What makes a biotechnology investible — and how precincts can help

As Founding Partner of OneVentures, Dr Paul Kelly has spent many years assessing breakthrough biomedical technologies for investment. Yet, as he explains ahead of the National Health & Innovation Precincts Summit, only a small fraction of innovations are truly investible from a venture capital perspective.

According to Dr Kelly, a simple formula separates the investible from the merely inventive — and founders who understand it greatly improve their chances of success.

“I often see technologies that are highly innovative and creative but are still looking for a problem to solve. The truly investible ones, however, are those that lead with the problem,” he said.

Beyond the Prototype

Dr Kelly has seen many “very clever” innovators with “impressive prototypes” that nonetheless overlook critical elements of commercialisation — namely, market pull, differentiation, and health system integration.

Among these are AI tools promising to improve healthcare delivery but failing to grasp the complexities of clinical workflow, health economics, and the regulatory and reimbursement hurdles unique to each market.

“I’ve seen AI products that look technically impressive but lack good quality input data, can’t integrate into clinical workflows, or fail to demonstrate health economic value. Without those, they’ll never become marketable products.”

Innovation must go beyond being “a cool technology.” It must solve a real problem and anticipate the practical challenges to adoption — from regulatory approval and clinical evidence to clinician acceptance and reimbursement.

“Changing medical practice is difficult because healthcare is highly regulated and built on entrenched ways of doing things. Change can happen — but not simply because you’ve invented something impressive.”

Logistical and Strategic Know-How

Founders also need a clear understanding of how and when their product will be competitive — and what it will take to get there.

“You must understand the timeframes, resources, and costs required to reach the market — and then consider the forces that could reshape the landscape over that horizon.”

This is particularly true in biotechnology, where development cycles can easily span a decade; and regulatory delays, scientific uncertainty, and shifting capital markets all contribute to risk.

“If you have a ten-year runway — which is relatively normal in biotech — you need to think ahead: what other products might emerge in that time addressing the same problem? What will the market look like when you’re finally ready to launch?”

Thinking Globally

Dr Kelly emphasises that innovators must view their opportunities within a global context, not just a domestic one.

“It’s crucial to understand global market dynamics, build strategic relationships, and be visible in key markets. Competition for R&D has globalised — and so has competition for capital.”

Global reach also strengthens supply chain resilience — a lesson underscored during recent years of disruption.

“You can’t build something in your garage and expect to sell it internationally. You need a network of credible, often regulator-approved suppliers and vendors. If one fails or borders close, you need viable backups.”

Small Australian companies, he notes, are typically reliant on international componentry and partners. “We’re constantly reviewing where things are sourced, how sustainable those arrangements are, and what would happen if a key link failed. You have to stay ahead of the game.”

The Power of Precincts

On this front, Dr Kelly says health and innovation precincts play a vital role by creating economies of scale and fostering collaboration.

“In Australia, we often have sub-scale pockets of innovation happening in isolation. Precincts can connect these efforts — unlocking opportunities for scale, efficiency, and genuine collaboration.”

More importantly, precincts ensure innovators are working on real problems grounded in clinical need.

“To uncover genuine pain points in clinical practice, you need a village around you. Precincts bring together clinicians dealing with real-world issues, researchers capable of generating novel solutions, and commercial experts who know how to turn discoveries into viable products.”

This interconnected environment allows innovators to access front-line clinicians, regulatory expertise, and commercial insight early in the process — vastly improving their investibility.

Culture Makes or Breaks a Precinct

While the concept of precincts is powerful, Kelly warns that success is far from guaranteed.

“You can’t just place people in adjoining buildings and expect innovation to happen. Collaboration requires deliberate cultural leadership.”

He stresses that effective precincts nurture a culture of mutual respect and open communication — where expertise from every discipline is valued and ideas can be constructively tested.

“You need an environment where everyone’s contribution is respected — where someone can say, ‘I’ve got an idea’ and others will respond, ‘Great, let’s connect you with a clinician, a supply-chain expert, or someone who’s tried this before.’”

Equally essential is a team-based mindset. “There must be an unspoken mantra that if one of us succeeds, we all succeed — with a shared focus on meaningful clinical impact.”

In a nutshell

Innovation precincts can be powerful engines of biomedical progress — but only if they foster cross-disciplinary collaboration, commercial literacy, and a culture of shared purpose.

“Their success depends less on buildings and infrastructure, and more on leadership, respect, and alignment around solving real-world problems.”

Further insight

Sharing more thoughts on the role of precincts and investible biotech, Dr Kelly will form an expert panel at the National Health & Innovation Precincts Summit on 2-3 December 2025.

The panel – ‘Bridging research to market: Commercialisation, investment & industry partnerships’ – will also feature:

– Dr Alastair Hick, Chief Commercialisation Officer, Monash University
– Rod Bristow, Chief Executive Officer, Breakthrough Victoria
– Bronwyn Le Grice, CEO & Managing Director, ANDHealth
– Dr Heather St John, Associate Deputy Vice-Chancellor, Research Partnerships and Translation, RMIT University

Learn more and register your tickets here.

About Paul Kelly

Paul is a Founding Partner and Director of OneVentures, leading the Healthcare and Biotechnology practice. He is a Non-Executive Director for BiVACOR and Prota Therapeutics and the Garvan Institute of Medical Research; and serves on the Advisory Board of the Australian Government’s Australia’s Economic Accelerator (AEA) program.

Previously, he served on the boards of Vaxxas (Chair), Hatchtech (Chair, licensed to NYSE: DRL), CharmHealth (acquired by ASX: CGL), Clinical Genomics (Enterix acquired by 3TM), and Blade Therapeutics.