COMMERCIAL READY SCRAPPED. TIME FOR A ‘FLASH’ PROTEST?
James Tuckerman, Editor-In-Chief, Anthill Magazine
Have you ever heard of a ‘flash protest’? It’s similar to a ‘flash mob,’ where a group engages in seemingly spontaneous but actually synchronised behaviour.
The concept has been attributed to Bill Wasik, an editor at Harper’s Magazine, initially as a kind of street performance. Popular examples of the ‘flash mob’ concept involve getting dozens of people to perch on a ledge stone in Central Park (all making bird noises), a ‘zombie walk’ in San Francisco and an incident where over 100 people ‘froze’ perfectly still in New York’s Grand Central Station for one minute.
But it can also be used for political purposes. Let me give you an example…
Not so long ago, a small group of Belorussian citizens decided to stage a protest against the autocratic President of Belarus, Alexander Lukashenko. The country had cut loose from the USSR after the collapse of European Communism. While many former Soviet states embraced the democratic process, Belarus retained a state-run economy and a President reluctant to give up his own brand of unchecked power.
So, what would you do if you were part of a small group eager to bring about political change in a state-run country like Belarus?
Option A: Stage an angry protest, with placards and organised chanting, where you would most probably be arrested during the planning phase, before even the first slogan could be shouted.
Option B: Stage a ‘flash mob’ by inviting participants through email and SMS to ’spontaneously’ show up at a public location and join other disenfranchised citizens in the act of eating… wait for it… ice-cream!
The second option is exactly what happened in Belarus in May 2007, soon followed by a mass ‘reading’ protest, and later a mass ’smiling’ protest. The two main benefits are obvious: 1) The plan cannot be ‘thwarted’ by the establishment due to the viral and instantaneous nature of new communication technologies; and, 2) It’s hard to arrest someone for eating ice-cream, reading or smiling without attracting international condemnation.
Of course, there’s also nothing more liberating (and nothing more politically destabilising to an autocratic state) than the public’s realisation that other’s are equally dissatisfied with the status quo.
Back to Commercial Ready…
According to the AFR, on 19 May 2008, at least 220 aspiring technology entrepreneurs were caught in the surprise axing of the four-year $700 million Commercial Ready program in the federal budget.
For a full grants overview (the good, the bad and the ugly), click here.
These people had spent hundreds of thousands of dollars collectively on their applications, and were offered little more than a letter explaining what other funding programs they might be eligible for.
However, according to many industry pundits, the closure of this program also has significant longer-term implications for innovation in Australia.
As reported by Slattery’s Watch, Ian Birks, CEO of AIIA, recently stated: “SME innovation and growth is a critical component of Australia’s aspirations in the information economy… and we cannot afford to fall behind in these areas.” While TVP General Partner Mike Zimmerman commented that he believes the death of Commercial Ready “will be an enormous blow to SMEs in the ICT sector… Many of the industry’s successful start-ups (and their investors) had seen the CR grant as THE critical government program supporting innovation.”
And from Perth-based venture capital investor Matt Callahan, published in the AFR: “Wow - that is probably the biggest damaging stake into the start-up companies’ heart I have ever heard of. I am stunned.”
Anthill also received an alarmingly large number of anonymous and public comments. Hence, this blog post.
So, what’s the plan?
Step #1: Add your comments below. Is there a genuine complaint to be made? If so, where should this complaint be directed? Your feelings, thoughts, opinions and suggestions will shape our actions.
Step #2: Join us in the first stage of a ‘flash protest’. You won’t be required to go anywhere or do anything complicated - just make a phone call when prompted by SMS.
To leave your mobile number and join the ‘flash protest’, click here. (Of course, we won’t pass on your private details to anyone else. This is all about activism! The power’s in your hands.)
Step #3: Forward this blog post to everyone you know who will be detrimentally affected by the scrapping of Commercial Ready (and anyone you know who is likely to feel strongly about the impact it’s closure will have on Australian innovation).
Step #4: Wait. Over the next five days, we’ll form a plan based on your comments and suggestions and the volume of responses we receive, and then alert you via SMS (see Step #2).
Here’s our ‘out’ clause…
If this ‘call-to-action’ fails to generate a significant response, we’ll drop the cause and move on. If the Federal Government introduces changes that will circumvent the complaints, we’ll again move on. And lastly, if this begins to get beyond us (we’re a small team at Anthill), we might need to review our position (and get back to work, so the next issue comes out).
Whatever the outcome, we’ll keep you posted, as we’re sure that whatever path we take, the outcome will present an interesting story on the rise of social networking technologies and ‘digital activism’.
What next? Get active, Anthillians.
To join the ‘flash’ protest, click here.
