1. An overview of Key Government Funding sources for SMEs
SESSION: AP055
Gary Twomey Director IMC

2. Agenda Awareness of grants for software development
The 1 golden rules of grants
Critical elements of a grant Application
Commonwealth Govt’s Commercialisation Australia
R&D Tax Concession/Credit for ongoing R&D work
Export Market Development grants
Other Commonwealth & State Govt programs
Next Steps

3. What’s new in 2011 The major changes that have happened in 2011;
Funding through the Commercialisation Australia program has more than doubled from $30m to $70m
The Federal Govt will replace the R&D Tax Concession with an R&D Tax Credit. This will potentially double the tax benefit that companies will receive.
The Emerging Renewables Program will fund software development for new renewable energy and enabling technologies

4. Show me the Money ? Awareness of Grants as a source of funding
Why grants – what about VC’s or Angel Investors
Are you grant worthy
Which grant
How much can I get (Some Examples)

5. Government Funds

6. Approach to Government Funding
Develop your Business/Strategic Plan & identify Growth Opportunities & Funding needs
Prepare a Business case seeking funding as you would for private investors
View the Government as a potential investor seeking a return on their investment but with additional national benefit requirements

7. Where do you start – 1St Rule
Undertake a review of current operations & identify major new product & business opportunities
Identify appropriate government funding sources to support the key product development strategies
Identify issues which may affect ability to attract funding i.e Structure, IP ownership, Trading history
Liaise with applicable Government body to establish the application processes- they all tend to vary

8. APPLYING FOR GRANTS Prepare detailed overview of project including:
What the project sets out to achieve
The end product + the end customer
Technical and commercial reasons for undertaking the project
Key technical innovations and competitive advantages
Target market and Market Size, Revenue
Export or Import replacement opportunities
IP protection strategy

9. Review Management Team
Review business management capabilities including:
Background of company and future company direction
Project fit with company strategy
Your performance – operationally and financially
Key management personnel
Examples of prior innovation
Identify any prior Government funding of innovation

10. Develop Project Plan Detailed project plan including:
Project innovation
Project risks, challenges and how these will be overcome
Differentiating technical features
Commercialisation strategy
Key project staff
Equipment and facilities required to successfully undertake and complete the project
Milestone table – activities and specific challenges

11. Commercialisation Detailed commercialisation strategy including:
Track record in commercialisation
Market potential and target markets
Competitor comparison – products and company specific
Competitive advantages
Share of potential market and forecast returns
Manufacturing, selling and distribution and pricing
Barriers to market entry

12. Project Costs Establish costs and cashflow including:
Salary and wages of key technical staff
Contractors to provide critical expertise
Plant and equipment required
IP protection
Other costs such as consumables, travel and audit
Cashflow throughout project period (need for funding important)

13. Community Benefits Overview and specific measurables including:
Increased international competitiveness
Productivity enhancement and growth ie, creation of jobs
Collaboration
Industry and flow-on benefits
Diffusion of knowledge
Environmental, health, safety and community benefits
Climate Change benefits

14. Need for Grant Funding
Requirement that the need for funding is legitimate. Demonstrate:
Proof you can not self fund
Current financial position and position over life of project
Degree of technical risk and ability to secure other forms of funding
Impact of timeframe and window of opportunity
Outcome if grant support was not provided
Ability to match funding ( many grants are $1 : $1)

15. Grant 1 – Commercialisation Australia
Provides $196M to 2013 with ongoing funding of $82M PA
Assists researchers, entrepreneurs & innovative firms to develop new products, processes & services to commercial outcomes
Competitive merit based process

16. Grant 1 – Commercialisation Australia
Provides Funding under 3 main areas:
1 Specialist Advice & Services
Assistance to boost skills and knowledge of commercialisation
Grant funding up to $50k on a 80:20 basis
Experienced Executives
Funds to engage experienced CEO or Commercialisation Execs
Grant funding up to $200k over 2yrs on a 50:50 basis

