakebyprimaryindustries.4.5.2 RuralR&DCorporations(RDCs)RDCsinvestinagriculturalR&DonacompetitivebasisandpartnerwithpublicandprivateprovidersusingfundsfromleviesonproductionwhicharematchedbytheCommonwealth.Themodelhasgivenruralindustrythevehicletonegotiatenewstandardsforinvestment,focussedontriplebottomlineoutcomes.RDCscanfundR&Dintoproduction(on-farm)andprocessing(off-farm)issues,andareexpectedtofundportfoliosofprojectsthathaveamixofbothpublicgoodandindustrygoodcomponentsgiventhetaxpayercontributions.TheRDCsengagewithadiversityofstakeholdersinasharedvisionofwhatthefuturecanbeforruralindustries,updatedinmulti-yearstrategicplansandreinforcedwitheachannualoperatingplan.TheRDCmodelallowsforatargetedapproachtoR&Dfundallocationbyindustry,wherethosefundsareamixtureofgovernmentandindustrycontributions.Further,themodelencouragesaccountability,allowinglevypayerstocontributetoRDCstrategiesincludingtheamountofthelevycollected.The15RDCsare:• AustralianEggCorporationLimited• AustralianMeatProcessorCorporation• AustralianPorkLimited• AustralianWoolInnovation• CottonResearchandDevelopmentCorporation• DairyAustralia• FisheriesResearchandDevelopmentCorporation• ForestandWoodProductsAustraliaLimited• GrainsResearchandDevelopmentCorporation• Grape&WineResearch&DevelopmentCorporation• HorticultureAustraliaLimited• LiveCorp

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• Meat&LivestockAustralia• RuralIndustriesResearch&DevelopmentCorporation• SugarResearchAustraliaLimited4.5.3 Universities-AgricultureAustralianuniversitiesareinternationallyrecognizedfortheiragriculturedegreesandresearch.The2017QSWorldUniversityTop50Rankings(bysubject)includesTheUniversityofQueensland(19),theAustralianNationalUniversity(21),theUniversityofMelbourneandtheUniversityofWesternAustralia(=31),andtheUniversityofSydney(42).The2016NTUPerformanceRankingsofScientificResearchPapersforworlduniversities(agriculture)includestheUniversityofQueensland(7),theUniversityofWesternAustralia(29),theUniversityofMelbourne(35),JamesCookUniversity(42),theAustralianNationalUniversity(47)andtheUniversityofSydney(50).

CharlesSturtUniversityhasacollaborativeresearchcentreknownasthe‘GrahamCentre’.ThecentreisruninconnectionwiththeNSWDepartmentofPrimaryIndustryandconcentratesoninnovationingrainandredmeatproductionandvalueadding.

QueenslandAllianceforAgricultureandFoodInnovation(QAAFI)isaUQresearchinstituteandapartnertotheQueenslandGovernment’sDepartmentofAgricultureandFisheries.

TheANU-CSIROCentreforGenomics,MetabolomicsandBioinformatics(CGMB)combinesthestrengthsoftwoofAustralia’sbestresearchinstitutionsandaimstomakediscoveriesinplantbiologicalsciencethatwillbenefitenvironmentalmanagementandcropdeployment.

UniversityofSouthernQueenslandhasresearchprograms(supportedbyindustryfunding)focusedonprecisionagriculture,smarttechnologies,spatialanalysis,remotesensingandmonitoring.

TheUniversityofSydneyhasperformedadecadeofresearchintoautonomous,remotesensinganddevelopingroboticsandintelligentsoftwareforhorticultureandlivestockindustries.

TheUniversityofTasmaniaareinvolvedin‘Sense-T’andotherAgTechrelatedprojects.Sense-Tusesdata,sensingtechnologyanddataanalyticstoimprovedecision-makingandyieldsforfarmers

TheUniversityofWesternAustraliaconductsresearchonfoodsystemsandagribusiness,includingadoptionofnewfarmingtechnologies.

QUTisinvolvedinseveralAgTechprojects,includingAgBot,Harvey,DigitalHomesteadandtheIntelliSensingresearchprogram.

UniversityofNewEnglandhasa2900-hectareSmartFarmandInnovationCentrelocatedinArmidale,NSW.Thisisademonstratorsiteforvariousagriculturaltechnologies.

JamesCookUniversityisacollaboratingpartnerfortheDigitalHomesteadlocatedinTownsville,QLD.JCUleadstheDigitalHomesteadprojectwhichhasincludedresearchinitiativessuchasthe‘DigitalDashboard’andthe‘WalkoverWeighing’systemforanimals.

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Upto80scientistswillstudycropgenetics,fungicideresistance,agronomy,andfarmingsystemsatthenew$43millionnationalresearchcentreforCrop&DiseaseManagementlocatedatCurtinUniversity

LaTrobeUniversityhasunveiledanewagribusinessdegreeforitsregionalcampusesdesignedtoallowruralstudentstheopportunitytostudyinthecountry.ThenewBachelorofBusinessinAgribusinesscoursehasbeendevelopedinresponsetoneedsfromindustryandwillbeofferedatBendigo,Shepparton,WodongaandMildura.

AswellasitsMelbournebasedfacilities,theUniversityofMelbourneoperatestheDookiecampus,a2440-hectareagriculturaleducationandresearchhubintheGoulburnValley.

WesternSydneyUniversityconductsresearchinareasincludingplanthealth&biosecurity,postharvest,water,environment&sustainability,cropphysiology&biotechnologyandfoodsecurity

MurdochUniversityhasindicatedaninterestinanewfood,agribusinessandtechnology-focusedprecinctproposedatNambeelup,nearMandurahinWesternAustralia.ThePeelBusinessParkconceptaimstocreateastrategiccommercialhubaroundtherapidgrowthoftechnologyinallaspectsofhorticulture,agricultureandfoodproduction.

TheSchoolofAgriculture,FoodandWinerepresentsaworld-classconcentrationofscientificresearch,educationandproductconferringcapability,withinfrastructureandresourcesattheWaiteCampusoftheUniversityofAdelaidewithanumberofresearchpartners.

4.5.4 Universities-FoodTechandFoodInnovation

TheARCTrainingCentreforFoodandBeverageSupplyChainOptimisationistrainingthenextgenerationofmulti-disciplinaryresearcherscapableofdesigning,building,andmanagingsafe,sustainable,andcosteffectivefoodsupplychainswhicharevitalforgrowingAustralia'sfoodindustryandforincreasingAustralia'sfoodexports.ProjectsattheITTCcovertopicsincludingPost-harvestScienceandTechnology,SustainableFoodSupplyChainsandColdFoodSupplyChains.

UQisservingupasmorgasbordofopportunityforthefoodindustrywiththeopeningofthenewFoodScienceInnovationPrecinctattheStLuciacampus.TheUniversityofQueensland’sBheshBhandari,isresearching3Dfood.Inthefuture,theycouldusesynthesisedmeatfrommanufacturedproteins,buttheyarecurrentlyonlylookingatusingrealfoodintheprinters.Hesaidconsumeracceptancewasanissuewithsyntheticfood.

TheRMITFoodResearchandInnovationCentreisaworld-classfacilitythathelpsAustralianbusinessesdevelopandmarketinnovative,highvalueproductsfortheglobalmarketplace.Itprovidesteachingandresearchtrainingwiththelatesttechnologies,hands-onexperienceinproductdevelopment,foodsafety,qualityassurance,nutritionandindustryplacements.

TheUoWSmartFoodsCentrewasoriginallyestablishedin1999asanARCKeyCentreforTeachingandResearch,andfrom2007hascontinuedtobeaUniversityofWollongongresearchinitiativewithintheFacultyofScience,MedicineandHealth.TheCentrealsosupportsitsresearchfundingthroughcommerciallyfundedresearchprojectsforcompanieswithintheAustralianfoodandbeverageindustry.

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TheUniversityofTasmanialauncheditsnewCentreforFoodInnovation(CFI)inApril2017.CFIisapartnershipthataimstohelpdiversifyTasmania’seconomicbasebygrowingexportsofhigh-quality,nutritious,value-addedfoodproducts

TheFoodInnovationCentreatMonashUniversityisanindustrysharedworldclassfacilityoperatedbyindustry&innovationpractitionerstoprovideaccessibleexpertise,capabilitiesandfacilitiesattogrowbusinessesforlocalAustralianandexportmarkets.

TheUNSWARCTrainingCentreforAdvancedTechnologiesinFoodManufacturewasestablishedin2013toprovideanenvironmentandopportunityforemergingscientistsandtechnologiststodevelopmanufacturingsolutionsfortheAustralianfoodindustries.

TheSouthAustralianFoodInnovationCentrehasbeenestablishedtomaximisefutureopportunitiesforSouthAustralia’sfoodandbeverageindustrybysupportinginnovationandencouragingcommercialisationofnewideasandproducts.TheUniversityofAdelaideandtheUniversityofSouthAustraliaarepartnersintheCentrealongwiththeSAGovernment

4.5.5 CSIROTheCommonwealthScientificandIndustrialResearchOrganisation(CSIRO)isAustralia’slargestscientificresearchorganisation,andoneofthelargestandmostdiversescientificorganisationsintheWorld.WorkingfromsitesacrossAustraliaandaroundtheglobe,CSIROseekstoprovidenewwaystoimprovethequalityoflifeforallAustralians,aswellastheeconomicandsocialperformanceofAustralianindustries.CSIRO’sresearchanddevelopmenthasdeliveredtechnologysolutionsthatmeettheneedsofbusinessesacrosstheeconomy,includingthemining,agriculture,manufacturing,andservicessectors.Thishasenabledthoseindustriestoinnovateandimprovetheircompetitivenessandhelpedthemtoprosperandgrow.AgricultureandFoodisoneoftheCSIRO’s9keynationalbusinessresearchunits.TheCSIRO’sdiversefoodandfarmingresearchrangesfromstudyingthemake-upofcropsandanimalstothemethodsandfoodprocessingtechnologiesthatmaybedevelopedtoproducehealthier,saferandmoresustainablefood.CSIRO’sfoodinnovationcentremakesiteasyforfood,ingredientandequipmentmanufacturingcompaniestoaccessourextensiveexpertise,technologiesandsupportininnovation.Fromadoptinginnovativetechnologiesandimprovingprocessefficiencytocreatinghighvalueproductsfornewmarkets,wepartnerwithindustryeveryday.TheCSIROhaveworld-classlaboratoriesandexpertiseinmoststatesandfoodmanufacturingresearchanddevelopmentpilotplantsinMelbourne,atWerribeeinVictoria,andinBrisbane,atCoopersPlains.4.5.6 CooperativeResearchCentreProgramTheCooperativeResearchCentres(CRC)Programisacompetitive,meritbasedgrantprogramthatsupportsindustry-ledandoutcome-focusedcollaborativeresearchpartnershipsbetweenindustry,researchersandthecommunity.Itaimsto:• improvethecompetitiveness,productivityandsustainabilityofAustralianindustries,especiallywhere

Australiahasacompetitivestrength• deliveroutcomesinlinewithgovernmentpriorities• encourageandenablesmallandmediumenterprise(SME)participationincollaborativeresearch

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• fosterhighqualityresearchtohelpsolveindustryspecificproblemsthroughcollaborativeresearchpartnershipsbetweenindustryentitiesandresearchorganisations.

Therearecurrentlyover30CRCscoveringsectorsincludingMiningandInfrastructure,Agriculture,Manufacturing,EnvironmentalServices,MedicalServicesandSocial&EconomicDevelopment.TwoCRCsrelevanttotheRedMeatIndustryare:SheepCooperativeResearchCentreTheSheepCRC,basedatUNEinArmidale,isanindependentorganisationthatperformsresearchanddevelopstechnologiestoenhancetheAustraliansheepindustry.TheCRCreceivesgrantfundingfromtheAustralianGovernmentanditsParticipantscontributecashandin-kindresources.Overfortyorganisations,fromallsectorsofthesheepsupplychain,areworkingtogetherwiththeSheepCRCtomakethepossiblepractical.Thethreeprogramsofresearchare:

• Enhancedsheepwellbeingandproductivity• Qualitybasedsheepmeatvaluechains• Fasteraffordablegeneticgain

FoodAgilityCooperativeResearchCentreInMarch2017,theFederalGovernmentannounced$50millionforanewFoodAgilityCooperativeResearchCentre(CRC)tohelpproducerswithinnovationandtechnology.Withanadditional$160millioncommittedby54partnersinprivatebusinessanduniversities,includingtheUniversityofTechnologySydney,QueenslandUniversityofTechnology,Brisbane,andCurtinUniversityinPerth-thewholefundis$210millionover10years.Asconsumerpreferenceschangerapidly,theCRCaimstohelpproducersadaptanddevelopfoodthatwillhavegoodsafetyrecords,highquality,andensureproductionisenvironmentallyandsociallysustainable.

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Consultationacrossindustryandresearchershasfocussedthreeresearchprogrammestoensuredeliverytothosefourindustry-specifiedimperativesoutlinedabove.Inthegraphicbelow,theimperativesrunacrossthehorizontalaxis,andtheresearchprogrammesuptheverticalaxis.

