UBS Australasia Conference 2019: AI, Cyber Security, Digital Health and latest VC trends in Fintech

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UBS Australasia Conference 2019: AI, Cyber Security, Digital Health and latest VC trends in Fintech

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UBS Australasia Conference 2019: AI, Cyber Security, Digital Health and latest VC trends in Fintech
UBS Australasia Conference 2019: AI, Cyber Security, Digital Health and latest VC trends in Fintech
UBS held its annual Australasia investors conference over 18th and 19th November in Sydney, with a number of interesting panels across the two days. Venture Insights moderated the Cyber Security panel and attended a number of interesting sessions over the two days. Below are some of the key takeaways from the sessions on artificial intelligence, cyber security, digital health and fintech investment trends.
  • Talent and skilled workforce shortages remained a universal theme across all four sessions. Almost all the panellists across the sessions agreed that finding the right talent remains a major challenge and that there aren’t enough STEM graduates coming through the system.
  • The big tech giants are dominating the artificial intelligence space and are investing massive resources into custom chip development and poaching the leading engineers and researchers from universities, Comparatively, AI startups are focusing on off-the-shelf hardware and platforms and in some cases are partnering with the big tech giants in order to build scale rapidly.
  • The cyber security sector in Australia has grown by 380% over the past 2 years as the perception around cyber threats has changed from being an IT related risk to a business risk especially for SME businesses which account for 96% of all businesses in Australia. Going forward, up to three A$1 billion valuation cyber security businesses could emerge out of Australia.
  • Scale remains an important factor that will drive the growth of digital health adoption. Initial adoption may face hurdles but partnerships with large existing healthcare or technology players can enable digital health businesses to gain credibility and scale at a rapid pace.
  • Blockchain and Corporate VC will play a bigger role in the Australian Venture Capital space. Corporate VC which today accounts for about 23% of VC funding in Australia is expected to increase to 50% of all VC funding in the next few years.

UBS Australasia Conference 2019

UBS held its annual Australasia investors conference over 18th and 19th November in Sydney, with a number of interesting panels across the two days. Venture Insights moderated the Cyber Security panel and attended a number of sessions over the two days. The sessions  covered a variety of topical themes that included - China: trade, tech and capital flows, Artificial Intelligence, Clean Energy policy settings, Robotics, Autonomous vehicles, Cyber threat to Australian businesses, the limitations of monetary policy, cell and gene therapy, digital healthcare, sustainability trends, millennials, fintech investment trends and how tech giants are dealing with the techlash. In this report we highlight the key takeaways from the sessions on artificial intelligence, cyber security, digital health and fintech investment trends.

Artificial Intelligence

  • The session was moderated by Ash Fontana, Managing Director Zetta Ventures and consisted of Eli Finkeshteyn, CEO Constructor.io, Natalie Nguyen, CEO HyperAnna, Richard Stebbing, CTO, Impira and Andrew Tulloch, Facebook AI researcher.
  • Some of the key takeaways from the session were:
    • The big tech giants are investing massive amounts of money and resources into the artificial intelligence space – building custom chips and poaching leading engineers and professors away from leading institutions
    • Data remains a critical component of the AI and machine learning space - engineers and researchers that want to work in this space need large data sets to be able to run and validate their AI and machine learning models. Tech giants are therefore able to attract some of the best talent to their organisations given they have the data sets.
    • In addition, the scale of the tech giants means that the AI researchers are able to make a massive difference with the actual implementation of their AI and machine learning models.
    • As a result, AI startups find it tough to hire talent and even find that they are an active poaching ground for the tech giants.
    • Search remains one of the key focus areas of the AI and machine learning space. Almost 90% of AI and machine models focus on some type search type problem.
    • There are many AI and machine learning startups like Constructor.io which are focusing on doing search better than Google using AI and machine learning by targeting niche segments eg. Ecommerce.
    • Similarly, HyperAnna, an Australian AI startup focusing on AI-powered business intelligence for enterprises, is also focusing on search but is focused on search within large data sets within the enterprise.
    • AI focused startups are dependent on an API led business model which allows them to plug into different data sets but also makes their business models vulnerable to disruption from some of the large players which could switch off or modify the APIs in the future. The panellists felt that the API led model is vital to the sustenance of a broader ecosystem which is beneficial to the larger tech players.
    • Many of the smaller players are worried about maintaining their data sets in the cloud using Amazon’s cloud computing platform - but given the scale of Amazon’s cloud business it is difficult to completely avoid Amazon and hence many businesses are adopting a hybrid cloud approach which involves diversifying their cloud exposure.
    • The tech giants are investing significant resources in developing custom hardware i.e. computing chips, which give them a large advantage over AI startups. Startups are focusing on using off-the-shelf hardware and platforms from the large tech players to save time and resources and overcome any potential shortcomings.

