Growing an AUKUS tech ecosystem

Six ways to accelerate Pillar 2, building on the Dec 2 statement

A growing body of academic research shows what every investor and entrepreneur already knows — that tech ecosystems accelerate innovation. Ecosystems speed access to funding, talent, and research. They facilitate trusting relationships.

AUKUS needs its own tech ecosystem. By fostering connective tissue between investors, entrepreneurs, and policy-makers across the alliance, AUKUS can build a “machine” that accelerates any strategic capability.

For those not familiar, the trilateral security agreement between the US, UK, and Australia known as AUKUS has two pillars. Pillar 1 focuses on providing nuclear-powered submarines to Australia. Pillar 2 focuses on developing advanced capabilities in technologies like quantum computing and artificial intelligence. 

The stakes for winning this tech race at the heart of Pillar 2 are high, which is why building an ecosystem is so important.

During AUKUS’s meeting in California last month, several programs were announced that move in the right direction, but more could be done. Here are six ideas for building on this effort in 2024.

1. Sell the AUKUS investment opportunity

A key measure of success for an AUKUS ecosystem is the dollar-value of venture capital invested in critical technologies areas across the alliance (if this isn’t being tracked, it should be). One way to increase targeted investment is to reach out to top venture funds with over $10b in assets under management and sell the “AUKUS investment opportunity.” The goal would be to convince them to align their investment strategies with AUKUS’s critical technology sectors. This is not a hard pitch. Most of AUKUS’s targeted tech sectors match venture interests, have high growth rates, and show signs of deal flow, which AUKUS’s imprimatur could enhance. There are several dozen venture funds that meet this criteria, so this kind of outreach is doable. A well-crafted investment pitch to these venture capitalists could immediately accelerate investment.

How to make this turn-key: Hire a Stanford or Harvard MBA type with a venture background to make the “AUKUS investment opportunity” pitch deck and go on the road to pitch VCs. 

2. Facilitate cross-border venture funding

Helping startups raise venture funding could be a powerful way to advance Pillar 2 as well. Imagine if the US Commerce Department or some such entity organized Silicon Valley roadshows for promising startups from the UK and Australia, where venture funding may be more difficult. Or, imagine if these companies had a resource within AUKUS that facilitated funding introductions and helped set up meetings with venture capitalists.

How to make this turn-key: Get buy-in from Gina Raimondo and the White House, then establish a program. Or outsource this function to a boutique investment bank with deep connections across tech VCs.

3. Create the AUKUS equivalent of Davos

Another way to build connective tissue across the alliance is by organizing events. Imagine a Davos equivalent for AUKUS. By this I mean an annual destination event bringing together key policy leaders, technology funders, innovators, and researchers. It would not have to be as flashy or high-profile as Davos, but it should be appealing to attend and make space for socializing, connecting, and catalyzing action. Local meetups and sector-specific gatherings would also be smart ways to build the AUKUS tech community.

How to make this turn-key: Partner with an events company like UK-based Informa to organize it and a series of other events. Let them make money off of it.

4. Turn AUKUS into a “special economic zone”

Venture capital is key to tech ecosystems, but investing across borders poses significant legal, tax, and regulatory hurdles. As AUKUS sets up an investor network, it may want to look for ways to reduce this friction while increasing incentives to invest across borders within the alliance. Legal resources could help. Tax incentives may work even better. Imagine if the three countries created an opportunity zone-like model, waiving capital gains taxes on cross-border investments in targeted sectors favored by AUKUS. Talent is another area where it might be valuable to reduce friction, since most of AUKUS’s critical technology sectors face talent shortages. AUKUS might consider making visas and mobility easier across the three countries, and incentives for keeping talent in-country and in-alliance may be just as important.

How to make this turn-key: Flesh out the “opportunity zone” tax incentive concept and create an operational plan to make it happen.

5. Cultivate tech billionaires and political champions

When I read the policy recommendations in ASPI’s report on critical technologies, I asked myself: Where’s the leadership to make this happen? Maybe this leadership already exists. My sense, though, is that it could be smart to recruit champions of AUKUS’s Pillar 2 plans from the tech world. Getting someone like Jeff Bezos behind an AUKUS tech ecosystem initiative, just to offer an example, would be extremely powerful. It would create an attractor for action, a rallying point for the cause, and a bridge into the technology world. There is a statesman-like role waiting to emerge for this type of technology billionaire investor. Cultivating political leaders across the alliance could be powerful as well, to promote legislation that advances Pillar 2.

How to make this turn-key: Get a high level figure to invite Jeff Bezos or Peter Thiel to play this role.

6. Facilitate networking within niche sectors

Promoting connective tissue within specific technology niches through events, meetups, fellowships, and social networks could be powerful as well. These sectors are world’s unto themselves. The bulk of quantum computing research, for example, takes place at only a handful of private companies and universities. Tracking key talent in these sectors would be smart. A community platform like Circle might help keep some of these communities connected across AUKUS. Treating each work group as its own mini-Manhattan Project requires leadership within these sectors; so that’s something to consider as well.

How to make this turn-key: Provide leadership for advanced technology work groups with “war room”-like mindset. Also, consider creating a new organizational entity focused exclusively on tech competitiveness.

Beyond capabilities — an AUKUS ecosystem with enduring value

The phrase that keeps coming to mind as I write about this is connective tissue. AUKUS can accelerate Pillar 2 by building connective tissue across the three partner countries; within critical technology sectors; between funders, policy-makers, and entrepreneurs.

In a geopolitical environment defined by technological prowess, building an AUKUS tech ecosystem, or network of them, is not a luxury. It is a necessity. It is also a potential source of enduring advantage… and something other countries will want to join.