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4.6 AgriFood Startups & Agile SMEs

4.7 Pre-Accelerator Programs

Australian&NZAg&FoodTechStartups

Created by:

Marketplace

Farm Management Software

New Farms

IoT, Remote Sensors, Monitoring

RoboticsFoodTech

Biological Control & Biomaterials

Supply Chain & Logistics

PitchingEvents

IndustryEvents

Hackathons

Australia&NZPre-Accelerator&Grass-RootsEcosystemActivities

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4.8 Accelerators & Incubators

AccelFoods GoodFoodBusinessAccelerator SproutAgritechAgLaunch H-FARMFoodAccelerator SproutXAgriN.E.S.T IncubatorforAgribusinessand

AgroindustrySquareRoots

Agri-BusinessIncubation IndieBio StartupBootcamp-FoodTechAgroInnovationLab IowaAgStartupEngine StartupNextbyLandO'LakesAlltechPearseLyons JustEatFoodTechAccelerator TechStarsConnection(ABInBev)AmiusStartupPrgrm. KitchenSync. TerraBigbangAngels Kolaborasi TheHatcheryBitsxBites NXTPLabsAgroTechProgram TheYieldLabCanopySanDiego PearseLyonsAccelerator ThriveAcceleratorCaoHeJingInnovationIncubator Prometheus UnframedCIIE-CentreforInnovationIncubationandEntrepreneurship

QIAOLAB VietnamSiliconValley

ClimateVentures2.0 Radicle VillageCapitalAgriculturalAccelerator

Cradle RevTechLabs VillgroIncubatorDigEatAll RuralHub Vitagora'sAcceleriseFoodFuture ShanghaiYangpuTechnology

BusinessIncubatorCenterFoodHatch SimplotIgniteFoodSystem6 SKUFood-x SkywalkerAcceleratorGoa-basedacceleratorCenterforIncubationandBusinessAcceleration

SmallWorldGroup

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4.9 Investors

1823Ventures DBLPartners NewCropCapital SandsCapital500Startups DNSCapital NewGroundVentures SeedersventurecapitalAccelPartners EastVentures OakInvestmentPartners SeedPlusAcreVenturePartners EnterpriseAngels ObviousVentures SequoiaCapitalAcreVenturePartners FallLineCapital OmnivorePartners SomersetCapitalAdvantageCapitalPartners FallLineCapital PaineSchwatrzPartners SOSVAgVenturesAlliance FenoxVentureCapital ParadiceInvestmentManagement StonyfieldAgfunder FinistereVentures PCGInvestors StripesGroupAgriAngels FinistereVentures PreludeVentures SVGPartnersAlacrityCapital FirstRoundCapital JustEatVentures SVGPartnersAMECloudVentures ForerunnerVentures KhoslaVentures TaoCapitalPartnersAndreessenHorowitz FortuneVentures KleinerPerkinsCaufield&Byers TemasekAquaAgroFund FrescoCapital LererHippeauVentures TheYieldLabARCHVenturePartners GoldenGateVentures LowercaseCapital ThriveCapitalArtesianVenturePartners GoogleVenture MacdochVentures TPGCapitalAscentCapital GreenmontCapitalPartners MeridianCapitalChina TrueVenturesAvrio Capital GreensoilInvestment MiddlelandCapital TsingBarnRaiser HorizonVentures MIGAngels TsingCapitalBessemerVenturePartners IMJInvestmentPartners Monk'sHillVentures TysonNewVentureBioPacificParnters IndexVentures MonsantoGrowthVentures UnionGroveVenturePartnersBlueberryVentures InitializedCapital NewCropCapital UTIMCOBlueHillAssetManagement INNOVAMemphis NewGroundVentures VenturraBlumeVentures InvestmentGroup OakInvestmentPartners VerlinvestCatamountVentures JJVentureCapital ObviousVentures VikingGlobalInvestorsCircleUp JustEatVentures OmnivorePartners VortexVenturesCoca-ColaAlliance KhoslaVentures PaineSchwatrzPartners WillowHillVenturesCollaborativeFund KleinerPerkinsCaufield&Byers ParadiceInvestmentManagement WNTVenturesConsumerGrowth LererHippeauVentures PCGInvestors YuuwaCapitalConvergenceVentures LowercaseCapital PreludeVentures ZodiusCapitalCopia-Agro MacdochVentures PrimorusInvestmentsCoriginVentures MeridianCapitalChina QICCultivianSandbox MiddlelandCapital RadarPartnersCultivian Sandbox Ventures MIGAngels RREVenturesCyberAgentVentures Monk'sHillVentures RusticCanyon/FontisPartnersDanoneManifestoVentures MonsantoGrowthVentures S2GVentures

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4.10 Corporates Top25AgribusinessandFoodCompaniesinAustralia

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5. ASIAECOSYSTEMPARTICIPANTS5.1 India Severalfactorsthatincludeyoungerandmoreeducatedindividuals,hundredsandthousandsofsuccessfulnewentrepreneursandasteadilyimproving“seedandangeltoprivateequity”fundingecosystemwillcontributetoanincrediblyentrepreneurialIndiainthecomingfewyears.India’sstartupecosystemisindeedexpandingatahighpaceasalotmorecapitalisfloodingintothescene.Theattractivemarketsopportunities,togetherwithIndia’sabilitytoproducestartupswithunicornvaluations,havemainlydrivenglobalinterest.ThestartupsmostlikelytosurviveandsucceedarethosethattailortheirofferingsspecificallyfortheIndianmarket.MajoroverseasVCsmadeIndiaamongtheirtopdestinationsfortheirforeigndirectinvestment.In2016,SequoiaCapitalhasraisedanadditional$920million,afterclosinga$720millionfundbackin2015.Similarly,NorwestVenturePartnershasraiseda$1.2billionfund,tobeinvestedacrossdifferentregions,includingIndia.Also,China'slargetechcorporatesdon’twanttomissout.Indianmobilepaymentande-commercefirmPaytmhasrecentlyraisedabout$680millioninaroundledbyAlibaba‘saffiliate,AntFinancial.Withthestronginternationalinterestandfinancing,Indiaisnowabletowelcomemoreandmoreunicorns:asofMay2017,Indiacouldcountnineunicorns,withrestaurantsearchanddiscoveryserviceZomatovaluedat$1Bbeingthelastonetothe“unicornclub.”WhileZomatofallswithinthefoodinnovationspace,theAgTechandFoodTechlandscapearenotasboomingasotherindustries.Thiscanberelatedtothefactthattechnologysector,togetherwithhealthcarearesupportedbythelargestnumberofincubators.Thenumberofincubatorsbackinguptheothersectorsisverylimited,asitisalsointhecaseofaccelerators.Asaresult,incubation/accelerationisnotalwaysseenasthepreferredapproachincommercializinginnovations.WithintheIndianecosystem,whatitisinterestingtopointoutisthepivotalroleofuniversities.About56%oftheincubatorsareinuniversities,indicatingtheimportantroleplayedbyuniversitiesinsupportingentrepreneurshipandstartups.Inadditiontothetraditionalteaching,research,andindustrialcollaborations,universitiesareincreasinglyplayingaveryimportantroleincreatingventures.Thiscanbeshownbythesteadilygrowingamountandsizeofangelinvestmentsandventurefunding.However,fundingisnotevenlyspreadacrossthecountry,asitismostlyconcentratedinTier1cities.Toimprovetheoddsoffunding,investorsarenowconsideringdevelopingaproprietarydealflownetwork.Regardingtheimportanceofreferences,TheChennaiAngelscasestudyprovidesaninterestingperspective.92%oftheinvestmentsmadebythegroupweresourcedthroughorhadareferencefromangelinvestorsormembersoftheangelnetwork.Noneofthedealsthatweredirectlysourcedweresuccessfulingettingfunding.Finally,alsotheIndianGovernmentcontributedtobuildingthestartupecosystem.TheStartupIndiainitiativefocusedonrelaxingthenormsfortaxbenefitsandincludingemploymentgenerationpotentialtogiveabigpushtojobcreationandentrepreneurship.Thesechangesarepartofaplantopromotethecreationofnewbusinessesandjobs,whileboostingthestartupecosystem.Butthingsarenotallplainsailing,especiallyforthoseinvestingintheonlinegrocerybusinessinIndia.Accordingtolocalmediareports,onlineretailerFlipkartshutdownitsgrocerydeliverybusinessinFebruary.GrocerydeliveryappPepperTapstoppedoperatingin10locationsearlythisyear.On-demanddeliveryserviceGrowersalsohaltedoperationsinninecitiesinearly2016.Thinmargins,highmarketingcosts,andficklecustomershaveallbeenblamedforthehiccups.

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5.2 China AccordingtoaresearchstudybyUHY,manycountriesareexperiencingaboominnewbusinesscreation.ThatisespeciallytrueofChina,wheremorethan4,000startupsarelaunchingdaily.Initialfundingisrelativelycheapercomparedtootherareas,astheaveragebudgetofChinesestartupfounderstoestablishacompanyis¥113,000CNYvs.$16,508USDintheU.S.Currently,themostactiveentrepreneurialsectorinChinaiscustomerservice(B2C).Successstoriesaredominatedbyonline-to-offline(O2O)companieslikeEle.me(B2Cfooddeliverywitha$4.5billionvaluation)andMeicai(grocerydeliverywitha$2billionvaluation).Foodstartupsmakeupasmallfractionoftheoverallpool.However,newfoodbrandsridingthewaveofChineseconsumptionthrivesand,asChinaisshiftingconsumptionhabits,risingdemandforsafe,healthyproducts,aredrawinginvestors’interest.Otherstartupsarebuildingtechnologysolutionstotacklefoodsafetyandfoodwasteissues,fromurbanfarmingkitstofoodwasteconvertersandwaterpurifyingtechnologytofacetheimminentthreatsposedbyresourcescarcityandoverpopulation.Thiscommunityofpurpose-drivenstartupshascapturedtheattentionofagrowingpoolofcapitalistsandbusinessleaders.FortuneVenturesisoneofthefirstprivateinvestorsactiveinChineseAgriFoodprojects(earlyinvestmentsincludepoultrysuppliersFujianSunnerDevelopment);SequoiajoinedagribusinessNewHopetofinalizeaSeriesAninvestmentinACSM[AgricultureConsultantandSmartManagement],aBeijingcompanythathasbuiltadigitalplatformforagriculturalmanagement.However,China’sAgriFoodinvestmentisnotyetpickingupthesamepaceaselsewhereintheworld.ForChinatorepresentahealthyandintegratedstartupecosystem,fundingshouldbeevenlyspreadacrossvariousgrowthstages:whilethemajoritythedealsfallintheexpansionstages,AgriFoodcapitalinseedanddevelopmentstagesneedstobeencouragedandfacilitated.TherealityisthatChinahasn’tyetproducedcutting-edgeAgriFoodtechstartupsthataretakingtheworldbystorm.Entrepreneursandstudentsneedtoadoptademand-drivenapproachtotechnologyinnovation,tobeproactivetomarketdemandsandbereadytotakevisionaryrisks.Therefore,theChinesegovernmenthastakenstepstonurturetechnologydevelopmenttoboostagriculturalinnovation.AcrosstheChina,morethan260nationalagricultureandsciencetechnologyparksarebuilttoserveaspart-technologyshowcase,partR&Dpilotfarms.Topagriculturaluniversitiesalsoallocatesubsidiesandco-workingspaceforstudentandalumnistartupteams.OnegoodexampleofthisisCyb-Bot,roboticsandautomationcompanythatreceivedfundingfromaChinaAgriculturalUniversityFund.Overall,themajorgaptofillwithintheChineseecosystemgoesthendowntoasignificantlackofsector-relatedaccelerators/incubators.Chinacountsoverallonlyfourincubators/acceleratorsthatfocusexclusivelyonFoodandAgTech.Inproportiontootherbigmarkets,Chinaisrelativelydisadvantagedwhenitcomestofood-relatedaccelerator/incubator.Otherexamples:OneexampleisWomai,anonlineretaileroffreshfoodsetupin2008bystate-ownedfoodconglomerateChinaNationalCereals,OilsandFoodstuffsCorporation,betterknownasCOFCO.Womaihasraised$330millionoverthreeroundsoffunding,accordingtoonlinedatabaseCrunchBase,withpartofthecashgoingtowardincreasingfoodimports.ItslatestroundoffundinginOctober2015raised$220millionfrominvestorsincludinginternetservicescompanyBaidu.BenlaiLife,anonlineretaileroffreshfruitandvegetables,isanotherpopularstartup.Itraised$117millioninMay2016.

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AsimilartrendisalsovisibleinIndia,wheretheBangalore-basedbigbasket.comraised$150millioninafollow-uproundoffunding.Withitsmassivepopulation,thegrowthopportunitiesforonlinegrocersareimmense.Bigbasket'slate-roundfundingwasledbytheUAE'sAbraajGroup.

5.3 South East Asia OutofthetenASEANcountries,Lao,Cambodia,andVietnamhavemorethan50percentpopulationemployedinagricultureandalliedsectors,whileIndonesia,PhilippinesandThailandhavemorethan35percentofthepopulationdependentonthesectorfortheirlivelihood.Cumulatively,thisamountstonearly150millionpeopledirectlyorindirectlyinvolvedwiththeagriculturesectorintheregion.MostfarmersinSoutheastAsiaregionaremostsusceptibletoclimateandweatherchangeinformationasymmetryduetothenon-availabilityoftechnicalknowledgecenters.Thus,technologyinnovationscanplayinimprovingacrosstheentireagrovaluechain.WhileAgTechsolutionmayminimizethelackofmarketlinkages,italsocomeswithachallengeasITinfrastructuresandavailabilityoftechproductsarelowinemergingcountries.IndiaandChinaarethemostadvancedregardingAgTechandaccountedformostthedealactivityinthedevelopingeconomies;nevertheless,theSoutheastAsianregionisshowingsignsofbeingripeforAgTechstart-ups.Forinstance,overthepastyears,therewereafewsignificantinvestmentsintheAgTechsectorinIndonesia.LocalAgTechandaggregatorstart-upshavecapturedtheinterestfromvariousinvestors,technologicalcompanies,andotherstakeholders.EnterprisessuchasVasham,iGrowhaveattractedinvestmentsfromglobalPE/VCs.Thebusinessmodelandoperationsoftheseenterpriseshavethepotentialtoassistandhelpsmallerlocalfarmersimprovetheirlivelihoodsandsourceofincome.Forinstance,iGrowisamarketplacethathelpsfarmerswithunder-utilizedland,toproducehigh-qualityorganicfoodandsustainableincomeswithcloud-basedagriculturalmanagementsoftware.VashaminsteadassistssmallholderfarmersinIndonesiabyoptimizingthefoodsupplychaintoguaranteethemabove-wholesalemarketpricesaswellasprovidethemwithfinancialsupportasrequired.ThevariousgovernmentsacrosstheSEAareagetinvolvedinecosystembuildingatdifferentdegrees.Singapore'sTemasekLifeSciencesLaboratory,fundedbyTemasekTrust-thephilanthropicarmofsovereignwealthfundTemasekHoldings.TLL,spentseveralyearsdevelopingTemasekRice,aresilientbreedcapableofwithstandingextremeweatherconditions.SincelandislimitedinSingapore,TLL’sriceisbeinggrowninIndonesia,exploitingthecountry’spotential.AnotherexampleinvolvestheVietnamesestatetelecomcompanyVinaPhone,whichstartedamobileservicesettoassistfarmersthroughweatherforecasts,prices,plantdiseasealerts,guidelinesonrelevantstatepolicies,advisoriesonabnormalconditionsaffectingagricultureandsoon.Togetherwithanexpectedslowdownofventurebuildersandariseofaccelerators/incubators(bothlocalandforeign),itisworthnotinganinterestingriseofcorporateventurecapital(CVC)intheregion,whichwentfromvirtuallynon-existentto14ofthemoverthepastyear.ForeignCVCsareattractedtotheSEAforpotentialbusinessexpansion,whilelocalconglomeratesandlargecapcompaniesareincreasinglyawareofthedisruptionoftechstartupstotheirtraditionalbusiness.Marketplace/Platformisleadingregardingseveraldeals,butitiscloselyfollowedbyE-Commerce,SaaSandFinTech.Onceagain,theseresultsemphasizetheremarkablelackofdomain-specificAgTech/Foodandinvestors.Similarly,itisapparentthattheroleofUniversitieshasnotyetbeenfullyvalued(IsitacoincidencethatSilicon

40

ValleydevelopedaroundStanford?).Ultimately,lowpresenceoffundedSoutheastAsianAgTechbusinessesatglobaleventsandvalidatedinAgFunder’sreportsindicatesthatstartupsintheregionmaylackexposureatthegloballevel.

