IN BRIEF - BROAD VARIETY OF FUNDING AVAILABLE TO THOSE WHO QUALIFY
A number of funding initiatives are on offer for innovators and entrepreneurs in New South Wales, Victoria and Queensland, as well as nationally such as the research and development tax incentive, the CSIRO Innovation Fund, and the Australian Government's National Innovation and Science Agenda. Interested parties should monitor the eligibility requirements and application criteria as these can be subject to change.
GOVERNMENT SUPPORT SCHEMES FOR INNOVATION
The Commonwealth and state governments and government organisations offer a variety of support for innovation initiatives. Both new and existing businesses can qualify for grants and other financial support.
While each grant scheme has different eligibility requirements and application criteria, they share the same goal which is to enable new ideas to come to market.
To take advantage of the assistance offered, businesses that develop new ideas and technology should regularly review the current federal and state support schemes to check if they are eligible to apply, as the criteria for application often changes.
Some of the current schemes include:
NATIONAL INNOVATION AND SCIENCE AGENDA
The National Innovation and Science Agenda's mission is to drive smart ideas that create business growth, local jobs and global success. The Agenda includes a wide range of initiatives worth $1.1 billion over four years.
Key components of the Agenda include the provision of new tax breaks to remove the bias against businesses that take risks and innovate, and support of greater private sector investment by government co-investing in promising ideas through a CSIRO Innovation Fund and a Biomedical Translation Fund.
NSW INNOVATION STRATEGY
On 30 November 2016, the NSW Government released its Innovation Strategy, "Bringing Big Ideas to Life" (NSW Innovation Strategy).
One of the NSW Innovation Strategy's goals is to firmly establish NSW as "a home for entrepreneurs". This goal is made up of a number of headline initiatives, including the Jobs for NSW's Startup Program and Innovation Launch Initiative.
Jobs for NSW: Minimum viable product and building partnerships grants
Jobs for NSW is one of the cornerstones of the NSW Government's Innovation Strategy with a budget of $3 million. From this funding, two programs have been developed to specifically target the needs of NSW startups:
The Minimum Viable Product Grants, which provide funding for promising startups of up to 50% of project costs to a maximum of $25,000 per project. This funding is to enable these startups to obtain customer feedback and test their business model.
Building Partnerships Grants, which provide funding of up to 35% of project costs to a maximum of $100,000 per project for existing startups. This program is directed to newly developed startups seeking to build their customer base and pilot their business models.
Who is eligible?
Grants for both NSW programs are available across all industry sectors to those with ABNs registered in NSW. However, to be successful in applying for these grants, startups must comply with a number of requirements, including a primary focus on the development of technology. For further details on eligibility see the Jobs for NSW website.
Innovation Launch Initiative
The Innovation Launch Initiative is the second headline initiative forming part of the NSW Innovation strategy goal of "a home for entrepreneurs". The Innovation Launch Strategy awards up to $150,000 per idea as seed funding to assist with the development of ideas from concept through to launch.
These ideas are to help solve and respond to a number of identified "challenges" by the NSW Government, such as domestic violence, city accessibility and planning.
Who is eligible?
Applications for the Innovation Launch Initiative are open to all individuals and businesses. Applicants are assessed on a number of factors, such as the degree of "innovative-ness" and potential value for citizens. Further details on eligibility and how to apply can be found on the Innovation New South Wales website.
VICTORIA - LAUNCHVIC
LaunchVIC (established in 2015) is $60 million startup fund for large and small ideas from all sectors which significantly enhance Victoria's startup ecosystem.
Unlike the NSW Innovation strategy, which distinguishes between new and existing startups, the amount of funding and process under the LaunchVic scheme differs depending on the "size" of the startup's idea.
The most recent round of funding has now closed. Details for further rounds of funding are expected to be confirmed shortly.
QUEENSLAND - ADVANCE QUEENSLAND
Similar to NSW and Victoria, Queensland has also implemented a range of programs under a broad strategy, Advance Queensland, to drive innovation and assist in collaboration between entrepreneurs, industry, universities and government.
Advance Queensland has implemented a number of programs that aim to develop its entrepreneurial culture by improving access to finance, new business opportunities, and management support for startups, including:
Ignite Ideas Fund - Offers up to $250,000 in funding to support the development of new or improved products, processes or services to help early stage businesses take their innovative ideas to the next level.
