Australia's AI Moment: Build, Lead, or Fall Behind

The $5B ‘Tall Poppy’ national strategy to capture the trillion-dollar AI revolution
By
James Alexander
Apr 2025

We are witnessing the dawn of a new computing revolution 66 years after the invention of the silicon chip.

This time it's an intelligence revolution that goes beyond hardware. For the first time, we can talk to computers and get them to complete tasks and adapt to any industry, application, or problem. 

From an investor's perspective, this expands software's Total Addressable Market exponentially. Microsoft brought computers to everyone’s home and office, Apple brought software to everyone’s palms, AI will bring software intelligence to everyone’s jobs and lives. As Sequoia Partner Alfred Lim noted at NVIDIA's GTC conference:

"If this market will be worth 10 trillion dollars, we'll see 3 or more trillion-dollar businesses created in the coming decade."

The Australia Tall Poppy AI Strategy

Australia must seize this moment. I'm proposing the "Australia Tall Poppy AI Strategy" – a $5 billion investment across five pillars: sovereign AI research capabilities, industry applications, semiconductor independence, incentives for AI companies, and talent development. Unlike our cultural tendency to cut down tall poppies, this strategy aims to proudly showcase Australian AI innovation on the global stage.

At Galileo, we're big believers and believe Australia should be a major player in the AI revolution. Through Fund I, we've backed 8 seed AI companies across Australia and the US, and we're eager to fund more exceptional emerging founders building the next trillion-dollar AI company. We believe at least one such company will emerge from Australia or be founded by Australians in San Francisco.

But we need more than just venture capital – we need a comprehensive national strategy to help our industry create AI solutions with global impact that will transform Australia's productivity and way of life.

Australia’s AI Opportunity

The atmosphere in San Francisco is electric. Riding my autonomous Waymo to meetings while scrolling through the latest AI announcements, you'd be hard-pressed to see "Australia" mentioned alongside "AI" or "leading innovator."

Back home, I'm not sure there's any awareness of this computer revolution going on, especially if you just looked at the current federal election where “AI” is barely gets a mention except in the context of regulation. According to my government staffer colleagues, "Innovation" remains a dirty word and an "election killer" for any government.

Despite this, Aussies are smart and we find ways to succeed, often despite any government support. The revolution is alive and kicking on ground with county-level high adoption rates of AI tools and ambitious founders launching new startups weekly. 

We can already see early results; of the world's largest data centre acquisition happened in Australia (Airtrunk sold for A$24B), Canva is a global juggernaut hundreds of millions of users and an exemplar of successful AI integrations, and at Galileo, we’ve just seen largest multi-million dollar investment into a portfolio enterprise AI company (announcement coming).

Australia's Key Advantages

Australia has several crucial ingredients:

  • Talent magnet – Researchers, engineers, and executives want to live here to raise families and build careers
  • Research excellence – We already have AI research pedigree across various disciplines with a large international student base to leverage
  • Growing tech sector – Our research shows Australia's tech sector funding is growing 20% annually, now is the time to pour fuel on the fire.

We now need direct policy and investment to take advantage of these ingredients.

Early Australian AI Success Stories

Our Fund I portfolio showcases how Australian founders are embracing the AI revolution through applied AI across diverse sectors. From supporting the elderly with robots (Andromeda) and enhancing construction productivity (BuildAI) to deploying AI agent data science teams (TrueState) to AI workforces that perform human-quality work (Relevance AI), entrepreneurs are breaking through our traditional barriers of distance and capital constraints.

Clearly application-layer AI, where existing models are integrated to radically improve products, is an “easy win” for Australia. However, limiting ourselves to this would be shortsighted. We should mobilise our existing research strengths in areas like field robotics, invest in infrastructure, encourage nationwide early testing and adoption, and invite global AI firms to establish engineering offices here.

But to accomplish all this, we're missing the essential cohesive element: a comprehensive national policy.

Where Is Australia's AI Policy This Election?

Lets scroll down the list of Allied nations; the US has committed $280 billion through the CHIPS Act for semiconductor manufacturing, plus the private $500 billion Stargate Project for AI data centers. The UK has announced a $19 billion AI infrastructure investment. The EU recently committed €200 billion for AI factories across the continent, and closer to home, Singapore has launched a $1 billion national AI strategy.

Where is Australia’s move? 

As it stands, the upcoming election reveals a disappointing lack of ambition from both major parties when it comes to AI.

The Australian Labor Party focuses cautiously on ethics and regulation, mirroring Europe’s approach with intentions to introduce frameworks similar to the EU’s AI Act. This now comes across outdated – the ‘AI doomsday’ predictions of 2023 have proven comically overblown with many major model builders axing or reducing their ‘AI safety’ teams. From an investor lens, this may stifle our small local market before it has had a chance to grow.