41

6. ECOSYSTEMGAPS&CHALLENGESThissectionlooksatthecurrentRedMeatInnovationEcosystemandidentifiesgapsanddeficiencies,aswellashighlightingthekeychallengestoexecutingtheI+EConnectplatform

6.1 Current Gaps in the Innovation Pipeline

42

The4keygapsintheAgriFoodInnovationEcosysteminclude:1. Comprehensiveecosystemdatabaseallowingobjectivetracking,measurement,analysisandpolicymaking

2. Criticalmassatthebaseofthestartuppipeline

a. Numberofentrepreneurs,startups&agileSMEsfocusedontheAgriFoodsectorb. Pre-acceleratoractivityc. AcceleratorsfocusedonAgTech,FoodTech&FoodInnovation

3. Ecosystemconnectivityandcollaboration

a. Universityactivity,engagementandcommercializationb. Acentral/physicalhubactingasthecollaborativefocalpointoftheecosystem

4. Co-Funding

a. LackofawarenessregardingpotentialforMDCco-investmentb. Ad-hocnatureofMDCpipeline-lackingprocessc. ScalabilityofMDCpipeline/investmentsd. MDCdirected,arms-lengthinvestmentvehicletakingdiversifiedearlystagestartupexposuretohelp

establishandgrowecosystemdealflowe. MDCneedstoemploybroaderrangevarietyofinvestmentmodels/instruments

Thefollowingchapter(Chapter8)expandsonthesegapsintheecosystemandidentifiespotentialsolutionsandrecommendations.

6.2 Key Challenges for I+E Connect Platform ThekeygapsintheAgriFoodinnovationecosystemneedtobeaddressed,tosuccessfullyimplementtheI+EConnectplatform.ThefollowingdiagramsummarisesthechallengesforoptimalimplementationoftheI+EConnectplatform.

KEYECOSYSTEMGAPS

ECOSYSTEMDATABASE

CRITICALMASSATBASE

CONECTIVITY&COLLABORATION

CO-FUNDING

43

Sco

utin

g Pa

rtne

rs

KeyCh

allenges

•Insufficie

ntco-investmentto

optim

izem

atchedfu

nding

•Lackofd

edica

tedfundingleadsto

longleadtimetoclosedealsand

potentiala

dversese

lection(useit

orloseit)

•Lackofa

warenessregarding

potentialo

fMDC

co-investment

•No

ventureequitym

odelm

eans

lackofa

lignm

entw

ithco-investors

•Lackofresources/solutions

availableforcorporatestoinstigate

ownacceleratorandVC

capability

•Ge

nerallyra

ndom

engagem

ent

betweencorporatesandbroader

ecosystemratherthanabespoke

orplatfo

rmapproach

•Curre

ntscoutingmodelneither

scalablenorextensiv

e•Requirein

creasedengagement

withallpartsoftheecosystem

andinparticularuniversities&

researchinstitutes

•No

dynam

icecosystem

mappingandtagging

•Insufficie

ntsupplyofAgTech,

FoodTech&FoodInnovation

entre

preneurs,agileSME’s,startups

toensureoptim

allate-stagepipeline

•Curre

ntfocusmoreonlatestage

andnomodelfo

rearlystage

•Curre

ntfocusmoreonte

chnology

lessonbusin

essmodels,softw

are

•Random

nessofa

pplicationsas

opposedtoapre-screenedandde-

riskeddealflow

•Lackofd

edica

tedaccelerator

programs

•FoodTech&FoodInnovationare

especia

llyunderre

presented

•Lackofsuccessfulsolutionforp

ull-

modelVC

•Lackofp

re-acceleratorsupportfor

mem

bersandaspiring

entre

preneurs/founders

•I+EConnectinmodelfo

rmand

needstobeimplem

ented

•No

centra

lhubth

atallows

criticalm

asso

findustry

particpantstocollaborate

44

7. CREATINGANINTERCONNECTED&INVESTABLEAGRIFOODINNOVATIONPIPELINE

ThissectionlooksattheexistinggapsintheAustralianAgriFoodEcosystemandproposessolutionstocreateaninterconnectedandinvestableAgriFoodinnovationpipeline

7.1 Review of Key Gaps and Related Recommendations/Solutions ThefollowingtablesummarizesthekeygapsintheAgriFoodInnovationEcosystemandpotentialsolutionsandrecommendations. CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTION1 EcosystemMapping&

Data1.1 Data • Artesian,viaitssubsidiaryVCAlphaBeta(VCAB)

collectsandmaintainsdatarelevanttotheAgriFoodinnovationecosysteminAustralia/Asiaandglobally.

• TheVCABdatabasewillbeofferedtoindustryparticipants,university&researchinstitutes,investorsandstartupsonafreemiummodel.

• Artesian/MDCcanpartnertocollectdatafromecosystemparticipants

1.2 Mapping • VCABdatawillbeusedtomaptheinterconnectivityoftheecosystem,keyperformancedata,trendsandstatistics

• Themappingcapabilitycanbeusedasthebasisforanalysis,researchandtopromotetheindustry

• Wouldprovideanabilitytovisualizenetworksandconnecttalent,clusters&processes

1.3 Analysis • Artesianand/orMDCcanproduceAgriFoodinnovationanalysis,researchandwhitepapers

• Thebroaderresearch,government,educationandmediaindustriescanaccessthedataonasubscriptionbasisfortheirownanalysis,researchandcontentproduction

• Couldbeusedtobuildajob/talentmarketplacefortheAgriFoodinnovationecosystem

1.4 Performance • Ratherthanrelyingonanecdotalevidencetomeasuretheeffectivenessofinnovationstrategiesandprograms,whethertheyareindustryorgovernmentinitiatives,itwillbepossibletomeasureusingdatadrivenanalysis

• Performancedatacanbeusedtoaudit&measureprogress,forindustrypromotion,forbenchmarkingandprovideaccountability

45

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTION2 Numberof

Entrepreneurs,Startups&AgileSMEs

2.1 Education • MDCcouldestablishanAgriFoodTechprogramthatqualifiedfordegreecoursepointswithpartneruniversities.ThiscouldbeapartoftheMCacceleratormodel

• Thiscoursecould:o promoteAgTechasapotentialfocusfor

graduatingstudentso increaseecosystemawarenesso actasatalenthiringmarketforMLA

corporatepartnerso beofferedtoforeignstudentstobuildup

internationalnetworks• MDCcouldoffercontinuingeducationcoursesand/oron-linewebinarsforfinancialplannersandotherinvestorgroupse.g.angelgroupsonkeythemes,technology,opportunitiesandstartupsintheAgriFoodTechecosystem

2.2 Pre-AcceleratorActivity

• Seesections3.1-3.3ofthistable

2.3 EstablishAgriFoodInnovationHub

• Seesection6.1ofthistable• TheHubcouldincludeaco-workingspace,communityevents,hackathons,meetupsandothernetworking/mentoringopportunities

2.4 MDC/ArtesiancouldpublishresearchandanalysisontheAgriFoodTechecosystembasedonmapping&dataanalysis

• Seesections1.1–1.4ofthistable• Thisresearchcouldbedoneinpartnershipwithindustryparticipants,universities&researchinstitutes,andMLAcorporatepartners

3 Pre-AcceleratorActivity

3.1 Supportindustryparticipationinhackathons,meetups,events

• ThiswouldbeakeyfunctionoftheAgriFoodInnovationHub(seesection6.1ofthistable)

• Artesian’sbroadnetworkofaccelerators,incubators,angelgroupsanduniversityprograms,aswellasthebroaderacceleratorecosystemcanbeleveragedwiththesupportofMDCandMLAcorporatepartnersandindustryparticipantstopromoteinterestandactivityintheAgriFoodtechsector

3.2 Externalpre-acceleratorprogram

• SproutXprovidesapre-acceleratorprogramforstartupsconsideringapplyingtotheiraccelerator

3.3 Providepre-acceleratorprogramatMDCin-houseaccelerator

• TheMDCacceleratorprogramcouldincludea2-4weekpre-acceleratorprogramforuniversitystudents,MLAmembers,otherfounders/entrepreneurs,corporateintrapreneurs

4 Number/varietyofAccelerators

4.1 SupportSproutXnationalroll-out

• Seesection73ofthistable

4.2 CreateMDCAccelerator

• AnMDCin-houseacceleratorwouldbeusedforthefollowingpurposes:

46

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTIONo Forspecificredmeatindustry-focused

startupcohortsthatcouldbesponsoredbylargeMLAcorporatepartnersoragroupofsmallercorporatepartners

o Toexecutepull-modelprogramsdesignedtosolvespecificindustryproblemsforMLAmembersorpartnercorporates

o Toprovidesupportforportfoliostartupsfollowingthecompletionofexternalacceleratorprograms,

o ToattractinternationalstartupslookingtoexpandintotheAustralianmarket

o TohelpAustralianstartupslookingtoexpandintointernationalmarkets(withtheassistanceofArtesianinAsianmarketsandalternativepartnersinotherinternationalmarkets)

o ToprovidesupporttoMDCportfoliocompaniesatthescale-up/growthstageoftheirdevelopment

• SeeAppendix1ofthisreportfordetailsoftheproposedMDCacceleratormodel

4.3 Artesian/MDCtohelpMLACorporatePartnersconnectwithexternalcorporateaccelerators

• CorporateacceleratorssuchasSlingshotandBlueChillicanfacilitateone-offormulti-cohortacceleratorprograms

• SproutXcanalsofacilitatecorporateprogramsorincludespecificcorporatesponsoredstartupsintheirAgTechacceleratorprogram

4.3 Artesian/MDCtohelpMLACorporatePartnersestablishproprietaryaccelerators

• Seesection9.3ofthisreportforadetailedanalysisoftheArtesiancorporateproprietaryacceleratormodel

• ThismodelisforlargermoresophisticatedcorporateswhowishtobuildtheirownholisticapproachtoopeninnovationanddistributedR&DandkeepmoreofthisIPin-house

4.4 InternationalAccelerators

• MDCtobuildrelationshipswithinternationalacceleratorsviatheirregionalpartnerse.g.ArtesianinAsia.

• ThiswillallowMDCto:o Sourceinvestmentsinearlystagestartups

frominternationalmarketso ProvidelandingpadsforAustralianstartups

lookingtonetwork/expandininternationalmarkets

o ProvideMLACorporatePartnerswithaccesstointernationalstartupsandnetworks

5 ImproveconnectivitywithUniversity&ResearchInstitute

5.1 DataMapping&Tracking

• Mapandtrackalluniversityandresearchinstitute’sresearch/IPcapabilities(seesection1ofthistable)

47

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTIONResearch&IP,andencourageCommercialization

5.2 Connectivity&AcceleratorPrograms

• MDCmustre-engagewithalluniversitiesandresearchinstitutes.

• PromoteandsupportprogramssuchastheCicadaInnovationsGrowLabtoaccessandcommercializedeepscienceopportunitiesandprepareresearchersforentrepreneurialcompanyformation

• OfferparticipationinMDCAcceleratorProgramsand/orexternalaccelerators

• Informresearchersofthepossiblepathsforcommercializingresearch

5.3 AgriFoodInnovationHub

• Universities&ResearchInstitutesshouldplayakeyroleintheAFIH(seesection6ofthistable)

6 EcosystemConnectivity

6.1 EstablishAgriFoodInnovationHub(AFIH)

• Atechnologyhubcanprovideaphysicalspace,offeringevents,mentoring,networkingandcollaborationopportunitiesaswellasworkspacesforindividuals,startupsandagileSMEs

• ThehubwouldbeestablishedasafocalpointfortheAgriFoodinnovationecosystem

• Itwouldbe:o communalo self-organizing&adaptiveo enableinnovatorso bringtogetherarangeoftechnical,

professional,industryanddesignexperience

o alocalfocalpointlinkedtoglobalhubsandinnovationlabs

• Attractgovernment,corporateandindustrysponsorshipsandlifttheprofileoftheindustry

• Existingexamplesinclude:o Farm491:AgTechInnovation&Incubation

(UK)o Stone&Chalk:FinTechinnovationhub

(Sydney)6.2 Providefreemium

accesstoecosystemmapping&analysistools

• SeeSections1.1-1.4ofthistable• TheVCABdatabasewillbeofferedtoindustryparticipants,university&researchinstitutes,investorsandstartupsonafreemiummodel.

• Thebroaderresearch,government,educationandmediaindustriescanaccessthedataonasubscriptionbasisfortheirownanalysis,researchandcontentproduction

• Couldbeusedtobuildajob/talentmarketplacefortheAgriFoodinnovationecosystem

• Performancedatacanbeusedtoaudit&measureprogress,forindustrypromotion,forbenchmarkingandprovideaccountability

48

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTION6.3 Encourage

partnerships&collaborations

• MDC,viatheI+EConnectPlatformshouldbuildanonlineandofflinecapabilitytoencouragepartnershipsandcollaborationsincluding:

o matchingstartupswithtalent,mentors,investors,distributionpartners,researchers,acquirers.

o matchingcorporateswithothercorporatesforacceleratorcohorts,investments

• Encourageparticipation/membershipintheAgriFoodInnovationHub

7 LackofCo-Funding 7.1 LackofawarenessofMDCmatchedfundingmodel

• MDCneedstoincreaseawarenessoftheavailabilityofmatchedfundingacrossthebroaderstartupecosystem

7.1 MDCinvestmentstructure

• Thereispotentialforlackofalignment&conflictsofinterestwithco-investorsifMDCnotparticipatinginsimilarinstruments/structure

• ThecurrentMDCinvestmentprocess,useofroyaltyshare,lackofprogramawarenessandstartupsupplyshortagemeansthatMDCdealflowisoftenadhoclackingaprocessdriven,pre-screenedandde-riskedpipeline

• ThecurrentMDCinvestmentstructure(withitsfocusonroyaltyshare)shouldbecomplementedwithotherinvestmentmodelsthatmaybemanagedbyMDCorbyexternalinvestmentmanagersincluding:

o DirectEquityo VentureDebto VCFundso EquityCrowdfunding

• Areviewofcurrentpoliciesshouldbeundertakenandprocesses,documentationagreedfornewinstruments/strategiescompleted

• Seesection11.1ofthisreportforrangeofalternativeinstruments

7.2 IncreasenumberofearlystageAgriFoodstartupsreceivingseed/angelfunding

• CurrentlyMDC’smatchedfundingmodelischallengedduetolackofco-investmentandtimetakentocompletedeals

• MDCfocusisgenerallyonlaterstagecompanieswheremoretraditionalduediligencecanbeperformed

• RiskofAdverseselection-companiesthatcansuccessfullyraiseexternalcapitalarenotnecessarilythemostinnovativeorprovidingthegreatestindustryupsideforMLAmembers

• ToensureahealthyAgriFoodecosystemitisnecessarytoensurebroad,diversifiedpipelineofearlystagedeals

• Duetoasymmetricalriskprofileofstartups(90%ofreturnscomefromthetop10%ofcompanies)

49

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTIONneedtouseadiversifiedportfoliostrategywithoptiontofollow-onintobestdeals

• RecommendcreatinganAgriFoodSidecarFund(AFSF)whichwillinvestin50-100seedtoangelstageAgTech,FoodTech&FoodInnovationstartupsovera5-yearperiod

• Thefundwillbemanagedbyanexternalmanagertocreatearm’slengthvehicleforMDC.Thefundwilltakeequitystakesinthestartups

• TheFundwillhavecommitmentsof~$50-60M,investing~$10-12Mperyear

• 50%ofthecapital($25-30M)willberaisedfrominstitutionalinvestors,HNWIandcorporates.Theother50%willbecommittedmatchingcapitalfromMDC.

