July 20, 2025 • 11 mins
Investing in startups and early stage investing takes a certain amount of courage and capability. When the asset you're buying is in deep tech, then you really have to understand what you're talking about.
Elaine Stead, principal of Main Sequence - Australia's largest deep tech venture fund - talks to Sean Aylmer about the difference between 'regular' tech and deep tech, and why patience and imagination really matter.
This is general information only. You should seek professional advice before making investment decisions.
Find out more: https://fearandgreed.com.au
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:06):
Welcome to the Fearing Greed Daily Interview. I'm Sean Almum.
Investing in startups and early stage investing takes a certain
amount of courage and capability. When the asset you're buying
is in deep tech, then you really have to understand
what you're talking about. Main Sequence is Australia's largest deep
tech venture fund and Elaine Stead is it's principal. Elaine,
(00:26):
Welcome to Fear and Greed.
Speaker 2 (00:27):
Thank you for having me.
Speaker 1 (00:29):
What is deep tech? What it was is a deep
tech venture fund has a different to a tech startup fund.
Speaker 2 (00:36):
Yeah, no, this is an excellent question, and when we
get all the time, the way we think about deep
tech is at the center of it is really some
fundamental scientific or engineering breakthrough, which is how we sort
of differentiate it from your traditional tech that might be
the sort of technology that generates a new software product.
(00:59):
The other thing or criteria that we think differentiates it
is it tends to be trying to solve a really
large global challenge, whether that's climate change or humanity scale healthcare,
or trying to feed ten billion people, which are a
number of the thematics that we invest in, and it
typically has a much higher research and development intensity. With
(01:22):
traditional tech products, you can almost stand them up in
a day now, whereas deep tech innovations tend to take
a lot more capital and a lot more time before
they're proved out.
Speaker 1 (01:34):
How do you do it? Then? How do you invest
in literally technology that's trying to solve the world's problems.
It's sort of there's a fair bit in that, You're right, So.
Speaker 2 (01:46):
I think fundamentally it requires some imagination. So I think
the difference between deep tech and traditional tech is you
can't sort of touch and feel the products straight away
or what it might event turn into. So it does
require from an investor standpoint that you have a little
bit of imagination about what it could turn into if
(02:08):
it was to work. And it very much helps to
have a technical background. I don't think it's necessary, but
certainly amongst our team at main Sequence, almost all of
the investment team have some technical expertise that helps us
to really understand the technology at a fundamental level, and
then that's paired with commercial expertise to try and understand
(02:31):
how we turn that into the next industry and well,
firstly the next product that might help solve a particular problem,
and then eventually a new industry, and I think it
takes a little bit of courage. It takes courage to
kind of invest in something that's so early stage and
potentially very esoteric, but has the capacity to really forge
(02:54):
something new, whether that's an industry or a way of
doing things or solving a big problem.
Speaker 1 (03:00):
So just give me a couple of examples of what
main Sequence has invested in so we get a feel
for what you're talking about.
Speaker 2 (03:06):
Sure, well, I'll give two examples that are very different.
One is Samsara Echo. So this was a company that
we actually started along with an entrepreneur, Paul Riley, with
the ambitious goal of trying to recycle plastics infinitely. Your
listeners might is that all that's exactly right, and your
(03:29):
listeners might understand that, you know, when you buy a
plastic water bottle that is recyclable, but only to a
certain extent. It's never possible. It has not been possible
to take plastics back down to their monomer forms in
the same way as they existed when they were virgin
plastics and infinitely right recycle them. What Sam Sarah has
(03:52):
been able to do is take enzymes and design them
so that they can actually do that, and they've been
able to solve that problem, and along the way they've
also learned how to recycle nylon infinitely and through a
partnership with Lulu Lemon where they're now able to recycle
(04:12):
their nylons back to their virginal state monomer state and
then infinitely recycle them. So that that's actually an example
of a very fundamental technology but also an ambitious goal
that hopefully will contribute to a sustainable, a more sustainable future.
And another example on the complete other end of the
(04:34):
spectrum would be Gilmore Space. One of our investment thematics
is how we would like to help bridge the gap
to space, and Gilmore is building a hybrid fuel rocket
and trying to launch that out of semi rural Queensland
and they are they have their launch permit now, it's
taken several years to develop the technology and build the
(04:57):
rocket and get all of the permits to launch. That
goal there is to try and launch rockets and then
payloads into space in a much more cost effective way.
And given how much the world depends on satellites and
others other things like that, to communicate, we think that's
pretty fundamental.
Speaker 1 (05:15):
Is it mostly about backing academic research that has practical uses.