Labor promises investments in digital infrastructure upgrades to regional broadband and workforce initiatives to foster tech jobs, but AI is notably absent as a strategic priority.

The Liberal Party emphasises innovation via extended R&D tax incentives and investments into cybersecurity and space tech. Yet AI, specifically, is glaringly missing from their platform—there is no explicit mention of funding sovereign AI infrastructure, AI-specific talent strategies, or a semiconductor supply chain that would underpin AI’s growth.

Both parties’ current stances reflect a dangerously short-term mindset. Missing entirely are bold, strategic commitments to foundational AI infrastructure, sovereign large language models (LLMs), semiconductor independence, and coordinated national talent strategies. In stark contrast to peer nations, Australia risks being left behind—missing our chance to shape the most transformative technology wave of our lifetimes.

Simply put, Australia urgently needs clarity, ambition, and substantial investment in AI—and neither major party is currently providing it.

What needs to happen next?

As a VC investor and operator working with Australian founders daily, I believe there are five major action items that would position Australia as a significant global player in AI.

I’ve proposed the thought experiment before: what if instead of buying US submarines, we invested $270B into AI instantly making us a global AI powerhouse? 

My more pragmatic proposal is to invest $5B into what I’m calling the Australia Tall Poppy AI Strategy. Unlike the usual Aussie tendency to cut down tall poppies, this policy aims explicitly at adapting, adopting and creating new AI technologies and proudly showcasing them—combining several bold policy actions to position Australia confidently on the global AI stage.

This would involve a starting allocation of $1B each into each:

1. Funding core AI research including a sovereign LLM capability:

Investing in foundational research and a sovereign large language model ensures Australia isn’t merely importing AI technology, but creating unique capabilities and IP to maintain control and influence over our technological future. Further, there is growing recognition in the cultural importance of having specialised models that are trained and uniquely tuned towards a country's way of life.  

2. Funding for industry and sovereign capability:

Targeted funding would accelerate the commercialisation of AI, strengthen critical infrastructure, and provide Australian industries—from agriculture to mining and healthcare—with a competitive global advantage.

3. Establishing and nurturing a sovereign semiconductor industry:

Semiconductors underpin every AI advancement, yet Australia remains reliant on foreign sources. Creating a sovereign semiconductor capability would drastically reduce supply-chain risks and position Australia strategically in global tech geopolitics.

4. Incentives for AI model-building companies to establish offices in Sydney or Melbourne:

Attracting both international and homegrown AI companies by offering compelling incentives, tax benefits, and streamlined visa pathways would significantly enhance local innovation ecosystems and employment opportunities in Australia’s tech capitals.

5. Attracting and retraining AI talent:

Investing in targeted AI education, reskilling initiatives, and attractive incentives to repatriate Australian talent from overseas or attract skilled migrants would build the robust workforce essential to sustaining AI growth and innovation domestically.

These targeted investments will transform Australia from an AI follower into an AI leader—leveraging our unique strengths to achieve lasting global competitiveness.

What are we doing at Galileo? 

We believe that a revolution in entrepreneurship is happening right now where more exceptional first-time Aussie founders are creating new technologies that will have an immense global impact. Combine this with the new AI revolution and we have a potent mixing pot for investing in the coming decade.

We’re launching Galileo Fund II to specifically invest in exceptional emerging founders looking to build in this new trillion dollar AI-power market and help unlock new opportunities and solutions for billions of people around the globe.

Conclusion: Australia's Defining Moment

In conclusion, Australia stands at a defining crossroads. We’re presented with a generational opportunity to participate meaningfully in the most transformative technological shift of our lifetime—but it requires clear-eyed ambition, strategic policy, and bold investments.

At Galileo, we’re optimistic. We’ve seen firsthand the exceptionalism, determination, and ingenuity of Aussie founders leveraging AI to tackle ambitious global challenges. However, to truly seize this moment, we need to move collectively with strategic clarity and urgency. We want to help.

Our proposed Australia Tall Poppy AI Strategy sets a practical yet ambitious blueprint to position Australia not just as a beneficiary of this AI revolution, but as a genuine global leader. With targeted investments, focused policy initiatives, and the right support ecosystem, we can ensure that this once-in-a-generation opportunity isn’t squandered.

We’re committed to playing our part. With Galileo Fund II, we’re ready to back the exceptional Australian entrepreneurs who will shape our collective AI future. Now, it’s time for policymakers, investors, and innovators alike to step up, ensuring Australia doesn’t simply follow the AI revolution, but leads it.

The next revolution is happening now—let’s make sure Australia doesn’t miss it.

About the Author
Co-founder and Partner at Galileo Ventures. 'Millennial VC' creating the leading fund for the world's best emerging founders.
Tags:
AI
Australia

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