Financing a Thriving Bioeconomy: A Challenge-Led, Complexity-Informed Approach

Right now, Australia stands at a pretty pivotal moment. Some may say it’s a ‘once-in-a-generation’ opportunity to lay the foundations for a flourishing future in which nature, humanity and technology can coexist symbiotically. What is this opportunity, you may ask? Is it Crypto? Is it AI? 

Nah. 

Not quite.

Everyone’s hyped about AI and Crypto. But suppose we’re serious about health, food security, climate resilience, and new materials that don’t screw up the planet? 

If we are truly serious about averting catastrophic climate collapse, the next step is to return to our roots and tend to the soil of the bioeconomy – the web of innovation built from cells, microbes, seaweed, soils, and everything in between.

Globally, countries are moving fast. Singapore has Biopolis. South Korea has the Seoul Bio Hub. Germany, Finland, Canada and the EU are backing their bioeconomies with long-horizon public–private funding and mission-oriented grants. These countries are not leaving this to chance – they’re building serious infrastructure, capital strategies, and policy frameworks to anchor bio-innovation at home.

Australia, meanwhile?

We do the science, and too often watch the IP and jobs fly offshore.

It’s not because we lack talent or capital. It’s because our system is fragmented: it favours short-term funding, has forged fragile translational pathways, supported by scattered state and federal initiatives that don’t quite add up to a coherent whole. We’re exporting raw ideas and importing finished value. 

So how do we fix this? 

Well, the answer is probably not ‘another fund or incubator.’ Instead, we believe what we need is a new architecture for innovation – one that works with complexity, starts from real-world challenges, and treats portfolios (not isolated projects) as the unit of change.

Layering portfolios in context. Developed by The Yunus Centre, Griffith University & Hatched for Design Foundations for Systems Capital

From Projects to Portfolios: What ‘Challenge-Led, Complexity-Informed’ Actually Means

A challenge-led approach starts with the big questions we care about as a society, then works backwards:

• How do we build drought-resilient, nutritious food systems?
• How do we prepare for future pandemics without burning out our health system?
• How do we replace plastics and fossil-derived materials with circular, regenerative alternatives?

This approach closely mirrors what economists like Mariana Mazzucato describe as a mission economy: governments setting bold, concrete, moonshot-style objectives and then shaping markets, investment, and innovation portfolios around them, rather than scattering grants and hoping for miracles.

In an Australian context, however, we deliberately avoid the language of ‘missions’.

The term carries a heavy historical burden here. For many Aboriginal and Torres Strait Islander communities, ‘missions’ are inseparable from histories of dispossession, forced assimilation, cultural erasure, and state control. These were not collective projects of shared purpose, but instruments of coercion and harm – often imposed without consent, agency, or reciprocity.

Using the same language to describe contemporary innovation policy risks unintentionally echoing those dynamics: top-down authority, imposed goals, and a sense that direction is set for communities rather than with them.

That’s why we prefer the framing of challenge-led.

A challenge-led approach still sets a clear direction and ambition. Still, it starts from shared, real-world problems—climate resilience, food security, health, materials—and invites multiple pathways, knowledges, and actors to explore solutions together. It signals humility rather than command, inquiry rather than decree.

Importantly, it leaves room for Indigenous knowledge systems, place-based wisdom, and more-than-human perspectives to shape what progress looks like—rather than presuming a single, centrally defined end state.

In short, challenge-led retains the strategic clarity and catalytic power of mission-oriented economics, while better aligning with Australia’s historical context, cultural responsibilities, and the need for collaborative, consent-based system change.

Instead of scattering money across random grants and one-off startups, we focus attention on these shared challenges and invite many different experiments to explore possible solutions.

That’s where complexity-informed comes in.

We’re not trying to ‘pick winners’ in advance. In complex systems, prediction is fragile, but learning is powerful. So we design portfolios: interconnected ventures, pilots, policies, and infrastructures that:

• Explore multiple pathways in parallel
• Share what they learn (including failures)
• Move the system, not just a company, toward resilience and regeneration

This would involve (quite) a bit of a worldview shift, however. Where the job of governments, investors, and institutions becomes less ‘gatekeeping a pipeline’ and more gardening a living portfolio: cultivating diversity, noticing signals, feeding insights back into the ecosystem, and iterating to support positive emergence.

