Forget large-scale projects – the best opportunities in smart city innovation are in small, iterative initiatives that solve problems and can then scale, according to a white paper by the Australian arm of venture capital firm Azcende.

Launching the paper, Habitats for Humans, Azcende CEO Alok Patel said there were technologies available now that can transform cities immediately.

Patel also called on governments to ease procurement practices to allow more private sector capital into smart city projects.

Neither governments nor the private sector have solved the problem of how to work together to achieve this transformation, he said. “Both parties will need to overhaul their approach to create better ways to collaborate.” 

Private sector is frustrated

“To realise this potential, procurement, data sharing and financing models must change. The private sector is frustrated – it knows how to invest and that people want smarter cities but it faces obstacles in working with government and getting innovation through prohibitive government procurement practices.”

Azcende said Habitats for Humans was the result of a series of roundtables in Sydney and Melbourne attended by leaders in business, construction, infrastructure, financial services, startups, government, logistics, communications and education, along with smart city specialists.

The paper claims to “present current thinking on smart cities in the Australian context [in the hope that it] will help policymakers and the private sector make informed decisions on how to best manage change.”

Habitats for Humans says governments are often puzzled as to how to describe and execute a grand smart city vision. The paper argues that, instead of thinking big, the opportunity is in thinking small: favouring iterative, proof-of-concept strategies that solve problems in markets where there is high demand.

“Once the nascent stage has been bootstrapped into profitability, it can then be scaled up – either with government help or seed funding from the private sector.”

Data sharing will be key

Azcende cites a recent report by Deloitte that describes data as the “lifeblood” of smart cities and says reformed data laws will be critical to ushering in smart cities.

It says governments collect colossal amounts of data from both traditional and non-traditional sources, and “the potential of this data to make our lives better can only be imagined.”

According to the white paper, city advocates from the public and private sectors have begun to work together to find ways in which the data can be made available to entrepreneurs without compromising privacy.

“Data will be key to revealing insights into citizens’ future needs. Correlations that we are currently unaware of will release the next wave of value to society.”

From everyday Australian innovators proving concepts, bootstrapping them into profitability and scaling to a national or global scale – either with government help or private sector seed funding – smaller is better.