SYDNEY -- Australia has the capacity to develop world-leading deep-tech innovations that can bolster its sovereign capabilities across industries, according to the head of the country's leading startup and scaleup incubator.

"As a country, we need to have more of that capability onshore that we can access in times of global disruption," Liza Noonan, CEO of Cicada Innovations, told Nikkei Asia in an interview. "Are we producing our own vaccine? Do we have our own renewable fuel supply? That's the thing about deep tech, almost all of it is sovereign capability."

"If you can source this from your own domestic market, and then have that flywheel -- we buy domestically, they scale, they grow into globally competitive companies, it helps Australia's terms of trade, and hopefully we create the conditions for them to reinvest in R&D for the next wave of innovation," she added. "So the wheel flies, and it gets bigger, and the benefits to Australia are greater." Since its inception in 2000 in Sydney, Cicada has supported more than 500 deep-tech ventures. It has raised A$6.5 billion ($4.5 billion) in funding and achieved over $1.4 billion in exits.

Noonan said Australia's natural resources, vast landscape, proximity to Asia and sophisticated clinical trial environment are conditions that make the country an "attractive proposition" for deep tech to thrive.

But Australia currently has a "scale-up problem", one she said her company was endeavoring to solve.

Cicada is home to 100 startups from across Australia, providing founders with dedicated workspaces, including custom laboratories and specialized hardware.

One issue she has identified is inadequate scale-up infrastructure for innovators seeking to manufacture physical products. "Often at the stage they're at when they're tipping over to that production scale or the proving production scale capacity, they don't necessarily have the revenue to be underwriting the capital requirements of their own dedicated facility and equipment." Cicada, currently home to 100 startups across Australia, is addressing some of these needs by providing founders with dedicated workspaces, including custom laboratories and specialized hardware. It also offers guidance on scaling up, product validation, IP strategy and early revenue generation.

"Australia punches above its weight in terms of what the research produces, so it then follows the logic of what are we doing to translate the outputs of that research and that scientific knowledge base into things that are economically valuable for the country, whether it's the creation of highly-skilled jobs or how we get more resilience in our supply chains and how we boost our economic complexity?" Noonan cites quantum computing development as a "real opportunity" for Australia. "You think it's something in the future, but Q-Day could be any time now," she said, referring to the point at which quantum computers become powerful enough to break today's standard public-key encryption.

Space CoLAB, one of 23 startups selected by Cicada for a September showcase of Australia's deep tech innovations, is building diamond-based quantum transceivers that operate at room temperature and could be used in sectors that value secure communications, such as defense, intelligence, and space.

Space CoLAB founder Carley Scott says its quantum transceivers are designed to enable immediate alerts about attempts to intercept communications.

"We know that groups and adversaries are harvesting sensitive information for nations," founder and CEO Carley Scott told Nikkei Asia. "Systems are being hacked into now, information is being taken and harvested with the idea that when quantum computers come, we'll crack into that information then." Currently, it takes an average of 180 days to detect a system breach, but Scott's transceivers would be able to destroy a message and issue an immediate alert upon an interception attempt.

Space CoLAB's next step is to build a prototype and deploy it in real-world situations within five years. She is also looking to collaborate with the Australian defense department and "Five Eyes" intelligence allies, including the U.S., U.K. and Japan, to develop interoperable technology.

"The fact we could say we've got that in Australia, the ability to guard against quantum hackers and our critical infrastructure like utilities or healthcare or banking, that's significant," Cicada's Noonan said.

Albon, another startup selected this year for Cicada's Tech23 national showcase, is a climate-tech company developing algae-bacteria systems to treat agri-food wastewater. A byproduct of that treatment process is biochar, a carbon-rich soil complement that can help farmers reduce their reliance on chemical fertilizers, while boosting crop yields.

"Just too many volatile things happen with chemical fertilizers that farmers can't afford to deal with," co-founder and CEO John Phipps told Nikkei Asia, pointing to global disruptions such as the Russia-Ukraine war and the closure of the Strait of Hormuz, which have restricted shipments and raised international prices.

Albon CEO John Phipps says the climate-tech company's byproduct from treating agri-food wastewater provides farmers with a local solution to enrich their soil, rather than relying on imports of chemical fertilizers.

"What we want to do is, if we can capture that value at the farm level, and then localize where these nutrients are coming from, we can help mitigate a lot of the risks that come with applying fertilizer, making your soil healthy, thinking about soil microbial health long term, especially as we're facing climate change," Phipps said.

Regarding Australia's deep-tech innovations, Cicada's Noonan said, "That ability to be able to turn to our domestic capability is really important, and we have it, we have it in spades." But the government and industries need "to be more comfortable with risk, but in a very focused and transparent way" to "unlock" deep tech's potential in building sovereign capabilities, she added.

"Where's the industry that's willing to adopt new innovation here in Australia at scale? Where are the government agencies who have procurement budgets who can be a really important first customer for these innovators?" Noonan said. "We need not just the investment. We need a customer base here in Australia."

"These are problems so worth solving, and Australia should feel confident that we do have this ability. But our industrial structure, our business structure, probably some of our risk settings, and just the size of our domestic market means we actually have to be very deliberate about backing it. It's not about picking winners. It's about picking problems that are important for the nation to solve, and that's what we should be doubling down on."