Leave any comments or remarks you might have below.
Tags: Activism, Commercial Ready, Federal Government, Funding, Grants, Protest
May 28th, 2008 at 3:09 pm
James who is advising the govt on their startup strategy? Perhaps it’s time for a ‘council’ of aussie entrepreneurs who are actually living the valley life to advise the AU Govt on how to actually cultivate a startup culture downunder?
I volunteer Martin Wells, Clay Cook to start with.
I can donate the domain ‘australia2.0workgroup.org’
Chris
May 28th, 2008 at 3:17 pm
mmm - ice cream - I’m in!
I think there are 2 parts to this story.
1 - Letting the government know that we are displeased. (I’m part of one company that was in the middle of the application process)
2 - Using this as an opportunity to push for new programs that will end up being better than Commercial Ready.
On www.technation.com.au I recently wrote a post one replacement that I think would help Australia’s hi-tech community: an incubator fund.
May 28th, 2008 at 3:20 pm
Australia is using up all the natural resources inherant to the land, we need to create a sustainable market for when these resources are deplieted. Along with actually manufacturing the raw material from the land instead of shipping it abroad, we need to build a reputation for innovation and entrepreneurship as these skills will attract skilled industries ,investment, economic growth and sustainability.
To be taking government funding away from individuals who have the aforementioned qualities, Australia is effectivley pushing these future captains of ‘industry and innovation’ away to other countries that are more future orientated.
I would be more than happy to become part of your cause, here are my contact details.
david.wollage@international-inventors.com
0403 669856
May 28th, 2008 at 3:21 pm
James, I’m glad to see someone with media clout has taken up the cause of fighting on the behalf of the entrepreneurs and start-up companies that were planning on or in the process of applying for CR or CR+. Letters and petitions should be senr to Carr and Carr’s office, as well as the Prime Ministers office and various state counterparts. Perhaps a list of stakeholders would be a good way to get things started.
May 28th, 2008 at 3:21 pm
They need to bring a grant procedure that doesn’t require the company to make such sacrifices to get it. They also need to avoid people trying to scam them. catch22, but also academic when we have no program at all.
May 28th, 2008 at 3:27 pm
The matter should be pursued.
There is the immediate concern of addressing the interests of those applicants acknowledged to be in the program’s pipeline. The closure of Commercial Ready echoes the suspension of R&D Start several years ago. What’s worse this time around is that there is no prospect of the program re-opening and the demands of a typical Commercial Ready application far outstrips those associated with R&D Start.
The second issue relates to the impact on the current National Innovation Review. The policy mix debate is a valid one and it now appears that Commercial Ready was not put forward for specific response (compared with the R&D Tax Concession) as the decision had already been taken. To close this significant program in the early stages of the review casts doubt over the intent of the review and has drawn an adverse reaction from participants. The Federal Government needs to reassure participants that the review is one of substance rather than being simply for show.
I have been in too many government “consultations” that end up not consulting on what turn out to be the main issues. This must not become another example of this.
May 28th, 2008 at 3:30 pm
There was a lot of criticism of Commercial Ready being too bureacratic and top heavy as well as expensive to apply for. Commercial Ready Plus was a step in the right direction but cancelling the whole program is cleary and example of throwing out the baby with the bathwater.
I’m sure there are many Australian success stories that owe their early survival to Commercial Ready funding and the need for ongoing innovation support has been flagged in previous comments.
I don’t particularly want to see a resurrection of the old CR program but would be pleased to participate in any industry initiative to providing input on a new program with similar ambitions.
Regards,
Michael Stone
Amethon Solutions
www.amethon.com
May 28th, 2008 at 3:39 pm
My view is that the problem is not with Sen. Carr rather with Mr Tanner. As far as I know Sen. Carr remains a CR supporter. Perhaps a ‘flash protest’ to the Minister for Finance is in order or to every member of Federal parliament (Senators included)!
One of my companies had been told they had actually won a grant on April 15 - only to be called the day after the budget to say that ’sorry, as the contract had not been signed, there will be no grant - 8 months of effort for nought!’
No notice, no transition, no replacement means no planning by anybody in the government.
May 28th, 2008 at 3:39 pm
I am unhappy that there was no warning that they were going to pull the pin.
We have spent a sizeable amount of time and money paying consultants to work on our grant application.
We even met with the local Ausindustry in Brisbane about 5 days before hand with our draft, and they didnt mention anything (They apparently didnt know either).
James Greig
http://www.bloomtools.com
May 28th, 2008 at 3:47 pm
As I said in my blog post http://blog.bluecoveventures.net/index.cfm/2008/5/16/Commercial-Ready-Rest-In-Peace - this is an absolute tragedy.