• Theexternalinvestmentmanagerwillberesponsiblefor:

o Structuring/buildingthefundo Preparinginformationmemorandum,

investmentdocumentso Raising$25-30Mfrominvestorso Liaisingwithaccelerators,incubators,

universities,angelgroupstogeneratedealflow

o Identifyingdealsthatcomplywithapre-agreedMDCmandate

o Completingduediligence,termsheetso Monitoringdeals,investor

relations/reporting,legal,regulatoryandcompliancemanagement

o Completingfollow-onroundso Identifyingandcompletingtradesaleexits,

IPOso MDCwouldhaveaseatontheinvestment

committeeorobserverrightsasrequired• TheinvestmentmandatemayincludeinternationaldealsatMDC’sdirection

7.3 SupportSproutXnationalroll-out

• Artesianistheinvestmentmanager,andisprovidingthefunding,fortheSproutXVentureFund

• Withdedicatedcapital,thisfundcanmovequicklytoprovideearlystageAgTechstartupswithco-investmentthatmaybematchedbyMDC

• ArtesiancanactastheeyesandearsforMDCtoprovidematchedfundingindealssourcedfromSproutX

• MDCisalreadysponsoring/supportingseveralstartupsgoingthroughSproutX(4startupsintheinitialacceleratorcohort)

• TheSproutXVentureFundwillbeacomplementarypipelineofpre-screenedandde-riskedstartupsfortheAgriFoodSidecarFund

50

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTION

• TheSproutXVentureFundmaybeasuitablevehicleforMLACorporatepartnerstotakeearlystagediversifiedAgTechstartupexposure

• AsinvestorsintheSproutXVentureFundthecorporatepartnerswillbealigned/incentivizedtomakelarger,later-stageinvestmentsintothebeststartupswhichwouldalsobecandidatesforMDCmatchedfunding

7.4 EncouragemoreAgTech,FoodTechandFoodInnovationstartupsviaagnostic,corporate&horizontalfocusedaccelerators

• Artesianhasexistingrelationshipswitharangeoftopaccelerators,incubators,universityprogramsandangelgroups

• ThisnetworkcanbeleveragedtoattractmoreAgTech,FoodTechandFoodInnovationstartups

• SlingshotandBlueChilliwhichfocusonrunningcorporateacceleratorsaresuitablepartnersforMLAcorporatepartnerstorunoutsourcedacceleratorprograms

• AsArtesianistheinvestmentmanagerforthesefunds,andaseachhasdedicatedfunding,thiswouldbeanotherefficientwaytohaveco-fundingimmediatelyavailableformatchedinvestmentbyMDC

7.5 SEAsia • ArtesianhasrecentlysignedanMOUwithBrinc,ahardware/IoTacceleratorbasedinHK.

• ArtesianwillestablishadedicatedventurefundtoinvestinalltheBrinchardware/IoTstartups

• ArtesianisestablishingfurtheracceleratoragreementsandfundsacrossSEAsiawithplansforacceleratorpartnersinHK,Malaysia,Vietnam,Thailand,Indonesia,SingaporeandthePhilippines

• Thiswillprovideabroadnetworkandpipelineofopportunitiesforinvestments

8 Currentscoutingmodelneitherscalablenorextensive

8.1 Optimizeexistingnetwork

• Connectionswithpeers,investors,accelerators,andstartupnetworksofferanexcellent(andnatural)waytolearnaboutthemostpromisingprojects.Havingacentralroleintherelevantecosystemsbooststhisnaturaldealflow,andcommunicatingMLA’schallengesandstrategicobjectivesincreasesthevalueofyourposition.

8.2 Startupchallenges • OrganizedcompetitionsrunbyMDCand/orpartnerstotargetspecificthemes,topics,typesofstartup.Thisisaneffectivewaytoidentifyandencouragetechentrepreneurstotackleindustrychallenges

• Largeindependentcompetitionswilloftenattractmanymorestartups,sincetheycanconnectstartupswithmanystakeholdersandcanbringadditionalbenefitssuchascashandvisibilityforthewinners.MDCcanpartner,sponsor,participateand/orhelporganize

8.3 Events • Thesemaycomprisedeep-techsummits,researchconferences,meetups,andvarioustrainingand

51

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTIONprivateevents.Everyopportunityhasitsownuniquemixoffeatures.MDCcanorganise,participate,sponsor

• Deep-techsummits:Thesegatheringshavetheadvantageofbringingtogetherawiderangeofparticipants.Theyfacilitateopportunisticencountersforstartups/corporatesinterestedinreflectingonthefutureoftheirindustry,andinwideningtheirperspectivesbyidentifyingemergingtrends.

• Smallerandmorepersonalevents:Eventswithfewerthan100participantstendtobemorefocused,whichmakesthemmoreaccessibletoearly-stagecompaniesthatarereadytosharetheirideaswithalimitedsetofpeople.

8.4 Crowdsourcedsolutions

• Increasinglypopulartocrowdsourcesolutionsforspecificproblemsviaonlineplatforms.MDCcoulddevelopanindustryfocusedplatform

8.5 Exploitingecosystemmapping&trackingcapabilities

• Seesection1.1-1.4ofthistable

8.6 Scoutingservices • Someorganizedcompetitionsoreventsofferscoutingservicesaswell,leveragingtheirknowledgeoftheirecosystemtomatchcorporateneedstothemostrelevantstartups

9 I+EConnectPlatformnotimplemented

I+EConnectProgramcurrentlymainlyinmodelformandmustbeimplemented

• TheI+EConnectPlatformisthecenterpieceofMDC’sinnovationstrategy.Thedesignandscopeneedstobecompletedandtheplatformneedstobeimplemented.

• Theplatformshouldcaptureallofthegaps/recommendationsasoutlinedinthisreport

• Thesuccessofaplatformstrategyisdeterminedbythreefactors:

o Connection:howeasilyotherscanplugintotheplatformtoshareandtransact

o Gravity:howwelltheplatformattractsparticipantsfromallpartsoftheecosystemincludingstartups,researchinstitutes,corporates,industryparticipantsandinvestors

o Flow:howwelltheplatformfosterstheexchangeandco-creationofvalue

10 On-goingsupportofstartupsinMDCportfolio

MDCportfoliostartupsneedsupportfrompre-launchtoexit

• MDCportfoliostartupswillbeabletoaccessmentoringandfundingsupportviapre-acceleratorprograms,internal/externalacceleratorprograms,scale-upprogramsandco-investmentatseed,angel,SeriesA&laterstagerounds(Seesections3,4,6,7ofthistable)

• MDC,viatheI+EConnectPlatformshouldbuildanonlineandofflinecapabilitytomatchstartups

52

CATEGORY SUBCATEGORY RECOMMENDATION/SOLUTIONwithtalent,mentors,investors,distributionpartners,researchers,acquirers.

• MDCportfoliostartupswouldalsobenefitfromtheestablishmentoftheAgriFoodInnovationHub(seesection6ofthistable)

53

7.2 Interconnected & Investable Innovation Pipeline

CreatinganInterconnected&InvestableAgriFoodInnovationPipeline

Star

tups

Pre-

Acce

lera

tor

Acce

lera

tors

INVE

STOR

S

Seed

Ange

lSe

riesA

Late

rSta

geEx

its

AgTechStartups

FoodTechStartups

FoodInnovationStartups

•VCs

•Corporates

•Institutional

•Equity

Crowdfunding

•MDCM

atched

Funding

•VCs

•Corporates

•Institutional

•MDCM

atched

Funding

•Angels/HNW

I

•Equity

Crowdfunding

•EarlyStageVCs

•MDCM

atched

Funding

•IPO

•TradeSale

•AFIHoptimizes

ecosystem

connectivity

•Dynamicm

apping

&trackingof

ecosystemto

measuregrowth

•Founders

•Accelerators

withm

atched

funding

•HNW

I

•Family/friends

•Target500applications/yr

toAgriFoodaccelerators

•Pipelinecreatingample

supplyoflatestagedeals

forVC/corporate

investm

entactivity

•SupportSproutX

nationalexpansion

•FacilitateM

DC

corporateclients

tooutsourceor

establishown

accelerators

•EstablishAgriFood

SidecarFund

•OptimiseM

DC

matchedfunding

•Increasesizeof

SproutXAgTech

VentureFund

•Virtuouscycle&

sustainable

ecosystemcreated

asexitsoccurand

investm

entgains,

entrepreneurs

recycled

•Meetups

•Hackathons

•Events

•Vertical

•Agnostic

•Corporate

•Horizontal

•Increasedquality

&supplyof

startupsw

ill

attractinvestors

•SidecarFund+

MDCm

atched

funding

•Pre-screened,de-

riskedpipeline

fromSproutX&

SidecarFundw

ill

attractlatestage

investors+M

DC

matchedfunding

•GlobalVCs,

investorsw

ill

haveoptimallate

stage

opportunitiesto

justifylocal

office/activity

Univ

ersit

ies&

Res

earc

hIn

stitu

tes

Indu

stry

Part

icipa

nts

•Createfeedersystemtoaccelerators

•Optimizeecosystemconnectivity

•ParticipateinAFIH

•Map&

trackresearch&innovation

•Optimizeecosystem,supportconnectivity,encouragepartnerships&

collaborations

•Encourage&

supportindustryparticipationin,and/orcreationofproprietary,

hackathons,accelerators,partnerships,investm

ents&acquisitions

AGRIFOOD

INNOVATIO

N

HUB(AFIH)

MDCM

atchedFunding

ArtesianAgriFoodSidecarFund

MDCM

atchedFunding

optimized&scalable

DynamicAgriFoodEcosystemm

apping,tracking,data&

analysis

Providesinvestm

ent

managementservices

54

8. MAPPING&TRACKINGTHEECOSYSTEMThissectionlooksattheimperativestomapandtrackalltheparticipantsinaninnovationecosystemtounderstanditsdynamics,providedataandanalysisandbenchmarkitsperformanceandsustainability.

8.1 Benefits of Mapping & Tracking the Ecosystem Aninnovationecosystemcanbedefinedasthenetworkofpeopleandinstitutionsinthepublicandprivatesectorswhoseactivitiesandinteractionscreate,storeandtransfertheknowledge,skills,productsandserviceswhichdefinenewtechnologiesandbusinessmodels.BeforeembarkingonaprogramtogrowasustainableAgriFoodInnovationecosystem,especiallyfocusedonthesomewhatopaqueearlystagestartupsandagileSMEsector,itiscriticaltofullymaptheexistingecosystemandinterconnectionsbetweentheparticipants.Followingthebaselinemappingeffort,itisequallyimportanttodynamicallyupdatetheInnovationecosystemmapsothatperformanceandsustainabilitycanbemeasuredandanalysed.Themappingexercisecreatesadatabasethatcanbeexploitedbyexistingandnewecosystemparticipants,toimprove:

• Connectivity• Transparency• Networkspeedandefficiency• Partnerships• Commercializationofresearch• InvestmentandCo-investment• M&Aactivity• Accountability

8.2 A Structure for Ecosystem Mapping & Tracking Artesiancollectsdatainto9keysectorsoftheindustryinnovationecosystem.Dataistaggedsoitissortableandsothatconnectivitycanbemappedbyavarietyoffiltersandrelationships.Themappingandanalysisfunctionscanbeofferedtothewholeecosystemonafreemiummodel.Thefreeofferingprovideshighlevelinformationthatprovideshighlevelmappingcapability,strategicinsightsandanalysis.Subscriptionmemberswillgainfargreateraccesstodata,analysisandresearch.Itisexpectedthatuserswillincludeindustryparticipants,investors,government,universitiesandthemedia.

CORPORATES

GOVERNMENT INDUSTRYORGANIZATIONS PEOPLE

UNIVERSITIES&RESEARCHINSTITUTES

STARTUPS&AGILESMEs

PREACCELERATORPROGRAMS

ACCELERATORS&INCUBATORS INVESTORS

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8.3 Red Meat Industry Ecosystem Mapping ArtesianpreparesbespokeindustryecosystemdatabasesandmappinganalyticswhichprovideaSaaSsubscriptionmodelsolutionforecosystemparticipants.8.3.1 HomePageforRedMeatIndustryEcosystemMap&Analytics

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8.3.2 InvestorEcosystemAnalysisPage

57

8.3.3 Startups&AgileSMEsEcosystemAnalysisPage

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9. CREATINGCRITICALMASSATTHEBASEOFTHEPIPELINE

ThissectionlooksatthebenefitsofaSidecarfundandtherangeofacceleratormodelsandotherstrategiesavailabletoMDCandMLACorporateclients&startupstoinvigorate,growandsupportthebaseoftheAgriFoodInnovationpipeline

9.1 Benefits of a Sidecar Fund to MDC & AgriFood Startup Pipeline TheAustralianearlystageventurecapitalecosystemhasdevelopedgreatersophisticationoverthelast5yearswiththeemergenceofaccelerators,incubators,universityprogramsandmorerecentlyequitycrowdfundingplatforms.Althoughstillperhaps5-10yearsawayfromhavingalargeenoughearlystagestartuppipelinetoproperlysupportafullscalelate-stageVCindustry,thefoundationsrequiredtogeneratesufficientinvestablelatestageventuresiswellunderway.PreviousattemptsbythegovernmenttokickstartthelatestageVCindustryhavefailedbecauseofatop-downapproach.SchemessuchastheInnovationInvestmentFund,wherelatestageVCswereallocatedcapitalfromthegovernment,wereinitiatedbeforetherewasalargeenoughbaseofearlystagestartupsbeingcreatedtogeneratesufficientqualitylatestagedealflow.Subsequently,toomuchmoneyhadtobeinvestedinsub-optimalopportunitiesandreturnsweresub-optimalasaresult.AVPbelievesthatabottom-upapproach,wherehundredsofsmallinvestmentsaremadeacrossaverybroadrangeofearlystageventures,willintimecreateagreaterdealflowofsuccessfulventuresthatwillsupportasustainablelatestageVCindustryinAustralia.Bysupportingarangeofaccelerators/incubators,universitiesandangelgroupsAVPhascreatedaprivatelyfundedsolutionfortheGovernment’sinnovationdilemma.

ThissameecosystembuildingmethodologyisapplicabletoMDC’saimofcreatingabroadandsustainablecriticalmassofearlyandlatestageAgriFoodTechstartups.

50have material liquidity event

9,000startups are uninvestible

10,000startups are formed over 5

year period in Australia

1,000achieve seed

funding

300achieve angel

funding

STARTUP ECOSYSTEM PYRAMID

To have 50 material exits over a 5 year period the ecosystem requires 10,000 startups to be formed

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ThebenefitsofaAgriFoodSidecarFundareillustratedinthediagrambelow.