Is like those examples you're doing are heavy on research.
Speaker 2 (05:24):
You're exactly right. Yeah, a lot of it comes out
of fundamental research and sometimes that's out of universities and
research institutes. And what we focus on is technology that
has some connection with publicly funded research in Australia. Some
of it is backyard inventors as well, who just happen
to have really focused expertise, but it is very fundamental
(05:48):
in its research when we often come into contact with it,
and then what we try to do is increase the
velocity of innovation, so with capital and with expertise and
bring the right people to bear. Hopefully what we do
is help translate that fundamental research into practical outcomes much
more quickly than if they were to do it themselves.
Speaker 1 (06:10):
Helene stay, we think we'll be back in a minute.
I'm speaking to Elaine Steed, principal at main Sequence. Okay,
so what about the company itself? I do you come
out of CSIRO? Am I right? And I say that
when I say that.
Speaker 2 (06:30):
Yeah, you're right, that is our that's our origin story.
We were originally spun out of the CSIRO with a
goal to you know, there was this acknowledgment that Australia
was fantastic at fundamental research and development, but one of
the things Australia did not do particularly well was commercialize
(06:50):
that research. And there are a lot of reasons for that,
but one of the key reasons was that there was
a lack of capital and also focused capital and expertise
to really help translate those really interesting pockets of research
into commercial outcomes. So it established the fund which was
(07:12):
eventually called main Sequence, and then eventually a few years
later that fund manager was privatized, so it's now quite
separate to the CSIRO and most of our investors and
our superannuation funds. So probably most of your listeners actually
have a portion of their superannuation fund invested into main
Sequence and other venture capital funds in Australia. But what
(07:35):
we do retain from that origin or that legacy is
a commitment to continue to focus on translating those things
that have come out of publicly funded research in Australia.
Speaker 1 (07:47):
Is it about making money or is it a lot
more than that.
Speaker 2 (07:51):
It's both, So we absolutely are measured on our ability
to make our investors' money that is the primary metric
by which which any venture fund manager is measured. But
one of the great privileges of investing in deep tech
is that you do get to try and solve some
of these bigger challenges which we think are you know,
(08:13):
our planet are really battling against at the moment, whether
it be climate, whether it be accessibility to food as
population expands, whether it's how do we make healthcare more
accessible for a growing population, how do we help enable
that next intelligence leap as well, whether that's quantum technology
(08:34):
or artificial intelligence. Our goal is really to try and
make our investors' money while trying to solve some of
these large problems at the same time. And that, you know,
that really is a privilege and I'm very grateful.
Speaker 1 (08:46):
What I mean, is it too early to ask you
what sort of returns you're getting, because presumably it needs
to be patient capital going in into main sequence, because
it's not something that you're going to pull out in
six months time. But are you at the point where
you can show return.
Speaker 2 (09:01):
Your spot on? It does take a lot of patient capitals.
So typically our venture funds are ten year funds and
you don't start to see realizations until year seven of
a given fund cycle. We're now three funds in. Our
first fund was twenty eighteen, so we're just getting to
that inflection point now where we're starting to look at
(09:24):
how we can realize some of those investments that we
made many years ago. So it's a bit early for
us to quote our return profile yet, but I will
say it's looking extremely exciting, and I will touch on
maybe some more audited data in Europe. There was a
McKinsey study that showed that analyzed fifteen hundred venture funds
(09:48):
across Europe and compared deep tech to traditional tech in
terms of returns, and deep tech funds actually significantly outperformed
traditional tech VC funds with a seven teen percent IRR
compared to a ten percent IRR. So it really does
have the capacity to generate much better returns because we're
(10:09):
investing in those things that have the opportunity to grow
and scale quite substantially, because they are addressing very global
markets and also very underpenetrated markets.
Speaker 1 (10:19):
Is it a very you say global market, Is it
a very competitive market in terms of both a discovery
but also the funding.
Speaker 2 (10:29):
Yeah, it's getting more competitive. I would say there are
still very few deep tech specialist funds across the globe,
although that is changing. In Australia, for example, there would
be ourselves Blackbird also invest in deep tech opportunities. We
have the recently stood up National Reconstruction Fund which has
(10:52):
a focus on many areas of softeign capability which overlap
with deep tech, and so we're starting to see more
players move into that space and that's an indication that
there is a lot of opportunity, but it is right
now not nearly as competitive as a enterprise SaaS from
an investment or a capital accessibility perspective.
Speaker 1 (11:13):
Well, good luck with it all, Elaine, and thank you
very much for talking to Fear and Greed.
Speaker 2 (11:17):
Thank you very much, pleasure to be here.