Global Clues: How Others Grow Their Bioeconomies

Around the world, governments have quietly been building the scaffolding of their bioeconomies. A few patterns show up again and again:

1. Stable R&D Incentives

Refundable tax incentives are the unsung heroes of deep tech.

• In Australia, the R&D Tax Incentive (RDTI) has been shown to generate more than triple the value of every dollar foregone in tax. (If you are from overseas and want to explore how you can leverage this to get 43.5% refundable offset on your R&D expenditure at CoLabs, drop us a line).
• France’s JEI programme goes further with multi-year tax exemptions for young innovative companies.
• The UK and Canada offer credits, too, but they’re not refundable, so they’re slightly less helpful for pre-rev startups.

To be clear, these aren’t ‘handouts’. Through a complexity lens, they’re public investments in option-creation: seeding lots of experiments, knowing only some will take root and grow into game-changers.

2. Challenge-Based Grants

Direct, non-dilutive funding helps ideas survive the fragile pre-investment phase.

• The US SBIR programme (‘America’s Seed Fund’) has powered countless biotech startups through proof-of-concept. (It’s worth noting this fund still exists under the Trump administration, but it’s much less… predictable). 
• The UK Biomedical Catalyst pairs funding with mentoring and regulatory support.
• The EU’s Horizon Europe fund channels significant funding into grand challenges such as antibiotic resistance and sustainable proteins. Take note, Australia. 😉 

That said, Australia has strong funding streams (MRFF, NHMRC, NRF, Accelerating Commercialisation, etc.) but no dedicated, SBIR-style, challenge-led mechanism for biotech and biomaterials. That is a gap that really matters.

3. Precincts and Shared Platforms

Unlike those hardware folks over at Silicon Valley, Biotech is not the easiest thing to start in a garage.

• South Korea’s Bio Parks and Seoul Bio Hub offer subsidised, long-term lab space: ‘start with a pipette, not a factory.’
• Singapore’s Biopolis co-locates hospitals, research institutes, and companies to accelerate spillovers.
• CSIRO’s BioFoundry in Australia provides startups with access to high-throughput synthetic biology tools they could never afford on their own through the Kickstart Program.

These labs, pilot plants, and GMP facilities can function as a commons – backbone infrastructures that multiple ventures can stand on. 

Just a quick one whilst we’re on the topic of commons.

Imagine if bio-led innovation infrastructure were part of the commons – shared, open, and woven into the very fabric of how we innovate and care for our world. Just as Dark Matter Labs outlines in Radicle Civics envisions 21st-century civic infrastructures that distribute agency, challenge concentrated power, and enable super-diverse publics to collaborate across boundaries, bio-led infrastructure could become a living commons that nurtures collective experimentation and stewardship rather than gated access. At its best, this would mean accessible labs, shared tools, and peer-to-peer networks where communities, makers, and researchers co-create new biological futures together, expanding what’s possible for society, ecosystems, and more-than-human worlds alike.

Australia’s Puzzle Pieces (and the Gaps Between Them)

Australia already has many of the ingredients of a thriving bioeconomy:

• RDTI: our single strongest policy lever, but undermined by shifting rules.
• MRFF & NHMRC: billions into world-class medical and health research. 
• NRF: a $15bn co-investment vehicle, with $1.5bn earmarked for medical manufacturing.
• State-level initiatives: Breakthrough Victoria, NSW’s R&D roadmap, Queensland’s Biofutures, Lot Fourteen in SA, and emerging biotech precincts in WA. Sadly, LaunchVic recently had its funding cut, RIP. 🙁 
  

The problem isn’t a lack of activity. It’s a lack of coherence across a multi-scalar system.

The result?

• A persistent ‘valley of death’ between lab discovery and investable venture
• Infrastructure bottlenecks: not enough shared labs, pilot plants, or GMP capacity
• Fragmentation across states: different rules, gaps, and duplications depending on your postcode
• Under-deployed capital: superannuation funds essentially sitting out early-stage bio despite being some of the most patient capital on earth

To move from silos to systems, we need a shared architecture that links missions, fields of action, portfolios, and projects, which enables them to learn in real time. What this does not mean is reducing the plurality of diversity into a single dominant logic. As Henri Bortoft reminds us, true wholeness is not achieved by abstraction or homogenisation, but by holding unity through diversity – allowing differences to remain alive, relational, and meaningful. This kind of coherence without collapse is essential for an innovative civilisation: one capable of sensing, adapting, and evolving across complex social, ecological, and technological systems. Without it, we remain stuck in fragmented silos; with it, diversity becomes a generative force rather than a coordination problem.

