The founders of Scimita Ventures believe R&D is in need of innovation, so they’re honing a business model that combines science, engineering and entrepreneurship to deliver that commercial cutting edge.
Australia’s tertiary institutions are regularly acclaimed for nurturing incredible research — sometimes world-leading — but they’re also occasionally criticised for being too slow, bureaucratic and not commercially minded enough. So, how do you accelerate R&D and get innovation into the market faster? Scientist Dr Mobin Nomvar MAICD and chemical engineer Professor Ali Abbas believe the answer is to have entrepreneurs work in the lab alongside scientists and engineers, with everyone following the “agile” credo for rapid iterative product development.
Nomvar and Abbas launched Scimita Ventures in 2016 while working together at the University of Sydney. The name acknowledges their Persian roots with a search-friendly adaptation of the word for a curved sword, scimitar — derived from the Persian word shamshir, meaning “lion’s claw”.
“I love science, but I was frustrated at university because you publish your papers, you get a patent, and so what — it takes too long to make an impact,” says Nomvar, recalling early conversations he had with Abbas about their mutual ambitions to use their scientific smarts to tackle global challenges such as affordable decarbonisation.
“You cannot have any lasting positive impact if whatever you’re inventing is not in the market,” he says. “But when I told my head of school I wanted to learn about commercialisation, she said, ‘University is not built for that’. I was silent for 30 seconds, then made up my mind. I’d resign my post-doctoral position to start a business.”
Sharpening the commercial edge
Although Scimita is the first business he’s built from scratch, Nomvar’s experience wasn’t all academic. After completing chemical engineering studies at Sahand University of Technology in Iran, he consulted for six years on carbon reduction projects in the fossil fuel sector and saw where the energy market was headed. It’s why he moved to Sydney, to extend his investigations in low-emission and renewable energy technologies through his PhD research, and why he took a post-doctoral job with the Hazer Group, a University of Sydney partner that developed a process for scaling up low- cost, low-emission hydrogen production.
Abbas brings experience in managing industry partnerships through his role as the founding director of the university’s Waste Transformation Research Hub, which he maintains alongside his role as acting head of the university’s School of Chemical Engineering. However, the pair knew they needed someone with heavy-hitting business credentials to guide their ambitions. Fortuitously, in 2019, they were introduced to experienced director and investor Albert Wong AM FAICD.
“I’d been on the board for many years and was a former president of the University of Sydney Physics Foundation,” says Wong. “Ali Abbas obviously knew of the late Professor Harry Messel who started the foundation. We got on well and in 2020, they said they’d very much like me to come on board with Scimita as chair, to give them some guidance. I find them both very intelligent and refreshing — and I respect people who are prepared to take risks.”
Managing risk and ambition
Scimita’s agile approach and rapid prototyping, combined with a strong commercial mindset, quickly attracted interest from private investors, universities, listed companies and government agencies, including the Clean Energy Regulator. Within its first few years of operation, the venture lab had completed some 20 R&D commercialisation projects, ranging from clean hydrogen production and waste management to medical devices and biosecurity solutions.
Nomvar credits this success to a highly skilled cross-disciplinary team with great personal values. The team developed a project execution blueprint called “Falcon”, which is trademarked and promoted as Scimita’s biggest invention and was designed to manage projects on-time and on-budget.
“Traditional R&D can have a narrow focus on experiments, but often doesn’t achieve all three important components of innovation — technology readiness, manufacturing readiness and commercial readiness,” says Nomvar. “It’s not the university — you have to hit all three targets, otherwise no invention turns into innovation.”
Falcon is partly based on the “lean/agile” methodology popular in the software industry, which typically engages teams in development “sprints” and ends each phase with user testing so feedback can be incorporated into the next iteration. However, as Nomvar notes, while agile is focused on fail-fast experiments towards finding solutions for users, it misses a trick or two with commercial risk mitigation. So Falcon combines the agile approach for engaging teams in problem-solving sprints with business analysis of a client’s commercial needs and risk mitigation rules, including time and budget constraints.
Wong emphasises that it’s important a client’s commercial needs and constraints are understood upfront by all the team (researchers, scientists, engineers and entrepreneurs) on any invention validation or concept development project. It’s also vital that there’s good chemistry across the team. “Working for and managing commercial organisations, if you don’t have the intangible factor of the right chemistry, it’s going to be a disaster,” says Wong. “We have a core team and when we’re sourcing people for projects, they’re indoctrinated with the company’s principles and mission statement. But if they don’t fit in, they don’t last long.”
Wong says the key to Scimita’s next growth stage is to bring in more people with experience leading scale-up businesses. The company will soon hire a business development lead and plans to add a chief commercial officer as well as a CFO in the next 12 months or so.