Speaker 1 (11:19):
That was Elaine Stead, principal at main Sequence. This is
the Fear and Greed Business Interview. Join us every morning
for the full episode of Fear and Greed Business news
you can use I'm sure al month Enjoy your day.
Welcome to the Fearing Greed Daily Interview. I'm Sean Almum.
Investing in startups and early stage investing takes a certain
amount of courage and capability. When the asset you're buying
is in deep tech, then you really have to understand
what you're talking about. Main Sequence is Australia's largest deep
tech venture fund and Elaine Stead is it's principal. Elaine,
(00:26):
Welcome to Fear and Greed.
Speaker 2 (00:27):
Thank you for having me.
Speaker 1 (00:29):
What is deep tech? What it was is a deep
tech venture fund has a different to a tech startup fund.
Speaker 2 (00:36):
Yeah, no, this is an excellent question, and when we
get all the time, the way we think about deep
tech is at the center of it is really some
fundamental scientific or engineering breakthrough, which is how we sort
of differentiate it from your traditional tech that might be
the sort of technology that generates a new software product.
(00:59):
The other thing or criteria that we think differentiates it
is it tends to be trying to solve a really
large global challenge, whether that's climate change or humanity scale healthcare,
or trying to feed ten billion people, which are a
number of the thematics that we invest in, and it
typically has a much higher research and development intensity. With
(01:22):
traditional tech products, you can almost stand them up in
a day now, whereas deep tech innovations tend to take
a lot more capital and a lot more time before
they're proved out.
Speaker 1 (01:34):
How do you do it? Then? How do you invest
in literally technology that's trying to solve the world's problems.
It's sort of there's a fair bit in that, You're right, So.
Speaker 2 (01:46):
I think fundamentally it requires some imagination. So I think
the difference between deep tech and traditional tech is you
can't sort of touch and feel the products straight away
or what it might event turn into. So it does
require from an investor standpoint that you have a little
bit of imagination about what it could turn into if
(02:08):
it was to work. And it very much helps to
have a technical background. I don't think it's necessary, but
certainly amongst our team at main Sequence, almost all of
the investment team have some technical expertise that helps us
to really understand the technology at a fundamental level, and
then that's paired with commercial expertise to try and understand
(02:31):
how we turn that into the next industry and well,
firstly the next product that might help solve a particular problem,
and then eventually a new industry, and I think it
takes a little bit of courage. It takes courage to
kind of invest in something that's so early stage and
potentially very esoteric, but has the capacity to really forge
(02:54):
something new, whether that's an industry or a way of
doing things or solving a big problem.
Speaker 1 (03:00):
So just give me a couple of examples of what
main Sequence has invested in so we get a feel
for what you're talking about.
Speaker 2 (03:06):
Sure, well, I'll give two examples that are very different.
One is Samsara Echo. So this was a company that
we actually started along with an entrepreneur, Paul Riley, with
the ambitious goal of trying to recycle plastics infinitely. Your
listeners might is that all that's exactly right, and your
(03:29):
listeners might understand that, you know, when you buy a
plastic water bottle that is recyclable, but only to a
certain extent. It's never possible. It has not been possible
to take plastics back down to their monomer forms in
the same way as they existed when they were virgin
plastics and infinitely right recycle them. What Sam Sarah has
(03:52):
been able to do is take enzymes and design them
so that they can actually do that, and they've been
able to solve that problem, and along the way they've
also learned how to recycle nylon infinitely and through a
partnership with Lulu Lemon where they're now able to recycle
(04:12):
their nylons back to their virginal state monomer state and
then infinitely recycle them. So that that's actually an example
of a very fundamental technology but also an ambitious goal
that hopefully will contribute to a sustainable, a more sustainable future.
And another example on the complete other end of the
(04:34):
spectrum would be Gilmore Space. One of our investment thematics
is how we would like to help bridge the gap
to space, and Gilmore is building a hybrid fuel rocket
and trying to launch that out of semi rural Queensland
and they are they have their launch permit now, it's
taken several years to develop the technology and build the
(04:57):
rocket and get all of the permits to launch. That
goal there is to try and launch rockets and then
payloads into space in a much more cost effective way.
And given how much the world depends on satellites and
others other things like that, to communicate, we think that's
pretty fundamental.
Speaker 1 (05:15):
Is it mostly about backing academic research that has practical uses.
Is like those examples you're doing are heavy on research.
