Government funding for Development and Commercialisation of Technology

Government funding for Development and Commercialisation of Technology products David Sajfar Dennis Alemis Brian Cook Microsoft) IMC OBS

Dennis Alemis - Director Innovation Management Consultants Pty Ltd IMC has helped over 100 companies to access approx $150 M from Government & Private Equity to support projects valued at $328 M

Some of Key Government Funding sources for ICT based companies • R&D Tax Concession for ongoing R&D work • Commercialisation Institute (New), Retooling for Climate Change, Green Building Fund – Federal • Market Validation Program (Vic) & Smart Fund (QLD) • Export Market Development Grants • Comet & State Govt for Business Planning

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

Where do you start? • Undertake a review of current operations & identify major new product opportunities • Identify issues which may affect ability to attract funding i. e Structure, IP ownership, Trading history • Identify appropriate government funding & liaise with them to establish the application processesthey all tend to vary

Strategic Approach to Govt Funds

1. 1 APPLYING FOR GRANTS • Develop Project Plan outlining what the project sets out to achieve and how it fits with the company strategy; • Outline its Key technical risks, innovations and competitive advantages; • Develop the IP protection strategy; • Undertake a review management & technical capabilities;

1. 2 Commercialisation • Detail your Commercialisation strategy including: Ø Track record in commercialisation Ø Market potential and target markets Ø Competitor comparison – products and company specific Ø Competitive advantages Ø Share of potential market and forecast returns Ø Manufacturing, selling and distribution and pricing Ø Barriers to market entry

1. 3 Project Costs • Identify Project costs including: Ø Salary and wages of key technical staff Ø Contractors to provide critical expertise Ø Plant and equipment required Ø IP protection Ø Other costs such as consumables, travel and audit Ø Cashflow throughout project period (need for funding important)

1. 4 Community Benefits & Need for Funding • Overview and specific measurables including: Ø Increased international competitiveness Ø Productivity enhancement and growth ie, creation of jobs Ø Collaboration & Industry and flow-on benefits Ø Environmental, health, safety and community benefits Ø Detail why you need Government assistance & how you will fund your share

2. R&D Tax Concession • Provides ability to claim eligible expenditure at 125% rather than 100% - (From 2010 it will be a Tax Credit with an effective deduction rate of 150% for companies with a T/O less than $20 M) • Ability to access Tax Offset / Cash Rebate for expenditure in certain circumstances • At the start of the financial year must set out an R&D Plan for the year

2. R&D Tax Concession What is R&D? • 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?

2. R&D Tax Concession • Throughout financial year 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- apportion some overhead costs ie rent & telephone

3. Export Market Development Grants • Require $10 k expenditure on export marketing activities • Grants of 50% of expenditure over $10 K & up to $415 K • Grants capped at maximum of $200 K p. a. • Applicants taxable income must be below $50 M • Can claim grants under the scheme for 8 years

3. Export Market Development Grants Eligible Expenditure • • • Overseas Representatives Marketing Consultants Marketing Visits Intellectual Property Rights Trade Fairs and Promotional Events Promotional Literature and Advertising Overseas Buyers Free Samples Communications

3. Export Market Development Grants Application Process • Applications must be lodged within 5 months of the end of the financial year • Following lodgement Austrade will audit claimed expenditure • Payments are then made within approx 2 weeks

4. Other Funding • Other funding sources to be considered are: Ø COMET- Funding of up to $75 K per round Ø State Government business / project planning subsidies Ø State Government project grants for specific industries/sectors where they think they have an economic advantage - between $50 K to $1 M Ø State Government Export market assistance - between $3 K to $100 K Ø Green Building Fund & Retooling grants- assistance for energyefficient retro-fitting of existing buildings – max of $0. 5 M

Next Steps 1. Review your product development pipeline & identify those projects that may be suitable for Government Funding assistance 2. Feel free to chat with me after this session; or 3. Call IMC for a no charge full assessment of the potential options open to your company IMC Contact details: Gary Twomey or Dennis Alemis Phone: 03 90774853 EMAIL: garyt@imconsulting. com. au dennis@imconsulting. com. au