75re

ceiv

e Se

ries

A

fund

ing

2,00

0st

artu

ps a

re

unin

vest

ible

2,50

0A

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ood

tech

sta

rtup

s ap

plyi

ng t

o ac

cele

rato

rs o

ver

5 ye

ar p

erio

d in

Aus

tral

ia

500

achi

eve

seed

fu

ndin

g

150

achi

eve

ange

l fu

ndin

g

25ha

ve m

ater

ial

liqui

dity

eve

nt

30re

ceiv

e Se

ries

A

fund

ing

800

star

tups

are

un

inve

stib

le

1000

Agr

iFoo

d te

ch s

tart

ups

appl

ying

to

acce

lera

tors

ove

r 5

year

per

iod

in A

ustr

alia

200

achi

eve

seed

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ndin

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60ac

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e an

gel

fund

ing0

mat

eria

l liq

uidi

ty

even

t

CURRENTAGRIFOOD

STARTUPPIPELINE

PROJECTEDAGRIFOODSTARTUPPIPELINE

WITHAGRIFOODSIDECARFUND

•TheAgriFoodSidecarFundwillinvest$50-

60Min~100startupsover5years

•Thefundwillraise$25-30Mfrominvestors

andthiswillbematchedby$25-30Mfrom

MDC($5-6Mperyearfor5years)

•Thisrepresents~15%ofMDCtotalannual

matchedfundingtarget.

Pipelinebenefitsforannual$6M

matchedfundingfromMDC

increasein

startupsformed

250%

pre-screened&de-

riskedstartupsfor

SeriesA+investors

75materialexitsvia

tradesaleandIPO

25

MDCcurrentlyinve

sting

alm

ost100%ofmatched

fundingintolaterstage

pipeline:

•limiteddiversification

•nothelpingbuild

broaderbase

for

AgriFoodstartup

pipeline

MDCw

illstillin

vest85%of

matchedfundingatlater

stagebutwillcommit15%

toseed/a

ngelstage:

•increase

ddiversification

•broadenbase

ofstartup

pipelineby250%

•increase

latestage

pipelinesize/d

iversity

•lessduediligence

(DD)on

latestagein

vestments

required.DDis

perform

edcontinually

fromseedinve

stment

BenefitstoM

DC&

AgriFoodStartupPipelin

ew

ith15%Allo

cationofMatchedFundingtoEarlyStage

Startups

60

9.2 External Pre-Accelerator & Accelerator Models with Ecosystem Partners

MDCandMLACorporateClientsandstartupscanpartnerwitharangeofexternalecosystempartnersintheAgriFoodinnovationecosystem.Theseinclude:• Pre-acceleratorPrograms:AgnosticandAgriFoodfocusedhackathons,meet-upsandevents• AcceleratorPrograms:AgnosticandAgriFoodfocusedaccelerators&incubators9.2.1 MeetupsBuildinganecosystemstartswithconnectingthepeople.Meetupsareakeyforumforlike-mindedpeople,keentolearnabouttheAgriFoodinnovationecosystem,toconnectandpotentiallylearnaboutwhatittakestolaunchtheirfirststartup.Meetupsarealsoanexcellent,andrelativelycheap,forumforsponsorstobeseensupportingandparticipatinginthegrassrootsleveloftheinnovationecosystem.AnexampleofanAgriFoodmeetupistheNSWAgTechMeetupisamonthlyeventwithover300members.ItissponsoredbySproutX,AgThentic,CroweHowarth,AgFunderandAgriDigital.Themonthlymeetinggenerallyhasseveralspeakersaswellasasocial/networkingelement.

9.2.2 HackathonsAhackathonisadesignsprint-likeeventinwhichdevelopers,designersandbusinesspeoplecollaborateintensivelyonsoftware/hardwareprojects.Hackathonstypicallylastbetweenadayandaweek.Somehackathonsareintendedsimplyforeducationalorsocialpurposes,althoughinmanycasesthegoalistocreateusablesoftware.Hackathonstendtohaveaspecificfocus,themeorproblemtobesolved.AnexampleofanAgriFoodhackathonistheAgrihackEventheldinWaggaWaggainApril2017.ThishackathonwassponsoredbyCommonwealthBank,andCharlesSturtUniversityandwasdesignedtobringinnovationtoregionalAustraliaandfurtherconnecttheentrepreneurialecosystemofmetroareastoruraldevelopersanddisruptors.Theeventfocusedon4keyareas:

• Wool• Datainformeddecisionmaking• Operationalefficiency• Dairy

9.2.3 IndustryEventsIndustryeventsincludeconferences,exposandotherfunctionsdesignedtopromoteandeducateabroadaudienceonkeythemesandissueswithintheindustry.Theyareanotherusefulnetworkingeventforentrepreneurs,startups,investorsandcorporatestoattend/sponsor.

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AnexampleofanAgriFoodindustryeventisthe400MAgTechInvestmentForumheldinToowoombainMay2017.Thiseventwasdesignedasa‘fire-starter’fortheconvergenceofdiversetechnologysolutionsandinvestmenttodrivethenextlevelofproductivityandsustainabilityforagriculture.9.2.4 AcceleratorsStartupaccelerators,alsoknownasseedaccelerators,arefixed-term,cohort-basedprograms,thatincludementorshipandeducationalcomponentsandculminateinapublicpitcheventordemoday.Australianstartupacceleratorsareconsolidatinginto4types:agnostic,corporate,vertical&horizontal.Thebestofbreedsolvecohortfundingpost-programwithdedicatedfundingforseed,angelandlate/growthstage

9.3 Artesian Accelerator Model for MDC & MLA Corporate Clients 9.3.1 Artesian’sVisonforBest-of-BreedCorporateAccelerators:Abest-of-breedcorporateacceleratorwill:• targetscalableearlystageventuresandgainaccesstonewexponentialtechnologies• targetexternalentrepreneurs(andtheirhighgrowth-potentialstartups)whilealsoprovidingopportunitiesfor

‘intrepreneurs’(internalCorporatecandidates)• providestrategicaccesstoearlystageinnovationinacheaper,fasterandmoreflexiblewaythanR&D,

creatingnumerousadvantageousoutcomes• lookbeyondaCorporate’scorebusinessandestablishanewgrowthstrategyofbusinessbuildingmovingout

toincrementalbusinessandallthewaytotheedgetobuildanddevelopexponentialanddisruptivebusinesses

• beestablishedtoachieveeconomicbenefit,incontrasttomanycorporateacceleratorswhichareestablishedfornon-financialutility(whichisalsothereasontheyfail).Inanyhealthyorganizationthereisacultureof

AGNOSTICTECHACCELERATORS

CORPORATEACCELERATORS

VERTICALACCELERATORS

HORIZONTALACCELERATORS

(AgTech)

(CleanTech)

(EdTech)

(MiningTech)

(FinTech)

(IoT,Hardware)

(AI)

(BigData)

(Robotics)

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profitabilityandifthecorporateacceleratordoesnotpursuethiscultureaswell,itwillnotsurvivewithintheorganization

• encourageanentrepreneurialspiritandculturethroughoutthebroaderorganization• establishclosetieswith,andencourage/support,thebroaderAustralianstartupecosystemaswellas

internationalcorporateacceleratorsTobestservicebothtypesofacceleratorparticipants(entrepreneursand‘intrapreneurs’),itisrecommendedthatCorporateAcceleratorsadoptahybridmodelwithkeyfeaturestakenfromthefollowingacceleratormodels.9.3.2 TraditionalCorporateAccelerator:Model:Theincubator/acceleratorworkswithboth‘intrapreneurs’andentrepreneursthatproposedisruptivesolutionstoexistingproblems,orworkonpotentialdisruptionsthataCorporatecannototherwisepursue.Thebestteamsaregiventheopportunitytocontinuedevelopingtheirinnovationbybeing:• invitedtojointheCorporate(spinin),• fencedoffforsomeadditionalperiodduringwhichtheCorporatemakesanadditionalinvestmenttokeep

themgoing,• askedtocontinueworkingoutsidetheCorporate(spinout)andareofferedaninvestmentbyadedicated

CorporateSeedFundand,potentially,businessunitsoftheCorporate(withorwithoutadditionalinvestmentsfromangelinvestors,othercorporationsandinstitutionalVCs).

OtherCorporateAcceleratorExamples:Samsung,Telefonica.Whentousethemodel:Whenthecorporation:• wantsaccesstoearlystageinnovations• isreadytocommitresourcestoworkcloselywithveryearlystagestartupteams,seethemthroughtheirups

anddowns,andtoleratetheirrisk-takingandfailuresBenefitstotheCorporate:• abilitytoattractentrepreneurswhocanbuildscalableventuresthatachievelucrativefinancialexitsviatrade

saleorIPOorbeacquiredbytheCorporate• ‘intrapreneurs’gettoworksidebysidewiththeseentrepreneursandlearnfromoneanother• theCorporateAcceleratoranddedicatedCorporateSeedFundcollaboratearoundtheseteams• theAcceleratorenablesthecorporationtoconnectwiththebroaderstartupecosystem9.3.3 ‘Intrapreneur’Incubation:Model:TeamsofentrepreneurialemployeesusetheCorporateAcceleratortocreateinnovativesolutionsandtestbusinessmodelsthatcannotnormallybepursuedbythebusinessunits.

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Examples:LinkedIn,Google,Starbucks.Whentousethemodel:Whenthecorporationhasastronginnovationcultureandlong-termcommitmenttodisruptiveinnovation.BenefitstotheCorporate:• Promoteandstrengthenintrapreneurship,risk-taking,andoutoftheboxthinking.• Rapidlydevelopnewproductsandbusinessmodels.• Rewardandretainhighperformanceemployees9.3.4 OutsourcedAcceleratorProvidervs.InternalExpertiseThereisanentireecosystemofaccelerators,entrepreneursandexperts.Formingtiesandpartnershipsallowstheacceleratortolearnfromtheecosystemandtooperateinanetworkfromdayone.However,justastherearelowbarriersofentryforstartups,therearealsolowbarriersofentrytostartup‘experts’,sothevettingofkeystaffandserviceprovidersiscriticaltothelongevityandsuccessoftheCorporateAcceleratorprogram.BuildinganAcceleratorProgramcanbedonewithapartner,incollaborationwithotheraccelerators,orcanbebuiltusinginternalexpertise.Artesianproposesthatitprovidesa‘shadow’teamtoestablishandoperatetheCorporateAcceleratorforaninitial12to24-monthperiod.TheArtesianteamwillruntheacceleratorprogramand,inparallel,trainassignedstaffoftheCorporatetosubsequentlytakefullresponsibilityfortheprogram.9.3.5 BenefitsofaCorporatetakingcontroloftheirAcceleratorProgramThebenefitsofaCorporatetakingcontroloftheirAcceleratorprograminclude:• Ensuringthesustainabilityoftheacceleratorprogramthroughchangesinmanagementandexternaleconomic

cycles.IntimeInnovationshouldbeembeddedacrosstheorganizationjustlikethefinance,HRortechnologyfunctionsanditisthereforeimperativetoinsourceandnotoutsourcesuchcriticalfunctions

• Learningtonavigatethefinelinebetweenanexistingcorporateculturethatoftenleanstowardssecrecyandefficiencyandcreatingacultureofinnovationwherethesebehaviorsarethenorm.Theselessonscanbecommunicatedtothebroaderorganizationtoencourageamoreopenandcollaborativeinnovationculture

• Helpingretainandrewardentrepreneurialstaffmembersandoptimizingthepotentialforculturalchange• UsingtheCorporateAcceleratorandCorporateSeedFundasbuildingblockstoestablishlaterstageVC

capabilitiesintegratedwithbroadergroupstrategicM&Aactivities9.3.6 ArtesianRecommendationforCorporateAcceleratorOperationArtesianrecommendsthataCorporateutilizesinternalresourcestorunitsacceleratorprogram.Thiswillensureprogramsustainability,retainintellectualproperty,buildaninnovationcultureandprovideopportunityandrewardfortheCorporate’sstaff.TothisendArtesianwill:

64

• providetheteamtooperatetheinitialCorporateacceleratorprogram(s)forinitial12-24months;andinparallel

• trainselectedCorporatestafftotakeovertheoperationoftheacceleratorinsubsequentcohorts.9.3.7 CorporateAcceleratorComponentsThegeneralfeaturesofabestofbreedacceleratorare:• Anapplicationandselectionprocessthatisopenyethighlycompetitive• Startupssupportedincohortbatchesor‘classes’• Adealthatdeliversacceleratorservicesandseedcapitalinexchangeforequity• Anaccelerationprogramfocusedonsmallteamsnotindividuals,time-limitedsupportcomprising

programmedeventsandintensivementoringfromanetworkofdomainexperts• Accountabilitywithregularfeedback,metricsandpeer/externalreview• Afinaldemodaywithbroadcommunityandindustryengagement• Alumniprogramsandpost-acceleratorsupportandnetworking• Adedicatedfollow-onco-investmentfundforangelandearly-stageVCrounds

TheMBAdissertationCopyingYCombinatorbyJedD.Christiansen(2009)1,focusedonspecificfeaturesoftheaccelerator.Itinvestigatedwhichaspectsoftheacceleratorprogrammatterthemosttothestartups.Thestudyconcludedthatthesinglemostimportantaspecttolong-termsuccessturnedouttobeconnectionstofuturecapital.Formostofthestartups,itisvitaltoraisemorecapitalaftertheacceleratorprogramtofurtherdeveloptheirproduct.Thismakesthenetworkandconnectionstoinvestorsanimportantissuefortheaccelerator.ThepaperDoStartupAcceleratorsDeliverValue?TheEconomicsofCreatingCompanies(Wu,2012)2definedwhatvalueanacceleratorprovidesforitsstartups.Itconcludesthatthereare4principalelements:• humancapital(education),• signaling(credibility),• searchcosts(networking),• costofcapital(seed,follow-oninvestments).

