$196m for Commercialisation Australia: Not so ‘radical’?
As announced in the 2009-10 Budget, the Australian Government is establishing Commercialisation Australia (formerly known as the Commonwealth Commercialisation Institute) to provide assistance to commercialisation. How this relates to existing and announced funding and technology developments in the clean-tech space is not eminently clear. I discussed commercialisation funding in Australia for clean-tech in a previous post.
On the surface the plan looks great: $196m for the first four years, then $82m a year thereafter. While there was a consultation exercise, there is extremely little detail on the final form and functionality of the organisation.
It promises that:
It will tailor assistance to applicants’ needs, not fit the applicant to the program.
But then goes on to say
Early Stage Commercialisation grants will provide funding from $250,000 to $2 million to undertake activities focusing on enabling a new product, process or service to be developed to the stage where it can be taken to market.
Applications for grant funding will be assessed through a competitive, merit based selection process.
So: the applicant will continue to have to fit the funding programme, as it will be assessed according to a defined set of merit criteria. What are those merit criteria? Does the framework of those criteria unnecessarily confine the applicant to the program structure? See – not as easy and ‘new’ as it sounds and promises to be.
(one criteria that is sure to arise is ‘national benefits’. This means jobs, market value and, controversially and implicitly, Australian content – which has to be carefully handled so as not to contravene WTO obligations.)
Also – it is evident that funding will continue to be a competition, which implies periodic funding rounds with applicants having to score highly against a range of specified criteria which add up to a final score. Thus, applicants will continue to have to artificially chase and respond to specific merit criteria in order to come out ahead of the competition on points across all scored areas.
Of the last ‘technical’ point to address, the following is extremely interesting:
Commercialisation Australia will adopt a mutual obligation approach to assistance. Early Stage Commercialisation grants will be repayable on the success of the project.
So this element says that if things go wrong, then you only lose half the investment. If things go right, you have to return the cash, thus possibly leaving you still with a project that doesn’t provide a commercial return (remember that early stage commercialisation projects will often end up being a loss-leader in any case).
Start-up companies, or companies investing in high-risk, costly technology, would expend significant resources on a grant they may never get, then experience a four-to-five month delay in being notified of a grant award, in order to achieve a potential return from an early-stage project, that they would then have to substantially repay. This repayment might possibly occur in a timeframe prior to much in the form of revenue to their business from the activity being forthcoming. I’m not sure how this idea got as far as it did.
Lastly, remember the dictum that 90% of start-up businesses go bust in their first year?
A sequenced, time- and resource-consuming competitive government grant programme that won’t be online until Feb 2010, and of which the funding programmes are not likely to disburse funds much before mid-2010, will ensure that those innovative start-ups entering the market now will likely not be around to see the fruit of the new programme.
Not so ‘radical’, and not so straightforward.