Mapping the System: Challenges, Portfolios, and Places

One useful organising tool comes from The Good Shift‘s (formerly Griffith Centre for Systems Innovation) Challenge + Impact Map. It connects four levels:

1. Directional Goals
   Big missions like:
   • Pandemic preparedness & health security
   • Resilient food systems
   • Circular and closed-loop materials
   • Climate adaptation & decarbonisation
   • Indigenous-led innovation and Country stewardship
2. Fields of Action
   Domains where innovation happens, e.g.:
   • Sustainable proteins
   • Biomaterials (hemp, algae, seaweed, mycelium, cellulose)
   • Biosecurity platforms
   • Marine bioeconomy
   • Climate-positive agriculture
3. Portfolios
   Clusters of ventures, infrastructures, and policies that reinforce each other.
   For example, a circular biomaterials portfolio could connect:
   • Startups like Alt Leather, AusKelp, Zeoform, and RespiraBuilt
   • Regional pilot plants that process biomass (waste, kelp, hemp, etc.)
   • Procurement policies favouring bio-based materials in public buildings
   • Standards and certifications that build trust in new materials
4. Together, they form a living industrial ecology – not just one company trying to do everything alone, but an entire web of organisations woven together to co-create a thriving bioeconomy.
5. Impact Projects
   
   Individual pilots, grants, and startups. On their own, they might look small. Their value is in how they contribute to portfolio-level learning: What worked? What failed? What did we learn about feedstocks, markets, regulation, or community engagement?
   

Instead of asking ‘did this project hit its KPIs?’, a better question might be:

‘Is this portfolio nudging the system toward resilience and regeneration?’

Turning Up the Heat: The ‘Spice Scale’ for Bio Interventions

Ok, now for the meme-worthy content.

Not every intervention has to be wildly radical. In fact, portfolios work best when they mix safe, incremental moves with bolder experiments that test the edge of what’s possible.

To make it meme-worthy, we came up with an Investment Spiciness Scale for the bioeconomy:

• 🌶 Mild – Lemon & Herb
  
  Stable R&D tax incentives, small rent subsidies in biotech precincts. Easy to sell politically, absolutely necessary, but not transformative on their own.
• 🌶🌶 Medium – Sriracha
  
  SBIR-style challenge grants, TIPS-style public–private co-investment models, and expanded NRF allocations. These stretch existing logics and start to build real momentum.
• 🌶🌶🌶🌶 Extra Hot – Habanero
  
  Systems capital funds, blended finance, bioregional financing facilities, commons-based infrastructures. These begin to challenge traditional VC and centralised ownership.
• 🌶🌶🌶🌶🌶 Ghost Pepper
  
  Steward-ownership venture models, Life-Ennobling Economics, profound rewiring of property and value flows. This is where we redesign the ‘operating system’ of the economy itself.

If you want to throw a good banquet, you’re probably not going to serve up dishes with all the same seasoning. A serious bioeconomy strategy would take note and intentionally mix up its spices: mainstream moves to anchor legitimacy and quick wins, plus spicier experiments that open up new possibilities.

Who Does What? Roles in a Regenerative Bioeconomy

No single actor can build this. It’s an ecosystem job. Here’s a little future-gazing exercise where we imagine some possible scenarios. 

Federal Government: Set Direction & Stability

• Guarantee long-term stability of the RDTI and avoid constant tinkering.
• Launch an SBIR-style, challenge-led translational fund for biotech and biomaterials.
• Treat GMP facilities, pilot plants, and shared platforms as national infrastructure.
• Use the NRF as a magnet for superannuation, creating fund-of-funds that back challenge-aligned portfolios.
• Embed learning contracts in major programmes so projects feed shared intelligence, not just individual outcomes.
  

State Governments: Anchor Place-Based Ecosystems

• Designate Bio Precincts with rent guarantees and shared labs.
  
• Build on regional strengths (e.g., vaccines, regenerative ag, industrial biotech) rather than duplicating one another.
• Support proof-of-concept accelerators that start from challenges, not just tech options.
• Attract anchor biomanufacturers to stabilise ecosystems and create local demand.