1Christiansen,J.D.,(2009)CopyingYCombinator:AFrameworkfordevelopingSeedAcceleratorPrograms.Cambridge:UniversityofCambridge.2Wu,A.(2011)DoStartupAcceleratorsDeliverValue?TheEconomicsofCreatingCompanies,MITEntrepreneurshipReview,August14th&22nd

ACCELERATORCOMPONENTS

SELECTIONPROCESS DEALDETAILS PROGRAM COMPLETION ALUMNIPROGRAM

• Biannualcohortsof5startups

• Screeningprocess+jurydecision

• 5%equitytotheCorporateacceleratorinexchangeforservices

• 5%equitytotheCorporateSeedFundinexchangefor$50,000

• Duration:3months• Freeofficespace• Mentornetwork&broadercommunityconnectivity

• Weeklyexpertlunches• Accesstocapitaldata-baseandnetwork

• Coachingmeetings• Monthly strategydays

• DemoDaywithselectedaudience

• Continuousadvice&support

• Activealumninetwork• Monthlyalumnimeetupaftereachstrategyday

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TheCorporateProgramwillbedesignedtooptimizethese4factorsfortheparticipatingentrepreneurs/foundersandstartups.9.3.8 CorporateAcceleratorProgramTheCorporateAcceleratorwillincludeaco-workingspaceforentrepreneurswithfirststageideastoworkalongsideeachothertogrowtheirconceptsintoearlystagescalablebusinesses.Co-workingallowsfordynamicinteractionbetweentheacceleratorprogramparticipantcompaniesandprovidesamoresocialexperience,optimizingopportunitiesforcollectivesupportandinputfrommentorsandmanagement.Participantswillbeofferedentrylevelbusinessdevelopmentsupportandmentoringthatisessentialfortakingtechnologystartupsfromideastoformingminimumviableproductsorservices.AllstartupsacceptedintotheCorporateAcceleratorprogramwillbeeligibletoapplyforfunding.SelectedcompanieswillbeseedfundedbytheCorporateSeedFundforupto$50,000inexchangeforupto5%equity.Upto40%ofcommittedfundsmaybepaidtostartupsupfronttodeferinitialsetupcosts.Thebalancewillbemadeavailableintranches,basedonachievementofpre-determinedmilestonesandonprogressagainstagreedtargets.TheprimaryintentionsoftheCorporateAcceleratorprogramwillbetoprovideadynamicandsupportiveenvironmentthatassistsparticipantstartupsto:• ensuretheirgovernancedocumentsareinorder(shareholderagreements,constitution,employment

agreement,IPassignment)• conductcustomerdiscoveryandvalidation• obtainbusinessmodelvalidation• producedemo/minimumviableproducts• engagewithearlybetacustomers• createapackageofallduediligencedocsreadyforangelorotherfollowoninvestment• developapolishedpitchdeckandpitchvideo.SupportprovidedbytheCorporateAcceleratorwillgenerallyinclude:• co-workingspaceinapremiumlocation• introductiontothefundamentalsoftheLeanStartupmodel,thebusinessmodelcanvass,andtheconceptof

pivoting• entry-levelbusinessdevelopmentsupportusingthebusinessmodelcanvassframeworkanduseofvarious

supportstoolssuchasforexampleNSW’ssmallbusinesstoolkitandthefederalgovernment’sbusinessplanningtools

• mentorshipprovidedbyitsvolunteermentornetwork• skillbuildinglectures• skillbuildingworkshops• facilitatingaccesstonetworkingchannel,• provisionofkeypro-formadocumentsneededtogetthecompanyinvestment-ready• accesstoavailablesupportandnetworksfromtheCorporate&Artesian.9.3.9 ProgramStructure&DeliveryTheCorporateAcceleratorprogramwillbestructuredtocaterforstartupsandscaleupswithparticipationfrombothexternalandinternalteams.

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Theprogramwillbeflexibletocaterforallcategoriesofventuresinaninclusiveenvironment.Thiswillensurethatthereisastrongcultureofsharingandcollaborationbetweenventures,thatareatdifferentstagesofgrowth,whileprovidingappropriatelevelsofmentorshipdependingonthestageandsophisticationoftheventures.Pairingthemostsuitablementorstomatchthespecificrequirementsofthestartupsandscaleupswillbeacriticalpartoftheprogramexecution.KPIsetting,monitoringandmeasurement,alongwithregular‘mock’boardmeetings,willensurethestartupsandscaleupsarereceivingtheoptimalsupportfromtheprogramanddeterminewhetherthestartupsandscaleupsaremeetingtheprogramsexpectedhighstandardsofperformance.Gatesattheendofthe12-weekstageandthe24-weekstagewillprovidemoreformalKPIreportstotheparticipatingteamsandwilldeterminewhetherfundingtranchesarereceivedandwhetherthestartups/scaleupswillcontinuetobeprogramparticipants.ThegateassessmentswillalsodetermineopportunitiestopartnerwiththeCorporate’sdivisionsand/orexternalpartnerships.

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 Week 9 Week 10 Week 11 Week 12

PROGRAM OVERVIEW & GOALS

MARKETING FOR DISRUPTIVE STARTUPS

DIFFERENTIATIONMARKET FIT: DEFINING THE OPPORTUNITY

PRODUCT DEVELOPMENT ROAD MAP

COMPLETION SESSION:WHAT NEXT?

QANTAS GROUP PARTNERING OPPORTUNIIES

LEGAL PROTECTION AND PROTOCOL

MOCK BOARD & KPI REVIEW

DEVELOPMENT SPRINTS

PRACTICE PRESENTATION

MOCK BOARD & KPI REVIEW

SALES: PROVING THE CONCEPT

STAGE 1GATE

MOCK BOARD & KPI REVIEW

ACCELERATOR PROGRAM - STAGE 1

Stage 1 Program

Week 13 Week 14 Week 15 Week 16 Week 17 Week 18 Week 19 Week 20 Week 21 Week 22 Week 23 Week 24

PROGRAM OVERVIEW & GOALS

TEAM RECRUITMENT

LEADERSHIP SKILLS

DEVELOPING FINANCIAL MODELS & DASHBOARD

RUNWAY PLANNING AND FUNDING STRATEGY

COMPLETION SESSION:WHAT NEXT?

QANTAS GROUP PARTNERING OPPORTUNITY EXTENSIONS

CAPITAL RAISING ALTERNATIVES

MOCK BOARD & KPI REVIEW

REFINING YOUR INVESTOR PRESENTATION DECK

PRACTICE PRESENTATION

MOCK BOARD & KPI REVIEW

BOARDS & ADVISORY BOARDS

STAGE 2GATE & ROADSHOWS

MOCK BOARD & KPI REVIEW

ACCELERATOR PROGRAM - STAGE 2

Stage 2 Program

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9.4 Support & Strategy for MLA Corporate Clients MLACorporateclientscanbeprovidedwitharangeofalternativestoignitetheirinnovationstrategy:Thesealternativesmayinclude:• EmployingMDC/Artesianforatacticaloverviewoftheirinnovationstrategy• Creatingadomainspecifichackathon• InvestingintheMDCSidecarFund• Participationinathird-partycorporateaccelerator• Establishingaproprietaryacceleratorprogram• EstablishingaproprietaryVCFundMDCCorporateClientsInnovationParticipationMatrix

9.5 Support & Strategy for Portfolio Companies SupportforMDCportfoliocompanieswillinclude:• ParticipationintheMDCacceleratorand/orCorporatePartnerprograms• Access/MembershiptotheAgriFoodInnovationHub• OngoingfundingfromtheAgriFoodSidecarFund• AccesstoArtesianVCresourcesandnetworks

$

$$$$

MaximumCommitment

MinimalCommitment

InvestmentinMDCSidecar

Fund

EstablishProprietaryVC

Fund

InnovationStrategyOverview

EmployOutsourcedAccelerator

EstablishProprietaryAccelerator

DomainSpecificHackathon

InvestmentinexternalVC

Fund

One-offinvestmentsin

startups

68

9.6 Pre-Accelerator Support for MLA Members & Entrepreneurs SupportforMLAMembers&Entrepreneurswillinclude:• ParticipationintheMDCpre-acceleratorand/orCorporatePartnerprograms• Access/MembershiptotheAgriFoodInnovationHub,includingco-workingspace,networkingevents,

hackathonsandmeet-ups• Onlineeducationandresources

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10. ECOSYSTEMCONNECTIVITY&COLLABORATION

ThissectionlooksatstrategiestoincreaseAgriFoodecosystemconnectivity&collaboration

10.1 Establishing an AgriFood Ecosystem Hub • Atechnologyhubcanprovideaphysicalspace,offeringevents,mentoring,networkingandcollaboration

opportunitiesaswellasworkspacesforindividuals,startupsandagileSMEs• ThehubwouldbeestablishedasafocalpointfortheAgriFoodinnovationecosystem• Itwouldbe:

o communalo self-organizing&adaptiveo enableinnovatorso bringtogetherarangeoftechnical,professional,industryanddesignexperienceo alocalfocalpointlinkedtoglobalhubsandinnovationlabs

• Attractgovernment,corporateandindustrysponsorshipsandlifttheprofileoftheindustry

``

AgriFood EcosystemHub

TECHNOLOGY

PUSH

TECHNOLOGY

PULL

HUBMEMBERSEntrepreneurs

Startups

University Research

HUBMEMBERSFarmers

Corporates

IndustryParticipantsGovernment

BRIDGE

INNOVATIONHUBDedicatedmanagementteam

Meet-upGroups

Hackathons

NetworkingEvents

Co-workingAccelerators

Incubators

FACILITATION

INVESTORS

VC

Corporates

Angels

HNWIInstitutions

Create&thenlook

formarketfit

Lookingtosolve

specific problem

$$

INTERNATIONALAGRIFOOD

INNOVATIONHUBS

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10.2 Examples of Successful Innovation Hubs InnovationHub KeyFeaturesSTONE&CHALK • Stone&Chalk(S&C),basedinSydney,isthelargestFinTechhubinAsiaand

isalreadythecentreofgravityforFinTechinAustralia.Asanot-for-profitorganisation,Stone&Chalktakesnoequityinthestartupsitsupportsandisthereforeatrulyindependentandtrustedpartnerforallstakeholders.Groundedonagivefirstphilosophy,Stone&Chalkhasattractedcorporatemembershipfrom24largeAustralianandglobalcorporatesandgovernment

• S&Cnowhousesover300entrepreneursworkinginover60FinTechstartupsthathavealreadycollectivelyraisedoverAU$101millioninfundingandemployedanadditional50people.

• TheS&Cpropositionisfocusedonhelpingstartupstocommercialiseandtoscalethroughcollaborationwithlargeorganisationsaroundtheworld.

• CorporatepartnersincludeASX,EY,Optus,AmericanExpress,KPMG,ANZ,IBM,IAG,SuncorpBank,Gemworth,AMP,MacquarieBank,Westpac,Oracle,ThomsonReuters,HSBC

• Aswellasprovidingco-workingspace,S&Corganizesfrequentindustry,investor,educationalandnetworkingevents.ThespaceisoneofthefirststopoffpointsforvisitingFinTechdelegationsfrominternationalmarksandisoftenusedforgovernmentpolicyannouncementsrelatedtotheindustry.

FARM491 • Farm491isaspaceforinnovatorstogrowtheirbusinessesbyapplyingtechnologytogrowingenvironments.Farm491provideshigh-specfacilitiescreatedtofosterentrepreneurship,ideasgeneration,andcollaboration–itincludes491hectaresoffarmlandforresearchandtesting.

• Farm491isofferingstartupspaceon-siteattheRoyalAgriculturalUniversity’smaincampusinCirencester(UK)andatthefarm-basedworkshopsatHarnhill:affordableandflexibleworkingenvironmentswhereAgTechinnovatorscanrunandgrowtheirbusinesses.

• Farm491membershaveaccesstothebusinesssupportandaknowledgenetworkthatincludesfarmers,investorsandexpertadvisers,aswellasopenaccesstofarmingdata.Memberscantest,refineandgrowtheirpropositions.

• ThispioneeringnewinitiativewillcreateavibrantincubationenvironmentwiththepotentialtoinfluenceandbenefitthewiderAgTechandfoodproductionindustries.

• Weplantoassistover55newAgTechcompaniesandhelpthemcreateover200newjobsoverthenext5years.

RISE • BarclaysisaglobalphysicalandvirtualFinTechopeninnovationhub,comprising,co-workingspaces,hackathonsandaccelerators.Theproductinnovationsandindustrydevelopmentsthatusedtocomefromlargecorporationsandinstitutionsarenowbeingcreatedbyentrepreneurialindividualsaroundtheworldwhoareworkingwithincreasedspeedtodisruptthebusinessmodelsofthepast.Toworkwiththeseentrepreneursinamutuallybeneficialway,BarclaysestablishedRise.

• Throughitsglobalnetworkofconnectedsitesinsevenoftheworld’stopFinTechecosystems(London,Manchester,NewYork,Vilnius,CapeTown,TelAviv,Mumbai)RisedeliversnumerousprogrammesthatfacilitaterapidengagementbetweenBarclaysandtheRisecommunitytosolvesomeofthebiggestchallengesfacingfinancialservices.Theseprogrammesfosterlong-termmutuallybeneficialrelationships,designedtoscaleearlyprototypesandnewbusinessmodelsintoliveproductsandservices.Bycollaborating

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withBarclays,ourmembersreceiveadviceandmentorshipfromsomeoftheworld’sleadingexpertsinfinancialservices,aswellashavingaccesstoanewglobalcustomer.

• Withaglobalnetworkoftalent,world-classinnovationprogrammesandworkspaces,Riseisacuratedcommunitywherethebestandbrightestcandevelop,collaborate,andscaletogether.

SOSA • TelAviv-basedstartuphubSOSA(SouthofSalameStreet).SOSA,alsoknownastheGlobalNetworkofTechInnovation,willbeleadingtheefforttotransformIsraelintoa“ConstrucTechHub”inpartnershipwiththeEconomyMinistry,theConstructionMinistryandtheIsraelBuildersAssociation.

• MuchliketheeffortstheIsraeligovernmenttooktosparktheauto-techindustrywithgrantsandpositiveregulatoryenvironment,thepartnershipwillhelptolaythegroundworkforthefundamentaldisruptionofthemultitrillion-dollarglobalconstructionandreal-estatedevelopmentindustry

• MeldingtogetherSOSA’sglobalnetworkofcorporationsandstart-upswiththeabilityofgovernmentbodiestoexpeditetheuseofnewtechnologies,thepartnersaimtobringglobalcorporationsaccesstoinnovationthatwillredefinetheconstructionandreal-estatesectors

• SOSAbringstogetherstartups,innovators,corporatepartnersandgovernmentbodiesunderoneroof,teammembershavebegunidentifyingpromisingtechnologiesfromtheconstructionsectorandfromotherverticals(chainsofsupplyandservices)thatcouldbepivotedintothebuildingindustry

• TheConstructionInnovationZonewillhaveaphysicalhomeatSOSA,withadedicatedmanagerandteam,includingastructuredyearlyprogramwithmentoringsessionsforstart-ups.Thegoalistoattractalltherelevantplayerstothisunder-exploredvertical,suchasthosepeopleinvolvedinplanning,construction,regulationandinspection,aswellasacademics,entrepreneursfromotherverticalsandinvestorswhohaveexperienceinsupportingstart-ups.

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11. CO-INVESTMENTSTRATEGIESThissectionlooksatarangeofstrategiesforincreasingco-investmentalongsideMDCinearlystageventuresandthevehiclesemployedtoexecutetheseinvestments.

11.1 Range of Instruments for Startup Investments 11.1.1 EquityIssuingequityinacompanyistheroutemostentrepreneurspursue,especiallyforgrowthcompanieswherecashflowisdifficulttopredict,hencemakingittoughtoforecastrepayingdebts.Equityistypicallysecuredfromangelinvestorsorventurecapitalfirms.AtypicalSeriesA(firstinstitutionalround)investorislookingfor25%to35%ofthecompany,inexchangeforitsinvestment.So,forexample,ifastartup’svaluationis$4Mpre-money,aninvestorwouldprovide$2Mfora33%stake,asanexample.Mostprofessionalinvestorswillbeseekingequityintheformofpreferredstock,notcommonstock,wheretheygeta6%to8%interestandaliquidationpreferenceofatleastonetimestheirmoneybackbeforethecommonshareholdersbegintoparticipateinanysaleproceedsforthebusiness.Thereareseveraltypesofpreferredequity,including:• ParticipatingPreferred-investors“doubledip”ontheirinterestandliquidationpreferenceandgettheir

equityupsideproratawithcommon,however,ifthisstructureisusedthereisfrequentlyalimitoftwotofourtimestheliquidationpreferencebeforetheparticipatingfeaturegoesaway.