“The company is growing and profitable in its own right because there are no extravagances in the organisation — salaries are realistic and we’re reinvesting everything back into hiring for growth,” he says. “From my business perspective of where Scimita Ventures is currently, for any challenges we face, there’s nothing that money won’t solve. So it’s about building the commercial capability.”
Scimita mainly generates revenue from developer fees on client projects, although it is keen to grow the company’s equity and IP portfolios. “We want to get more skin in the game for these ventures and projects we work on,” says Nomvar. “We’ve recently launched a patent for low-emission/high-production volume LNG production, which will enable us to serve a massive market in the not too distant future. We want to build larger rapid prototyping labs specifically for energy and circular economy projects, because there are innovators in the sector who have really good ideas, but don’t have access to those facilities.”
Two of Scimita’s early successes were swiftly spun off — medical device manufacturer Opuz in August 2019, and the green hydrogen tech company ScimTek Hydrogen (a joint venture with Kinaltek) in January 2021. In December 2021, ScimTek Hydrogen announced a partnership with Bathurst City Council to build the first ScimTek Reactor, which aims to extract cheap hydrogen to power trucks from methane sourced from rubbish tips. In October 2022, the joint venture entered a memorandum of understanding with Run Energy to take the technology nationwide.
“It’s one thing to find partners with money, it’s another thing as to the provenance of that money,” says Wong. “If you get $1m from John Smith, it’s $1m, but if you get $1m from someone with a high profile, then that speaks volumes.” And he should know, having attracted investment in his previous ventures from the likes of Malcolm Turnbull, Andrew “Twiggy” Forrest and Neville Wran (his business partner for several decades).
“Big investors generally like to come in quite late in the process, which is why our underlying principle is to make investment in innovation less scary,” says Nomvar. “We’re already pretty strong on the technical front, making innovation quicker and more reliable. Now we want to educate more people about the commercial difference between invention and innovation, so Australia can move from a resource-based economy to an innovation-driven economy.”
Albert Wong’s tips for innovators
Focus on what you’re really good at
You’re running an embryonic organisation, not BHP or Apple. Hopefully, your business will grow that big, but for now, do one thing better than any other business in the world and the world will beat a path to your door. Identify key market opportunities
You can’t be everything to all people and you can’t sell to everyone. So focus on the product categories where you can innovate well (Scimita focuses on future fuels and energy, material manufacturing and the circular economy) and which have the best sales opportunities in the markets you can feasibly reach.
Prove your worth early with small wins
There’s no point only chasing big potential deals if you don’t close any. We encourage potential clients to sign up for discovery projects with low financial risk on both sides. For example, we did a discovery project worth $60,000 and lasting 12 weeks that produced good results. The client then invested $700,000 in the second round lasting eight months to prove patentable concepts. Now we’re negotiating stage three, which will be worth $2m.
Be strategic about partnerships
Choose the right partners for each stage of growth. Find companies with complementary services addressing the a similar market. At one stage, you might need to partner with engineering firms, at another, with IP and patent specialists.
Educate your target audience
Whether you want to attract investors, partners or bigger customers, you need to clearly communicate where innovation is realistically heading. For example, companies want to address climate change, but might not know what to invest in first to meet their ESG objectives.
Get sensible business valuation advice
Scale-up founders need realistic numbers for what a business is worth. You can risk giving away too much equity cheaply in the early stages, but once you start attracting bigger investors, you also risk becoming greedy. Don’t blow good investment deals by overinflating your valuations.
Boards can better support innovation
Dr Mobin Nomvar MAICD nominates some of the obstacles to innovation he believes need addressing at the board level.
Lacking innovation expertise on the board
If your board doesn’t include directors with experience in science and invention, then bring in reputable innovation practitioners to make sense of changes in the market and share insights on how the company can adopt important trends.
Being uncertain where to start
Innovation doesn’t have to start big. The first step can be a short discovery project to strategically look at an industry problem or business opportunity.
This can be a low-cost step to proving the business value of technically sound ideas and indicative impact.
Thinking everything must be managed in-house
Companies don’t have to innovate all by themselves or perceive exploratory projects as too hard. Having an internal R&D team is justifiable if there are 10–15 years of R&D programs envisioned.
But in fast-moving markets, companies need lean R&D and innovation support, which can change as its requirements do. They can accelerate and de-risk innovation by outsourcing work to agile innovation execution teams, hiring external R&D capabilities or exploring strategic M&A.
Having a low risk appetite
Boards can empower the executive team to take measured risks that aim to de-risk the future of the company. For example, investing in new technologies early can deliver competitive advantages in the market. Innovation is an investment — to build wealth, one needs to risk.
Being unable to differentiate market hype from real trends
Directors and/or executives investing in technology need to consider if the technology matches the intended use case, and if it’s based on the reality of physics. You need expert advice on what a technology or energy source can realistically deliver — or even if it will meet your needs.
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