October 18, 2012
Start-up slowdown: A spokesman for Commercialisation Australia CEO Doron Ben-Meir (above) says the government is “examining every dollar it is spending”. Photo: Glen McCurtayne
Start-ups are hanging in limbo after the federal government abruptly halted the distribution of millions of dollars to sponsor innovative activities.
For the past six weeks government organisations such as Commercialisation Australia (CA), the Australian Research Council and the Clean Technology Investment Fund have not processed grants to businesses or researchers seeking funds to develop innovative products and services.
The Department of Industry and Innovation confirmed the freeze order was handed down by Treasury, which is looking for areas to cut wasteful spending, as it attempts to deliver a budget surplus.
CA matches third-party investments dollar-for-dollar and over the past three years has distributed $11.9 million to start-ups in 303 grants. However, according to its website, the last grant was awarded on August 27.
Over the last few months, Melbourne’s Rome2Rio carefully traversed the complicated CA grant application requirements. Founders Michael Cameron and Bernie Tschirren applied for the government’s funds-matching program to multiply the value of a $450,000 investment raised earlier this year. The additional resources would fund the development of its mutli-modal travel search engine, which uses a range of transport options to navigate users from A to B.
Cameron said the company’s plans are in limbo because of the funding freeze.
“It’s a great program for start-ups that can access it. We received a lot of positive feedback during the application process and it will make a big difference if we get the grant,” said Cameron, who repatriated from the US with his co-founder to establish their company in Melbourne. “But the wait is frustrating for everyone, including our case manager and the CA admin.”
Cameron said they had committed the equivalent of two full-time staff members for a month to prepare the grant application.
“Of course that was over a span of several months, going through the first, then second stage of application – with various redrafts.
“It really makes you sit down and think: ‘OK, I’ve spent a lot of time on this application, if it all comes to nothing that was a lot of wasted time,'” said Cameron. “So there’s definitely a cost-benefit trade-off you’re making in your mind when you apply for these grants.
“How much time is it going to take you? How much money is it going to get you? And how likely are you to get the grant? It’s a tricky assessment to make.”
CA awards grants ranging from $50,000 to $2 million to help start-ups commercialise their products or develop a proof-of-concept. Prior to the freeze, the organisation had committed $278 million over the five years to 2014, and $82 million a year thereafter.
It distributed $2 million to a range of software projects including: HiSeis, a 3D seismic services for mining exploration; Euclideon, 3D computer graphics software with infinite geometry; Whispir, a defence-grade cloud-based engagement platform; and Ai-Live, which streams live speech to any device.
Treasury’s budget-slashing exercise could impact the CA innovation mission: there is no indication of how much funding could be cut, how many start-ups are stuck in limbo, when the grants will be awarded; or why the government targeted an area that aims to generate economic and social value for the country.
Commercialisation Australia chief executive Doron Ben-Meir directed queries to the department’s spokesperson. The Department of Industry and Innovation’s spokesperson said “the government was examining every dollar it is spending to make sure taxpayers are getting value for money”.
He said the blackout was a regular part of the budget process.
“All the background work such as the preparation of guidelines and assessment of applications is continuing in the normal way.”