Cyber threat to Australian businesses

  • The session was moderated by Nigel Pugh, Managing Director Venture Insights and consisted of Chris Mohan, Principal for Threat Intelligence and Research Telstra, Dave Maunsell, CEO Haventec, Michelle Price, CEO AustCyber and Nick Klein, CEO Klein & Co.
  • Some of the key takeaways from the session were:
    • The cyber security threat is real and affects thousands of small businesses every day. Small businesses face an array of new and increasingly sophisticated threats, including malware attacks, hijacking of wifi networks, online fraud, phishing and hacking of their cloud storage accounts.
    • Over the past 2-3 years, the perception around cyber security has changed from cyber threats being an IT related risk to a business risk with a lot more awareness around the risks of cyber threats.
    • Cyber threats are now being discussed at the board level in larger enterprises with most enterprises investing in a dedicated cyber security unit within their businesses.
    • Government departments are also becoming increasingly aware of the risks associated with cyber threats and are allocating additional resources to build their expertise in this space.
    • There is an opportunity for startups and even larger enterprises like telcos to play a key role in developing the cyber security expertise in Australia.
    • Australia currently faces a shortage in cyber security talent on both the technical and non-technical fronts. AustCyber conducted a study which concluded that there aren’t enough students taking up STEM subjects which means that Australia is facing a massive STEM related talent shortage.
    • Proliferation of cheap IoT devices is one of the key segments that is likely to be subject to a cyber-attack right from a hacker taking control of your wifi network using the $2 sensor in your microwave to a hacker being able to view the security cam footage of your home/office.
    • The cyber security sector in Australia has grown by 380% in terms of the number of products and services produced. But while the scale in Australia is nowhere close to that seen in the US or UK, Australia is fast catching up and building a name for itself in the global cyber security space.
    • Michelle Price from AustCyber expects to see 3 cyber security related unicorns i.e. A$1 billion businesses to develop in the future.
    • Cyber-attack resilience is fast becoming an important component of the due diligence process for M&A deals.
    • Companies that understand the importance of cyber resilience from a growth perspective and how it to impacts the business’ growth rates will outperform on an ROI basis for investors.

Reimagining healthcare – progressing towards a digital future

  • The session was moderated by Nic Woods, Chief Medical Officer APAC Microsoft and consisted of Steve Krien, CEO Start Up Health Holdings, Dr Michael Costello, General Manager Privacy and Compliance Australian Digital Health Agency and Dr Bianca Ogden Healthcare Portfolio Manager Platinum Asset Management.
  • Some of the key takeaways from the session were:
    • Globally the healthcare industry is facing a number of challenges with the two key challenges being rising healthcare costs and not enough resources to manage the growing demand for sophisticated healthcare.
    • This is where technology can make a difference and help transform multiple aspects of the healthcare value chain.
    • The US is leading the world when it comes to investments in digital healthcare startups. Australia has a lot of catching up to do in this space.
    • Investors are focusing on AI applications in healthcare and digital health systems that can manage the massive amounts of healthcare data being generated.
    • Some of the challenges that start-ups face are a) majority of the people working in the healthcare sector believe that everything is working well and there is no reason to change, b) lack of business case to implement change and c) absence of clinical validation.
    • The Australian Digital Health Agency is working towards supporting the digital health ecosystem by developing a national framework and platform for digital health to thrive.
    • Scale remains an important factor that will drive the growth of digital health startups. Initial adoption may face hurdles but partnerships with large existing healthcare or technology players can enable digital health startups to gain credibility and scale at a rapid pace.

Fintech – future trends in venture capital

  • The session was moderated by Adrian Bunter Executive Director Venture Advisory and Nic Woods, Chief Medical Officer APAC Microsoft and consisted of Steve Krien, CEO Start Up Health Holdings, Dr Michael Costello, General Manager Privacy and Compliance Australian Digital Health Agency and Dr Bianca Ogden Healthcare Portfolio Manager Platinum Asset Management.
  • Some of the key takeaways from the session were:
    • The cost of starting up has reduced from US$5 million about 25 years ago to about US$0.5 million today. Concurrently, the amount of venture capital money going into startups has increased by nearly 30x.
    • In 1995, Silicon Valley accounted for 95% of all venture capital (VC) funding in the world. Today, it accounts for about 50%, with a big proportion of the rest coming from Asia and in particular China.
    • Going forward, Corporate VC is expected to play a bigger role than traditional VC funding. Corporate VC accounts for about 23% of total VC in Australia and this is expected to increase to more than 50% in the next few years.
    • Multi-asset and multi-business model venture funds such as Polychain Capital are starting to emerge. These funds include an accelerator, a startup consulting division, a technology or labs division and a traditional VC fund.
    • The barriers to entry for startups from a technology point of view are the lowest they have been but the barriers to entry from entrepreneurial point of view are very high.
    • Blockchain and tokenisation in particular could revolutionise venture capital in the future through a) the ICO or Initial Coin Offering could distribute assets democratically to founders in any part of the world and b) the rise of company coins like Binance which is now the largest distributor of cryptocurrencies.
    • Going forward, VC as a service will grow more popular especially amongst Corporate VCs.
    • Finding and nurturing the right talent with the required skillsets remains a big impediment for almost all startups and accelerators and VC funds.
    • VC funds are raising record sums of money to invest in startup businesses but are facing the problem of a lack of quality pipeline of startups. As a result, these VC funds are committing to invest in early stage businesses so that they can nurture these businesses and potentially invest in them through their VC funds as they grow larger.