The Federal Government will launch its new Commercialisation Australia funding body early next year, with grants of $250,000 available for proof of concept activities and repayable grants of up to $2 million for early stage commericalisation.
The announcement of the new funding by Industry Minister Kim Carr comes almost two years after the Rudd Government infuriated the SME community by scrapping the $1 billion Commercial Ready scheme in the 2008 Federal Budget.
Commercialisation Australia will receive $196.1 million over the next four years, with ongoing funding of $82 million a year thereafter.
As well as the staged funding, successful applications will be given a special case manager who will guide them through the commercialisation process.
“The radical new program for commercialising research will take a completely new approach to innovation assistance. It will tailor assistance to applicants’ needs, not fit the applicant to the program,” Carr said in a statement.
The establishment of the new funding has been welcomed by innovation and government grant experts.
Terry Cutler, the author of a detailed report into Australia’s innovation system, says the new program deserves a “big tick” and says it is clear the Government has channeled a lot of the information it has received in the last 18 months into the new program.
Cutler has particularly praised the focus on direct mentoring that has been built into the new program.
“When you look back to the old Commercial Ready program, everyone said one of the indirect benefits was that it forced companies to think about their business model. This program makes that explicit upfront. The Government’s really recognised that and that’s good.”
Commercialisation Australia will also appoint a number of voluntary mentors to help companies and Cutler says this will help mobolise the large group of business people who are willing to help out companies but have been unable to find a platform that allows them to do so.
Cutler is also a big supporter of the staged grants process, whereby applicants get one lot of funding for proof of concept and further funding once they are sure their idea will work.
Adrian Spencer, chief executive of grant consultancy GrantReady, agrees. While the $2 million grant maximum is lower than the $5 million maximum available under Commercial Ready program, Spencer believes the staged approach will be more effective for applicants and the Government.
“I think it will give more certainty towards ensuring success, instead of giving someone $5 million and saying ‘we hope it all works out’.”
Cutler says the investment community will also love the staged process.
“You’re got a far more robust base of potential investments coming through that pipeline.”
Spencer says the grants community has been desperate to see a replacement for Commercial Ready, particularly as changes to the R&D tax incentives have been viewed by some as pushing government support back towards “pure” R&D rather than early stage commercialisation.
“This is great. It’s more than we expected in terms of money and it’s really going to fill a desperate need in the market. It’s a chance for this current Government to put their stamp on things.”
He says that while the Government’s use of a repayable funding model is a good idea, it will be interesting to see whether or not the loans were paid back. He says previous Government conditional loan schemes have typically been unsuccessful. “My recollection was that none of them ever paid back.”
While many details of the program are yet to be released, Spencer says that companies who think they might apply need to get into gear.
“The big thing now for organisations to get in on the first round. We find companies often get caught on the back foot with these programs, so if you think you are eligible and ready, start getting your thoughts together now,” he says.
“You’ll never get a better chance to get funding than in the first round.”
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