Industry & Investors: Shape Markets and Capital Flows

• Act as first customers for bio-based materials, foods, and health solutions, pulling products through the innovation journey to help de-risk experimentation. 
• Co-invest alongside NRF in challenge-aligned funds.
• Pilot systems capital instruments: steward-ownership, regenerative bonds, cooperative venture funds.
• Share risk through partnerships, including milestone-based funding, shared IP frameworks, and joint development agreements that reward collaboration over extraction.
• Provide patient capital and flexible timelines, recognising that bio-led innovation follows biological, regulatory, and infrastructural rhythms that don’t fit conventional VC cycles.

Founders & Innovators: Build for the Long Now

• Align ventures with national and regional challenges, ensuring solutions are anchored in real place-based needs (food systems, health, materials, climate) and benefit from policy tailwinds, procurement pathways, and ecosystem support.

• Design for system fit, not just product–market fit, understanding how your venture interacts with infrastructure, regulation, supply chains, ecosystems, and cultural norms over time.

• Plug into precincts, shared labs, and common platforms to reduce upfront capex, accelerate learning, and increase positive spillovers across adjacent ventures and disciplines.

• Focus on a collaborative advantage by building modular, interoperable solutions that enable your technology or platform to integrate with others rather than compete for dominance – increasing resilience and scalability across the system.

• Commit to open learning, sharing what doesn’t work as well as what does, so portfolios, funders, and ecosystems get smarter together and avoid repeating the same failures in isolation.

• Adopt governance models that support longevity, such as steward-ownership, mission locks, or cooperative structures that protect purpose through growth and transition.

• Plan for biological and institutional timeframes, recognising that bio-led innovation matures through experimentation, regulation, and trust-building, rather than focusing on speed to exit.

Connective Institutions (like CoLabs, Regen Melbourne, Dark Matter Labs): Weave the Tissue

• Support the development of venture studios and venture builders that are explicitly oriented toward addressing systemic challenges. Enabling coordinated exploration across materials, food, health, data, and infrastructure rather than isolated startups.

• Design and steward systems-capital portfolios, shifting from single-asset optimisation to portfolio logic that circulates value locally within (and between) adjoining bioregions, strengthening regional resilience and regenerative capacity.

• Act as neutral convenors and trusted intermediaries, aligning founders, researchers, industry, investors, and public actors around shared missions while holding space for plurality and experimentation.

• Host learning infrastructures, including sense-making forums, challenge maps, shared dashboards, and live portfolios that allow ecosystems to learn in real time and adapt strategy collectively.

• Enable shared physical and digital infrastructure, from labs and precincts to data platforms and standards, lowering barriers to entry and increasing collaboration across disciplines.

• Help co-create bioregional financial backbones that link capital flows to land, communities, and ecosystems through place-based investment vehicles, blended finance, and regenerative funding models.

• Translate between worlds, making scientific, financial, civic, and cultural logics legible to one another so innovation doesn’t stall at disciplinary or institutional boundaries.

So… Where to From Here?

Ahh, the age-old question.

Well, the way we see it (and have said before), Australia has all the raw ingredients: world-class science, strong R&D support, emerging state-level funds, and vast pools of patient capital. What is underdeveloped is the connective tissue – the challenge-led, complexity-informed architecture that pulls these pieces into a living, adaptive bioeconomy.

That architecture could look like:

• Clear national challenges that actually matter to people and support Country, grounded in lived needs, Indigenous knowledge systems, and ecological realities. Providing shared direction without prescribing uniform solutions.

• Portfolios, not isolated projects, are the primary unit of strategy and learning, enabling multiple approaches to be tested in parallel, failures to be metabolised quickly, and insights to compound across time.

• Precincts, labs, and platforms are treated as commons rather than afterthoughts, designed for shared access, stewardship, and long-term use. Thus, lowering barriers to entry while increasing collaboration and spillover value.

• Funding architectures that mix mild and fiery interventions across time horizons, combining patient capital, catalytic grants, first-customer commitments, and growth finance to match the biological and systemic rhythms of innovation.

• Venture studios and systems-capital vehicles built for endurance, aligned to missions and places, capable of accompanying ideas from early exploration through to scaling and stewardship.

• Governance that holds coherence without collapse, maintaining unity of direction while protecting diversity of approaches, actors, and cultures across the system.

• Measurement and feedback loops that value learning, regeneration, and resilience, not just speed or short-term financial return.

If we get this right, the bioeconomy won’t just be another ‘sector’ chasing subsidies and pandering to business-as-usual. It will be a national project of reconstruction and renewal – one that reweaves human economies with living systems, so prosperity and planetary health grow together.

Now that’s a future worth financing.