17. Grant 1 – Commercialisation Australia
2 - PROOF OF CONCEPT PROJECTS
Grants from $50k to $250k on 50: 50 basis
Assists with testing the commercial viability of a business model or a product, process or service
Projects that focus on basic research aimed at creating base IP not eligible.
Turnover must be under $10M for the past 3 years

18. Grant 1 – Commercialisation Australia
3 EARLY STAGE COMMERCIALISATION PROJECTS
Repayable grants - $250k to $2M on a 50:50 basis
Funds a new product, process or service to be developed to a stage where it can be taken to market, must build on existing R&D work
Grants repayable on success of the project – based on 5% of gross sales after the first $100k
Turnover must be under $20M for the past 3 years

19. Grant 2 R&D TAX CONCESSION/CREDIT
For FY claim eligible expenditure at 125%
From FY2012 is a Tax Credit – claim at:
150% for companies with a T/O <20M;
133% where T/O is > $2oM
Potential to access Cash Rebate - If turnover <$20M
For FY $100k of exps - cash rebate of $37.5k;
For FY cash rebate increases to $45k
Need to document work in an R&D Plan

20. Grant 2 R&D TAX CONCESSION/CREDIT
What is R&D?
Does it involve a scientific approach ?
How does it differ from industry practice?
How is the product/process new, novel or innovative?
Would industry peers consider it R&D?
What were the main technical challenges?
How does it compare to the ‘state of the art’?
Can the results be patented?

21. Grant 2 R&D TAX CONCESSION/CREDIT
Identify and record direct costs incurred in completing activities:
Salaries – record time spent on R&D projects
Contractors- identify contractor costs
Plant & Equipment- track use of any P&E used
Other Direct costs- identify direct costs covering: travel, training, consumables etc;
Overhead- it is possible to apportion costs i.e. rent & telephone

22. Grant 3 - Export Market Development
Require $20k spent on export marketing activities
Grants of 50% of expenditure over $20K & up to $320K
Grants capped at maximum of $150K p.a.
Applicants can be individuals, partnerships, associations, statutory corporations & trusts
Applicants taxable income must be below $50M
Can claim grants under the scheme for 7 years

23. Grant 3 - Export Market Development
Eligible Expenditure
Overseas Representatives- pays the salary of overseas staff
Marketing Consultants- pays for market research
Marketing Visits- pays for staff airfares to go overseas
Intellectual Property Rights- pays for patents
Trade Fairs and Promotional Events- covers conferences
Promotional Literature and Advertising- pamphlets etc;
Overseas Buyers & Free Samples
Communications- covers telephone/internet costs etc;

24. Grant 3 - Export Market Development
Application Process
Applications must be lodged within 5 months of the end of the financial year
Following lodgement Austrade will audit claimed expenditure
First payment then made within 2 weeks with 2nd payment at June year end

25. 4. Other Funding
C’wlth Govt Emerging Renewable Program – will fund development of IT components or software for use with renewable energy technologies or enabling technologies in Australia
Vic Govt Market Validation Program – R&D grants of up to $1.5M- Currently on hold subject to review
Vic Govt -Small Technologies Industry Uptake Program – grants up to $250k to help companies to make use of small technologies (micro and nanotechnologies).
Vic Govt – Collaborative Internet Innovation Fund- grants up to $250k to accelerate the use of innovative Web 2.0 technologies

26. 4. Other Funding
NSW Govt- Collaborative Solutions Program- new mobile & wireless solutions for Tourism & Retail – grants to $250k
Cwlth Govt - Enterprise Connect - Grants to $20k for Tailored Advisory Services
Cwlth Govt- Researchers in Business- Grants to $50k for the employment of dedicated specialist research expertise
Various State Government project grants for specific industries/sectors to deliver an economic advantage - between $50K to $1M

27. Next Steps Hand out outline of suggested grants
Connect with a Grants Advisor Organisations that focus on Grant provisioning Success fee/commission based Introduction to Grants Expert