• ConvertiblePreferred-investorswillgettheir6%to8%interestrateplusmoneybackortheycanconvertandgettheequityupsideoftheirstockproratawithcommon.

11.1.2 DebtTherearearangeofdebtinstrumentsthatcanbeusedforgrowthstagestartups.Theseinclude:• SecuredDebt-isdebtthattakespriorityoverotherunsecuredorotherwisemore"junior"debtowedbythe

issuer.Seniordebthasgreaterseniorityintheissuer'scapitalstructurethansubordinateddebt.• SubordinatedDebt-unsecuredloansorbondsinwhichthelenderagreesthatseniororsecuredcreditorswill

befullypaidbeforeanyinterestorprincipalispaid• ParticipatingLoans-loanswhoseremunerationiscontingentupontheresultsofthedebtorfirm,ratherthan

beingfixed.Theremunerationcanbelinkedtothefirm’ssalesorturnover,profitsorshareprice.Participatingloansdonotsharelosses.

• SilentParticipation-closerinlegalformtoanequityinvestmentthansubordinatedorparticipatingloans.Inthisformoffinancingoneormorepersonstakeanequitystakeinacompany,butwithoutassuminganyliabilitytothecompany’screditors.Thesilentpartnerisa“limitedpartner”,sincetheirliabilityisusuallylimitedtotheamountinvestedinthecompany.Usuallythesilentpartnerparticipatesinthelossesuptotheirinvestedcapitalamount.

• ConvertibleDebt&Warrants-adebtinstrumentwithamaturitydateandstatedrepaymentterms,whichincludesanoptiontoconvertthedebtintoanotherfinancialinstrument,suchasotherformsofdebt,derivatives,orstock.Detachablewarrants,whichgivetheholdertherighttopurchaseaaspecificnumberofsharesatapredeterminedprice,differfromconvertibledebtinthattheycanbetradedseparatelyfromthesecuritiestowhichtheyarerelated.

• MezzanineFinance-generallyintendedasatechniquethatcombinestwoormoreoftheaboveinvestmentinstruments(tranches)withinafacilitythatissoldasasingleentitytoainvestors.Asimplemezzaninefacilitycontains(1)oneormorecategoriesofsubordinateddebt(2)atrancheinwhichtheinvestorreceivesa

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“success”feei.e.ashareofthefirm’searningsorprofitsand/or(3)anequityrelatedtranche(“equitykicker”)inwhichaninvestorreceivesapaymentwhosevalueiscontingentuponariseinthevalueofthecompany,usuallyreflectedinthecompany’sshareprice.

• VentureDebt-atypeofdebtfinancingprovidedtofundworkingcapitalorcapitalexpenses,suchaspurchasingequipment.Venturedebtcancomplementventurecapitalandprovidevaluetofastgrowingcompaniesandtheirinvestors.Unliketraditionalbanklending,venturedebtisavailabletostartupsandgrowthcompaniesthatdonothavepositivecashflowsorsignificantassetstouseascollateral.Venturedebtproviderscombinetheirloanswithwarrants,orrightstopurchaseequity,tocompensateforthehigherriskofdefault.Asacomplementtoequityfinancing,venturedebtprovidesgrowthcapitaltoextendthecashrunwayofastartupcompanytoachievethenextmilestonewhileminimizingequitydilutionforbothemployeesandinvestors.

11.1.3 ConvertibleNotesConvertiblenotesareloansthatconvertintoequityuponspecifiedfutureevents.Someseedinvestorsandmanystartupspreferconvertiblenotestoanequityround,asaconvertiblenoterounddoesnotrequirenegotiationofpreferredstockterms,multipledocuments,andthenecessityofacharteramendment.Thismayleadtofasterclosingsandreducedtransactioncosts.Themostcommondebt-to-equityconversioneventisafutureroundofequityfinancingwithaminimumthresholdofatleast$500,000.Eachconvertiblenoteconvertstothesameseriesofstockastartupissuesatthesubsequentequityfinancing(say,aSeriesAfundinground).Tocompensatetheconvertiblenoteinvestorfortheirearlierinvestmentandthereforeincreasedriskrelativetolaterstageinvestors,convertiblenotesoffera“Discount”tothesubsequentSeriesApricepersharepaidbyinvestors.ThetypicalDiscountis20%.Forexample,ifSeriesAinvestorspurchaseSeriesAsharesat$1.00pershare,theconvertiblenoteholderswouldconverttheirdebtintoSeriesAsharesat$0.80pershare.A“PriceCap”isthemaximumpre-moneyvaluationuponwhichthenotewillconvertintoequity.Thus,ifaSeriesApre-moneyvaluationis$12.5millionandthenote’sPriceCapis$5million,theconvertiblenoteconvertsintoequityatthe$5millionvaluation.MostconvertiblenotescontainbothaPriceCapandaDiscount,andtheinvestorapplieseitherthePriceCaportheDiscountwhenconvertingtheirdebtintoSeriesAshares.TheinvestorusesthecalculationthatresultsinagreaternumberofSeriesAshares.11.1.4 ConvertibleEquity(SAFEs)Convertibleequityisessentiallyaconvertiblenotewithoutthedebtfeatures,i.e.nointerestandnomaturitydate.But,theeconomictermsofconversion(PriceCapandDiscount)typicallystillapply.Convertibleequityalleviatesaprimaryconcernofconvertiblenotes-repaymentifafutureroundoffinancingorasaleofthestartupdoesnotoccurpriortothematuritydate.Additionally,acoupleoffamousincubators(YCombinator-SAFEand500Startups-KISS)havestartedtouseconvertibleequityasapartialwaytofinancetheirportfoliocompanies.TheYCombinator(YC)SAFEinstrumentisconvertibleequity,andYChasprovided4differentdocumentsets:Rangeofinstrumentsforstartupinvestments(1) PriceCapandDiscount:ThisversionofSAFEisconvertibleequitywithaPriceCapandDiscount.(2) Discount:ThisversionofSAFEisconvertibleequitywithonlyaDiscount.(Notethatthisversionhasno

thresholdamountthatthestartupmustraisetotriggertheconversion.)(3) PriceCap:ThisversionofSAFEisconvertibleequitywithonlyaPriceCap.(Notethatthisversionhasno

thresholdamountthatthestartupmustraisetotriggertheconversion.)

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(4) MostFavoredNation(MFN)Provision:ThisversionofSAFEisaconvertibleequitywithnoPriceCaporDiscount.ButifthestartupsubsequentlyissuesSAFEwithprovisionsthataremoreadvantageousrelativetocurrentSAFEinvestors,thisversionofSAFEcanbeamendedtoreflectthetermsofsuchsubsequentissuedSAFEs.(NotethatthisversiondoesnotautomaticallyconvertintosharesunlesstheamountofSeriesAraisedisatleast$250,000).

11.1.5 Royalty/LicenseAgreementsAninvestormaychoosetoreceiveashareofroyalties/licensefeesratherthanholdingequityordebtsecurities.Typically,thiswillbeapercentageofgrossprofitfromsalesoftheproductorservicesorafixeddollaramountperunitsold.Grossprofitisthecompany's‘factorygate'priceperunitminusthecostofproductionandselling,multipliedbythenumberofunitssoldperyear.Royaltyagreementsgenerallydifferfromventuredebtinthataroyaltyagreementmayhavenodefinedend.Venturedebt/loanswillhaveaspecificvalue,aknownrepaymentschedule,andafinitelife.11.1.6 VCFundsVenturecapitalfundsareinvestmentfundsthatmanagethemoneyofinvestorswhoseekprivateequitystakesinstartupandsmalltomediumsizedenterpriseswithhighgrowthpotential.Theseinvestmentsaregenerallycharacterizedashighrisk,highreturnopportunities.Inthepast,venturecapitalinvestmentswereonlyaccessibletoprofessionalventurecapitalists,althoughnowaccreditedinvestorshaveagreaterabilitytotakepartinventurecapitalinvestments.Venturecapitalinvestmentsareconsideredeitherseedcapital,early-stagecapitalorexpansion-stagefinancingdependingonthematurityofthebusinessatthetimeoftheinvestment.However,regardlessoftheinvestmentstage,allventurecapitalfundsoperateinmuchthesameway.Likeallfunds,venturecapitalfundsmustraisemoneypriortomakinganyinvestments.Aninvestmentmemorandum(IM)isgiventopotentialinvestorsofthefundwhothencommitmoneytothatfund.TheinvestorsareLimitedPartners(LPs)inthefundandthemanageristheGeneralPartner(GP).Onceclosed,theventurecapitalfundseeksprivateequityinvestmentsthathavethepotentialofgeneratingpositivereturnsforitsinvestors.Thisnormallymeansthefund'smanagerormanagersreviewhundredsofventuresinsearchthebest,potentiallyhigh-growthopportunities.ThefundmanagermakesinvestmentdecisionsbasedontheIMandtheexpectationsofthefund'sinvestors.Afteraninvestmentismade,thefundchargesanannualmanagementfeeofaround2%.Investorsofaventurecapitalfundmakereturnswhenaportfoliocompanyexits,eitherinanIPOoramergerandacquisition.Ifaprofitismadeofftheexit,thefundalsokeepsapercentageoftheprofitsinadditiontotheannualmanagementfee.Thisisknownastheperformancefeeorcarryandisgenerally20%oftheprofitsaftertheLPshavebeenmadewholeontheiroriginalcommitment,anyfundcostsandtheirmanagementfees.

11.2 Increasing Corporate Co-Investment Artesiancandevelopinnovationplans,proprietaryacceleratorprogramsandinvestmentstrategiesforMDC’scorporatepartners.ThissectionoutlinesArtesian’sapproachtocommunicatingtheopportunitiesandrisksforacorporatetoparticipateinopeninnovation,distributedR&Dandstartupinvestment.

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Collaborationsbetweenbigcompaniesandstartupsarethebusinessworld’soddcouples-twoentities,whichatanoperationallevelhavelittleincommon,tryingtoworktogether.Successfulcompaniesdevelopinnovationmodelsandsystemsthataresuitedtotheircircumstancesandreflecttheircorporatestrategies.Successfulcompaniesalsodefineamandatefortheirinnovationprograms,ensuringthattheirorganizationsknowwhatthegoals,focus,andparametersoftheseeffortsare.Themandateneednotbelongorcomplicated,butitshouldcoverthefollowingpoints:• TheCompany’sInnovationObjectives.Thesemayfocusonstrengtheningthecorebusiness,expandinginto

adjacentareas,orexploringandpreparingforfutureentryintocurrentlyunrelatedbusinessareas.Theroleofdeeptech—comparedwiththeapplicationofdigitaltechnologiestoexistingproducts,services,processes,andfunctions—shouldbehighlighted.

• R&DFocus.ThetopicsonwhichthecompanywantstofocusitsR&Deffortsshouldbedefined.• PreferredPartnerProfile.Anapproximateprofileofthekindofstartupsthecompanywantstopartnerwith

shouldinclude,forexample,whethertheyareinearly-stage,intermediate-stage,orlate-stagedevelopment.• Resources.Adescriptionoftherequiredresourcesshouldspecify,forexample,thebudget,people,and

facilitiesthatwillbeneededtomeetthemandate.AHolisticStrategicApproachtoCorporateInnovation

11.2.1 StrategicBenefitsofCorporateCo-InvestmentItisimportanttopromotethebroadrangeofbenefitsthatcorporateco-investmentinstartupscanbringtoanorganization.Theseinclude:• DistributedR&D/DealSourcing

» anearlystageventuringstrategycanfacilitate‘eyesandears’forthecorporate,identifyingandestablishingrelationshipswithstartups,identifyingcommercialpartnerships,dealflowforlaterstageinvestmentand/orstrategicM&Aopportunities

» allowsrecognitionof,andtimelyresponseto,therisksofdisruptiontoacorporate’scorebusinessandtoexistinganddevelopingrevenuestreams

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• NewServicesfortheCorporate’sCustomers

» leveragetheinformation/datafromtheinnovationecosystemtoinstructandadvisethecorporate’sowncustomersregardinginnovativeanddisruptivetechnology,newbusinessefficiencies,threatsandopportunities,partnershipsandM&Aopportunities

» extendthecorporate’sleadasathoughtleaderinbusinessandtechnologyinnovationandcreatenewofferingsandopportunitiestoincreaseshareofmarket.

• InformationExchange

» byengagingbroadlywiththeinnovationecosystem,acorporatecanprovidetheirboard,managementandstrategyteams,divisionheads,staffand/ororcustomerswiththeopportunitytogainstrategicinsightsintoinnovativeanddisruptivetechnology(hardwareandsoftware)andbusinessmodelsshapingtheirindustry

» educateandup-skillmanagementandstaff.» helpattract,retainanddevelopbestindustrytalent-includingopportunitiesforgraduaterecruitment

andacqui-hires.» transferofknowledgefromleanstartupexecutiontoimproveefficiencyandinnovationwithinthe

corporate• InfluenceSupply(Pull-Model)

» gainaccesstouniversities,acceleratorsandincubatorstofacilitatediscussionsonsectors,problems-to-be-solvedorspecifictechnologythatisofmostinterestinpartnershipand/orpotentialM&Aactivity

» bypromotingaclosetiewithaccelerators,incubatorsandstartupentrepreneurs,thecorporatecancreatedealflowinspecificareasofinterest.

» throughthisdialogue,thecorporatewillinfluencea“pull”ratherthan“push”basedfunnelthatwillpotentiallyincreasetheefficacyandrelevanceofthepipeline

• DirectProblemSolving

» canfacilitate,viaaccelerators,incubatorsanduniversities,openinnovationhackathonsandcompetitionsthatcantacklespecificproblemsandchallengesspecifictothecorporate

» throughthisprocess,thecorporatewillbeabletoidentifytargetedsolutionstospecifictechnologyandotherproblemsfacedwithinitsbusiness

• CustomerAcquisition&BusinessDevelopment

» thecorporatewillhavetheopportunitytomarketitsproductsandservicestoalargepipelineofscalablehighgrowthbusinesses,thefounders,employeesandcustomersofthosebusinesses

• Branding&Marketing

» reinforcethecorporatesbrandpositionofinnovationandcommitmenttotechnology» linkthecorporate’sbrandtoanationalnetworkofinnovative,cuttingedgebusinesses,foundersand

researchinstitutes» securethecorporatespositionasindustryleaderandgo-topartnerforthestartupsector

• CorporateSocialResponsibility

» Thecorporatecandemonstrateitscommitmenttobuildinganationalstartupecosystem,promotingentrepreneurship,innovationandhelpingcreatejobsandreinvigorateregionalcentres.