Create Queensland - Provides funding ranging from $10,000 to $150,000 to creative YouTubers to develop high-quality digital content and reach new global audiences.
Innovate Queensland - Helps small to medium enterprises (SMEs) grow their business through workshops and webinars on innovation, technology commercialisation, innovation planning, and Research and Development (R&D) design.
Business Development Fund - Provides co-investment funding of between $125,000 and $2.5 million to Queensland businesses at the forefront of commercialising ground-breaking research or innovations.
Small Business Innovation Research (SBIR) pilot - Offers total funding of up to $750,000 to provide commercial opportunities to innovators while solving Queensland Government challenges.
Testing Within Government - Provides up to $250,000 in funding to assist SMEs in a collaborative process with the Queensland Government to address business problems.
Two of the initiatives specifically targeting innovation in business are:
Business Development Fund
Similar to LaunchVic's funding for large ideas, the Business Development Fund provides early stage co-investment funding of between $125,000 and $2.5 million for Queensland startups. In this Queensland program, successful applicants receive an investment from the Fund which is then matched by private sector co-investors.
Who is eligible?
Applications for the Business Development Fund are open anytime. An independent Business Development Fund investment panel, which consists of seven experienced entrepreneurs, assesses applications on the following basis:
- the applicant is commercialising research, an innovative idea or an innovative product or service
- the applicant requires seed, early stage or follow-on investment
- the applicant will create opportunities for new, high value and skilled employment
- the applicant has a realistic prospect of becoming commercially successful
Ignite Ideas Fund
The Ignite Ideas Program provides funding of up to $250,000 per project to help early-stage businesses by supporting activities that prove an idea will work, or to assist with identifying a market or investor for a product, process or service.
Who is eligible?
To be eligible for funding, organisations must be Queensland based and meet the following requirements:
- have less than 200 full time equivalent staff
- be registered for GST before the project commences
- have a product, process or service which is at, or beyond, minimum viable product/working prototype stage
- have an innovative, unique or new product, process or service with the potential to achieve high growth
- have identified customer(s), industry partner(s) or investor(s)
Application for the 2016 Ignite Ideas funding round have closed. Details for further rounds of funding are expected to be confirmed shortly.
RESEARCH AND DEVELOPMENT TAX INCENTIVE
Replacing the previous scheme in July 2011, the Australian Government's R&D tax incentive provides tax offsets to innovative companies undertaking eligible research and development activities. Under this scheme, eligible companies may claim up to 45% of the expenditure as a refund from the Australian Taxation Office (ATO).
Who is eligible?
Eligibility to claim R&D tax offsets depends on a number of factors, including whether or not the claimant is considered as a R&D entity and, if they are, whether or not notional deductions of at least $20,000 on eligible R&D activities have been incurred.
- a company incorporated in Australia
- a foreign corporation that carries on R&D activities through a permanent establishment in Australia, or
- a company acting as trustee of a public trading trust, and
- must pay income tax, and
- must be registered with AusIndustry.
Available financing options
Currently, there are financing options available that offer financing to R&D entities to obtain the tax incentive upfront, rather than having to wait until the funds are received from the ATO. Upfront access to the R&D tax refund can assist these companies to:
- expedite further R&D activities
- bring forward commercialisation plans
- satisfy ongoing cash flow needs, and
- delay or avoid expensive equity raisings
CSIRO INNOVATION FUND
In December 2016, the Commonwealth Scientific and Industrial Research Organisation (CSIRO) established a CSIRO Innovation Fund to support the commercialisation of early stage innovations to help Australia's home-grown innovations become successful businesses.
The CSIRO Innovation Fund is open to investment proposals from CSIRO, Australian universities, Australian publicly-funded research agencies, and their partners, including SMEs. It is expected to invest in startup and spin-off companies, existing SMEs engaged in translation of research, and company formation opportunities.
KEEP ABREAST OF REGULAR UPDATES TO FUNDING SCHEMES
As details of these schemes change regularly, we encourage you to review relevant websites or contact a lawyer for more information.Dan Brush
Colin Biggers & Paisley
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.