Speaker 2 (05:24):
You're exactly right. Yeah, a lot of it comes out
of fundamental research and sometimes that's out of universities and
research institutes. And what we focus on is technology that
has some connection with publicly funded research in Australia. Some
of it is backyard inventors as well, who just happen
to have really focused expertise, but it is very fundamental
(05:48):
in its research when we often come into contact with it,
and then what we try to do is increase the
velocity of innovation, so with capital and with expertise and
bring the right people to bear. Hopefully what we do
is help translate that fundamental research into practical outcomes much
more quickly than if they were to do it themselves.
Speaker 1 (06:10):
Helene stay, we think we'll be back in a minute.
I'm speaking to Elaine Steed, principal at main Sequence. Okay,
so what about the company itself? I do you come
out of CSIRO? Am I right? And I say that
when I say that.
Speaker 2 (06:30):
Yeah, you're right, that is our that's our origin story.
We were originally spun out of the CSIRO with a
goal to you know, there was this acknowledgment that Australia
was fantastic at fundamental research and development, but one of
the things Australia did not do particularly well was commercialize
(06:50):
that research. And there are a lot of reasons for that,
but one of the key reasons was that there was
a lack of capital and also focused capital and expertise
to really help translate those really interesting pockets of research
into commercial outcomes. So it established the fund which was
(07:12):
eventually called main Sequence, and then eventually a few years
later that fund manager was privatized, so it's now quite
separate to the CSIRO and most of our investors and
our superannuation funds. So probably most of your listeners actually
have a portion of their superannuation fund invested into main
Sequence and other venture capital funds in Australia. But what
(07:35):
we do retain from that origin or that legacy is
a commitment to continue to focus on translating those things
that have come out of publicly funded research in Australia.
Speaker 1 (07:47):
Is it about making money or is it a lot
more than that.
Speaker 2 (07:51):
It's both, So we absolutely are measured on our ability
to make our investors' money that is the primary metric
by which which any venture fund manager is measured. But
one of the great privileges of investing in deep tech
is that you do get to try and solve some
of these bigger challenges which we think are you know,
(08:13):
our planet are really battling against at the moment, whether
it be climate, whether it be accessibility to food as
population expands, whether it's how do we make healthcare more
accessible for a growing population, how do we help enable
that next intelligence leap as well, whether that's quantum technology
(08:34):
or artificial intelligence. Our goal is really to try and
make our investors' money while trying to solve some of
these large problems at the same time. And that, you know,
that really is a privilege and I'm very grateful.
Speaker 1 (08:46):
What I mean, is it too early to ask you
what sort of returns you're getting, because presumably it needs
to be patient capital going in into main sequence, because
it's not something that you're going to pull out in
six months time. But are you at the point where
you can show return.
Speaker 2 (09:01):
Your spot on? It does take a lot of patient capitals.
So typically our venture funds are ten year funds and
you don't start to see realizations until year seven of
a given fund cycle. We're now three funds in. Our
first fund was twenty eighteen, so we're just getting to
that inflection point now where we're starting to look at
(09:24):
how we can realize some of those investments that we
made many years ago. So it's a bit early for
us to quote our return profile yet, but I will
say it's looking extremely exciting, and I will touch on
maybe some more audited data in Europe. There was a
McKinsey study that showed that analyzed fifteen hundred venture funds
(09:48):
across Europe and compared deep tech to traditional tech in
terms of returns, and deep tech funds actually significantly outperformed
traditional tech VC funds with a seven teen percent IRR
compared to a ten percent IRR. So it really does
have the capacity to generate much better returns because we're
(10:09):
investing in those things that have the opportunity to grow
and scale quite substantially, because they are addressing very global
markets and also very underpenetrated markets.
Speaker 1 (10:19):
Is it a very you say global market, Is it
a very competitive market in terms of both a discovery
but also the funding.
Speaker 2 (10:29):
Yeah, it's getting more competitive. I would say there are
still very few deep tech specialist funds across the globe,
although that is changing. In Australia, for example, there would
be ourselves Blackbird also invest in deep tech opportunities. We
have the recently stood up National Reconstruction Fund which has
(10:52):
a focus on many areas of softeign capability which overlap
with deep tech, and so we're starting to see more
players move into that space and that's an indication that
there is a lot of opportunity, but it is right
now not nearly as competitive as a enterprise SaaS from
an investment or a capital accessibility perspective.
Speaker 1 (11:13):
Well, good luck with it all, Elaine, and thank you
very much for talking to Fear and Greed.
Speaker 2 (11:17):
Thank you very much, pleasure to be here.
Speaker 1 (11:19):
That was Elaine Stead, principal at main Sequence. This is
the Fear and Greed Business Interview. Join us every morning
for the full episode of Fear and Greed Business news
you can use I'm sure al month Enjoy your day.
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