Government funding for Development and Commercialisation of Technology products

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

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

3. 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

4. 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

5. 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 processes- they all tend to vary

6. Strategic Approach to Govt Funds

7. 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;

8. 1.2 Commercialisation • Detail your 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

9. 1.3 Project Costs • Identify Project costs 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)

10. 1.4 Community Benefits & Need for Funding • Overview and specific measurables including: • Increased international competitiveness • Productivity enhancement and growth ie, creation of jobs • Collaboration & Industry and flow-on benefits • Environmental, health, safety and community benefits • Detail why you need Government assistance & how you will fund your share

11. 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 $20M) • 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

12. 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?

13. 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

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

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

16. 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

17. 4. Other Funding • Other funding sources to be considered are: • COMET- Funding of up to $75K per round • State Government business / project planning subsidies • State Government project grants for specific industries/sectors where they think they have an economic advantage - between $50K to $1M • State Government Export market assistance - between $3K to $100K • Green Building Fund & Retooling grants- assistance for energy-efficient retro-fitting of existing buildings – max of $0.5M

18. Next Steps • Review your product development pipeline & identify those projects that may be suitable for Government Funding assistance • Feel free to chat with me after this session; or • 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