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• InnovationCulture

» theassociatedbenefitsofworkingdirectlywithstart-ups,incubators,acceleratorsandotherinvestorswillassistinbuildinganinnovationculturewithinthecorporate

• CollaborationwithotherVerticalCorporatePartners

» therewillbeopportunitiesforthecorporatetoworkincollaborationwithothercorporatesinstartupsthatspanseveralverticalsand/ortoformpartnershipstoacceleratethegrowthofportfoliocompanies

11.2.2 ModelsforCorporateCo-InvestmentModelsforCorporateCo-investment:• ParticipateinThirdPartyVentureFund(s)

» Thecorporateinvestsinafundrunbyanexternalmanager» ArtesianSproutXAgTechVentureFund,FinistereVentures(US),AcreVenturePartners(US)

Benefits:ü Leveragethemanagerscontacts,expertise,dealflowü Minimizeheadlineriskandsignalingriskü Limitedresourcerequirementfromcorporateü Receivefinancialreturn(performanceoffund)&strategicreturn(information,data,analysisfrom

manager)ü Easyfirststepintoearlystageinnovationecosystem

• PartnerwithThirdPartyAccelerator

» Thecorporatepartnerswithathird-partyacceleratortorunadhocorregularacceleratorprograms» Examples:SproutX(NationalFarmersFederation,MDC),Slingshot(Simplot,LionNathan)

Benefits:ü Relativelylowerheadlineriskthanaproprietaryacceleratorü Facilitatespull-modelpipelinetoacceleratestartupsthatsolvekeycorporateproblemsü Someexposuretoearlystageecosystemü Limitedhalo-effectandcorporateinnovationreputationü Rewardandincentivizesomekeystaffü Createdealflow

• EstablishProprietaryCorporateAccelerator

» Thecorporateestablishesitsownproprietarycorporateaccelerator» Examples:Muru-D(Telstra),BoschIndiaAccelerator-Discover,NurtureandAccelerate(DNA)

Benefits:ü Buildownintellectualproperty

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ü Optimizepull-modelpipelinetoacceleratestartupsthatsolvekeycorporateproblemsü Deeplyimmersedinearlystageecosystemü Importagileinnovationcultureü Maximizehalo-effectandcorporateinnovationreputationü Rewardandincentivizekeystaffü Createproprietarydealflow

• EstablishProprietaryEarlyStageVentureCapitalFund

» ThecorporateestablishesitsownearlystageVentureCapitalFund» Examples:TysonNewVentures(TysonFoodsInc.$150MVCfund),RabobankFood&AgriInnovation

FundBenefits:ü Relativelylowerheadlineriskthanaproprietaryacceleratorü Facilitatespull-modelpipelinetoacceleratestartupsthatsolvekeycorporateproblemsü Someexposuretoearlystageecosystemü Limitedhalo-effectandcorporateinnovationreputationü Rewardandincentivizesomekeystaffü Createdealflow

• InvestDirectly/OpportunisticallyinindividualStartups

» Thecorporateselectsstartupsfromarangeofacceleratorsandothersources» Thecorporatetakesdirectequityineachcompany

Benefits:ü Relativelylowerheadlineriskthanaproprietaryacceleratorü Facilitatespull-modelpipelinetoacceleratestartupsthatsolvekeycorporateproblemsü Someexposuretoearlystageecosystemü Limitedhalo-effectandcorporateinnovationreputationü Rewardandincentivizesomekeystaffü Createdealflow

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11.3 Artesian AgriFood Sidecar Fund 11.3.1 CreatingaSustainableAgriFoodInnovationEcosystem

11.3.2 InvestmentStrategy/ProcessTheArtesianAgriFoodSidecarFundwillinvestin~100seedtoangelstageAgTech,FoodTech&FoodInnovationstartupsovera5-yearperiod.ThefundwillbemanagedbyArtesianVenturePartnerstocreateanarm’slengthvehicleforMDC.Thefundwilltakeequitystakesineachofthestartups.TheFundwillbea10-yeardurationfund,raisingcommitmentsof~$50-60Mandinvesting~$10-12Mperyear,overits5-yearinvestmentperiod.Halfofthecapital($25-30M)willberaisedfrominstitutionalinvestors,HNWIandcorporates.TheotherhalfwillbecommittedmatchingcapitalfromMDC.Artesianwillberesponsiblefor:

• Structuring/buildingthefund• Preparinginformationmemorandum,investmentdocuments• Raising$25-30Mfrominvestors• Liaisingwithaccelerators,incubators,universities,angelgroupstogeneratedealflow• Identifyingdealsthatcomplywithapre-agreedMDCmandate• Completingduediligence,termsheets• Monitoringdeals,investorrelations/reporting,legal,regulatoryandcompliancemanagement• Completingfollow-onrounds• Identifyingandcompletingtradesaleexits,IPOs• MDCwouldhaveaseatontheinvestmentcommitteeorobserverrightsasrequired• TheinvestmentmandatemayincludeinternationaldealsatMDC’sdirection

THE ACTIVITY OF THE INVESTMENT VEHICLE INCREASES ACTIVITY

WITHIN DEDICATED AND AGNOSTIC

ACCELERATORS

STARTUPS ARE SOURCED FROM DIVERSE RANGE OF SOURCES, INCLUDING

DEDICATED INDUSTRY ACCELERATORS, AGNOSTIC TECH ACCELERATORS, STARTUPS EXTERNAL TO ACCELERATOR ECOSYSTEM &

FROM INTERNATIONAL SOURCES

1

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5BUILDNETWORKING EFFECT OF STARTUPS, INVESTORS, MENTORS AND INDUSTRY PARTNERS

6TARGET LIQUIDITY EVENTS - PRIMARILY TRADE SALE EXITS BUT ALSO IPO

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I+E CONNECT PLATFORM & AGRIFOOD INNOVATION HUB

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11.4 Accessing Co-Investment via Equity Crowdfunding Platforms TheemergingEquityCrowdfundingindustrymaybeanothersourceofco-investment.ArtesianistheownerofVentureCrowd,Australia’sleadingequitycrowdfundingplatform.

TheAgriFoodSidecarFund,andMDCdirectlyinlaterstagedeals,couldpartnerwithVentureCrowdtocreateanotherdistributionchannelforco-investment.

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12. ARTESIANSERVICESThissectionoutlineskeyservicesthatareperformedbyAVPincludingfundsmanagement,duediligenceanddata,research&advisory

12.1 Due Diligence Artesianhasdevelopedascalableduediligenceprocessthatmateriallyreducesthetimeandresourcesrequired.ThestartupsacceptedintotheAgriFoodSidecarFundcanbefollowedholisticallyfromseed,angelandontoSeriesAinvestmentrounds.WhereastraditionalduediligenceprocessesbeginasthecompanyengagestoraiseaSeriesAround,Artesian’sscalableprocesscontinuesthroughoutthelifeofthestartup.ThesidecarFundwillprovideMDCwithpre-screenedandde-riskedinvestmentopportunitiesthatwillnotrequirerelativelyexpensiveexternalduediligencetobeperformed.

ArtesianwillprovidebespokeduediligenceforMDCasrequired,onafeeforservicebasis,leveragingtheindustryrelativevalueanalysisandinformationflowingfromtheAgriFoodSidecarFund.

ARTESIAN’S APPROACH TO DUE DILIGENCE

Star tups

500-1,000 200 50

Seed Angel Trade Sale, IPO

10,000+ 50have material liquidity event

9,000startups are uninvestible

10,000startups are formed over 5 year period in Australia

1,000achieve seed funding

300achieve angel funding

3. Pick winners2. Make lots of little bets1. Avoid

α β Portfolio approach with pro-rata follow on rights

Pick winners from pre-screened, de-risked pipeline

Artesian partners with Australia’s best accelerators, incubators, universities & angel groups to avoid un-investible startups

EXITS

Later Stage

Artesian begins due diligence when the startup applies to the partner accelerator and continues throughout the life of the startup

Traditional VCs begin their due diligence once the startup has traction, revenue, customers. It is backward looking.

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12.2 Fund Administration, Deal Coordination & Funds Management 12.2.1 Artesian’sBackOfficeCapabilityArtesianVenturePartners(AVP)employsFrontInvest,aprivateequitysoftwaredevelopedbyeFronttomanageitsdailyoperations.FrontInvestprovidesanend-to-endsolutionviaaWeb-basedplatformwitharangeoffunctionalitiestocovermultipleinvestmentsandfundsinanintegratedmanner.

12.2.2 DealFlowManagementAVPFrontOfficewillsendinformationforeachinvestmentdealtoAVPOperationsupontheconfirmationofinvestmentbytheInvestmentCommittee.AVPOperationswillcreateindividualrecordsforeachinvestmentonFrontInvesttotrackandmaintaininformationoneachdeal.Relevantdocumentssuchasshareholdersdeed,sharecertificate,capitaltableandtermsofinvestmentwillbeuploadedinFrontInvestforeachinvestmentdeal.FrontInvestfurtherclassifieseachinvestmentdealinthedeal-flowpipelineasitprogressesthroughtheduediligenceprocess(basedoncriteriasetupbyAVP).Additionally,FrontInvestprovidescustomisablereportsbysectors,geography,andcurrencyforthedealsinthepipeline.ThisallowsAVPOperationstostreamlinethedealflowmanagementprocessthroughacompleteviewofdealsovertime.Achecklistismaintainedtoensureastandardizedduediligenceprocessisfollowedacrosstheentireinvestmentteam.Follow-upreminderscanbeset-uptotrackanyoutstandingdocumentrequiredforaparticulardealtoallowAVPOperationstoefficientlymanagethestagesoftheinvestmentreviewovertime.12.2.3 PortfolioManagementAVPOperationsreceivesquarterlyandyearlyupdatesfrominvesteecompaniespertainingtobusinessdevelopmentanddistribution,markettractionandgrowth,R&D,marketing,capitalraisingandchangesinkeypersonnel.TheseupdatesarequalitativeinnatureandaredocumentedinMicrosoftWord.AVPOperationsthenuploadtheentireupdatedocumenttoFrontInvestforeachportfoliocompanies.TheseupdatedocumentsonFrontInvestwillalsobepostedtotheInvestorPortalforinvestors’reference.

FRONTINVEST CAPABILITIES

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Alongwithitsquarterlyandyearlyupdate,AVPOperationsrequeststheinvesteecompaniestosendthroughfinancialinformationsuchasincomestatement,balancesheetandcashflowstatementinMicrosoftExcelformat.ThespreadsheetwillbeuploadedontoFrontInvestandAVPOperationscandirectlyviewandamendthefinancialinformationviatheExcelapplicationembeddedwithintheplatform.FrontInvestfurtherassistsmanagementoftheportfoliocompaniesbyprovidinggraphsandchartstotrackthefinancialinformationforeachinvestment.Forexample,FrontInvestenablesinstantcreationofbarchartdepictingthecomparablerevenueandexpensesfortwoinvestmentcompaniesoveraspecifiedperiod.AsthehistoricalandcurrentinformationforeachinvestmentismaintainedinacentralizedlocationonFrontInvestsincetheinitialstageduringthemanagementofthedealpipeline,AVPOperationscanquicklytrack,analyseandreportportfoliocompanyinformationefficientlyandinreal-timemannerthroughouttheinvestmentprocess.Additionally,acheck-listismaintainedandautomaticremindersareset-upwithinFrontInvesttoassistAVPOperationsinensuringtheyearlycompliancerequirementsareadheredtobytheinvesteecompanies.12.2.4 HostingandBackupofFrontInvestFrontInvestiscurrentlymanagedbyeFrontonsecureservershostedbytheAmazonWebServices(AWS).12.2.5 FundAdministrationAVPwillactasthefundadministratorfortheFundsupervising4broadfunctionalareas:§ Fundestablishment/construction-buildingfund.§ Financialserviceslicensingandcompliance-ongoingcomplianceandregulatoryfunctions.§ Fundaccountingfunctions-theaccounting,valuation,registration,reportingandrelatedfunctions.§ Investmentmanagementfunctions-thelegalanddocumentationrequirementsofinvestingthefund’scapital

instartups.FunctionalArea SubFunction DetailsFundEstablishmentFunctions

FundDocuments • InformationMemorandum–prepareandfinalize• CarryTrustDeeds(forcarrydistributions)–prepareand

finalize.FundManagerEstablishmentandDocuments

• FundadministrationagreementbetweenMDCandArtesian-prepareandfinalize;

• InvestmentCommitteeconstitutionandrules-prepareandfinalize;

FinancialServicesLicensingandCompliance

PreparationofCompliancePolicyandProcedures

• Establishappropriatecompliancepolicyandprocedures

Compliance • UndertakeASICcomplianceandreportingrequirementsinrespectofthefund.

• Undertakemandatecomplianceonthefund.FundAccountingFunctions

FundAccounting • Prepareannualauditedfinancialstatements;• Preparehalf-yearlystatementoffinancialpositionand

statementoffinancialperformance(unaudited);• Prepareannualstatement(includingtaxinformation)for

limitedpartners;• Calculatemanagementandperformancefee;and• Calculateaccruals(includingFundestablishmentcosts)and

expenses.

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Valuation • Conducthalf-yearlyandannualvaluationsoftheFundinvestmentsinaccordancewiththeClientFund’svaluationpolicyandtherequirementsofrelevantlegislation;

• Reportvaluationinformationtoinvestorsasrequired;and• Prepareandassistwithvaluationpolicy.

Taxation • PrepareandlodgeFund’staxreturns;• Calculatethetaxcomponentsofanydistributedamounts

(incaseofinterestornon-exempt)income;and• Liaisewithexternaltaxadvisers.

InvestorRegistry • Receiveandprocessapplications;• Administercapitalcalls;• Maintaininvestorrecords;and• Administerreturnofcapitalandearnings.

InvestorCommunication • Prepareandissueperformanceandfinancialstatementupdates(quarterlyandannual);

• Prepareandissuenewsletters;• Payreturns;• Administergeneralinvestorenquiries;and• Makeannualcapitalcallsoninvestors.

Custody • SecureFundassets;• MaintainrecordsofFundassets;• Administercashmovements;• Payfeesandotherexpenses;• Makepaymentstoinvestors;and• Receiveincomeandassetrealizations.

CashForecasting • ForecasttoensureFundcanmakeallpaymentsastheyfalldue.

CoordinatingAudit • LiaisewithexternalauditorsfortheFundaudit;• Liaisewithexternalauditorsfortheauditoftheinvestment

manager;and• Arrangeinitialandongoingauditsofeachinvestee

companyInvestmentCommitteeRepresentation

• ArtesianwillhaveseatsontheFundinvestmentcommitteetoensurecompliancewithitsAFSL.

• ThisprovidesabenefittoMDCbyprovidingVCexperienceInvestmentManagementFunctions

StandardDocuments PreparestandardizedinvestmentdocumentsforusebytheFundincluding:• Termsheet(firstroundinvestments);• SubscriptionAgreement(firstroundinvestments);• ShareholdersAgreement(firstroundinvestments);• Termsheet(laterroundinvestments);• SubscriptionAgreement(laterroundinvestments);and• ShareholdersAgreement(laterroundinvestments).

MakingInvestments MakeinvestmentsonFund’sbehalfincludingprepare,negotiateandsign:• termsheets;• subscriptiondocuments;• shareholderagreements;and• otherrequireddocumentsforClientFundinvestments.

Correspondence • Attendtoallcorrespondencewiththeinvesteecompanies.

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Follow-onInvestment • MakesecondandadditionalinvestmentsonFund’sbehalf.CorporateActions • Attendtocorporateactions(e.g.,Delawareflip-ups),

divestments,exits,IPOs,etc.