SA entrepreneurs need to seize the opportunities for innovation created by the global financial crisis advises Amanda Heyworth, CEO of South Australian seed investor Playford Capital.

“South Australia has excellent long-term prospects in areas of its technology strengths, but it is essential for us to innovate and invest in order to sell into global technology markets,” she said.

“Looking ahead, innovation won’t stop, especially in areas such as cleantech, wireless, cloud computing and Software as a Service. In the area of early stage investment, the basics are the same.”

Playford Capital invests as much as $1.5 million in innovative early-stage South Australian companies.

Ms. Heyworth’s comments came after an outstanding month for Playford Capital. In early August, the Federal Government announced it had awarded Adelaide-based Playford a 12 per cent share of its Innovation Investment Follow-on Fund (IIFF) – worth $7.45 million – to invest in Playford’s existing portfolio, which includes companies active in areas such as food and beverage processing technology; energy management; online advertising; medical devices and diagnostics.

Two weeks later, Playford announced that, despite the global financial crisis, it had succeeded in generating more than $12 million in innovation investment during the 2008-09 financial year. Using its own investment stake of $1.39 million, Playford managed to attract co-investment of more than $10.8 million – 70 per cent of it from private investors – for innovative South Australian companies.

Ms. Heyworth said investors continued to look for great teams capable of executing on a big market opportunity. “Currently, concern about the global financial crisis means that most investors are preserving capital for their existing portfolios,” she noted.

“In an environment where the IPO market is dead and trade sales have slowed, investors are planning to hold their investments for longer. However, for those who are still investing, there are many great opportunities. Investors need to commit now to harvest profits in the next three or four years. Entrepreneurs and investors who hold their nerve will be rewarded.”

SA’s IC&T sector contains more than 1100 firms that employ 25,000 people, according to a 2004 survey. The State defence/electronics sector has about 400 companies while the DSTO at Salisbury has the largest collection of engineers and electronics employees in the Southern Hemisphere.

Ms. Heyworth said defence contractors played a central role in the SA economy. “While defence is a hidden industry, it is a significant enabler for many other sectors,” she said.  “Although they tend to have only one customer, defence companies possess strong, specialist skills that help to grow the talent pool and the commercial networks based in SA.”

Ms. Heyworth, who also sits on the Federal Government’s new Information Technology Industry Innovation Council, said the immediate future presented a number of challenges for high growth technology companies. “There will be short-term bumps as cash-strapped customers delay their uptake of new technology,” she said.

“Because of delayed sales and the capital drought, cash is king: Early stage companies need to cut their ‘cash burn’ including non-essential R&D and will probably be dependent on existing investors.

“However it is not all doom and gloom: There has been a pick-up in customers interested in buying technology that offers productivity benefits.  A year ago, the economy was booming and there wasn’t a strong imperative to change processes and cut costs. It’s now a lot easier to get on the radar with customers where you are offering new ways of using technology to save money.”

For more information about Playford Capital, visit www.playford.com.au

Playford PR for media assistance:

Call John Harris on 08 8431 4000 or email jharris@impress.com.au.