A point overlooked in a lot of the analysis is the loss of the experienced staff within AusIndustry. It took years for them to build up their understanding and competence in early stage commercialisation. Thats all gone!
Even if a replacement programme is forthcoming we as entrepreneurs will have to wait for AusIndustry build up their competence again.
May 28th, 2008 at 4:20 pm
how is this going to help with the brain drain?
I have no option but to head overseas now.
If there is enough howling Mr Rudd, might review the decision and reverse it, like the pensioners missing out in the budget,
New economy? backward economy
May 28th, 2008 at 4:21 pm
I guess it’s easy to be cynical but your talking about a goverment that in the last 6 months has:
1. Said “Sorry” - important, but just words at this stage
2. Signed the Kyoto agreement - important, but just a signature at this stage
3. Had 20:20 summit - probably important, but just more words at this stage
4. Looked to curb a cultural issue (binge drinking) with an ill thought out tax
Now in the budget they go & slash federal funding for innovation albeit with the promise of an “innovation” review.
I’ve seen this sort of approach before in a corporate I won’t mention. The only way to get around it is for the workers to make them irrelevant. By this I mean get a bunch of successful entrepreneurs with millions in their accounts & time on their hands to step in & develop a better approach & take it to the opposition with the hope that in 3 years time we can stop talking & start doing (something, anything) as I fear to try & engage the current leader & his team (not the labour party as such, who might work differently with a different leader) would be a large waste of time & resource as what the leader promotes, is a lot of talking & not a lot of doing (so far).
May 28th, 2008 at 4:31 pm
We have a Commercial Ready grant, and it was the single largest factor is us NOT moving our operation overseas.
Because we got the grant, more than one of the top 100 companies in Australia will be able to use our technology instead of offshoring jobs to India.
NASA is using our product to promote the Phoenix lander. The Federal Police are thinking of using it to fight crime.
Our experience of Commercial Ready is that it is a well-thought out grant with competent management.
Aussie companies already have a huge struggle raising early stage funding for risky technology, compared to our USA competitors.
This grant made me feel I was supported in the slave pits of getting a new technology off the ground, and made me proud to be an Aussie. I ranted on to US clients about the glories of Australian government support of innovation.
No more!
my sympathies to those who did not get it in time.
Liesl Capper
www.mycybertwin.com
May 28th, 2008 at 4:36 pm
Small business is the largest employer in Australia - Government seems to take this for granted.
I have always wondered why Government doesn’t have cheap yet powerful initiatives to stimulate small business (mentor programs, incubation schemes, 0% loans).
I think we have to take a couple of steps back. We need in the first instance to address this cultural issue that seems to undervalue the importance of entrepreneurial risk and is disrespectful towards commercial failure. We also need to look at the subtle and sometimes not so subtle tall poppy issues - from there we can then build programs to stimulate and support business.
Kevin
http://spellr.us
May 28th, 2008 at 5:07 pm
Too true, Kevin. We covered this in our issue 18 cover story (”Autopsy of a start-up disaster”). http://www.anthillonline.com/article_detail.php?id=113
Entrepreneurs need to know they can take the risks required to succeed without being shamed by their failures. It’s also important for us all to know that start-up ventures, while often lonely, are a shared journey.
In a market the size of Australia, Government support for start-up companies (both cultural and financial) is crucial, not just because it enables specific opportunities but because it also fosters community understanding of what is required to succeed on a global scale.
We can only hope that Commercial Ready has been scrapped because something more refined and effective is in the works.
May 28th, 2008 at 5:17 pm
As one of the very few Australian VC firms, we have invested in more than a couple of dozen Australian technology companies. It is absolutely irrefutable to me that the commercial ready program (and its predecessor programs going back more than 30 years!) has made a significnat positive impact on the commercialisation of Australian technology. AusIndustry’s own figures suggest a benefit to cost ratio of 4.5:1 based on direct dollars invested vs return to the community. More specifically, our investee companies have undertaken research that absolutely would not have been done if the program did not exist or would have been done offshore. Finally, those companies have raised investment capital from local and offshore corporates, individuals and institutions that would never have happened without undertaking the requisite R&D and the amounts raised have been a significant multiple of the grant dollars expended.
The axeing of this program will have a massive impact on the creation of startup companies in years to come. Even if a new program was implemented in 12 months time coming out of the Innovation Review, the skills and experience built up within Ausindustry and the various market participants will have been lost as staff have already been let go. Of course, many of those companies that have invested heavily in time and money to submit applications that will never be considered may never recover from this abrupt change to their plans.
Thinking ahead, its imperative that anyone with an interest in seeing this situation redressed makes a strenuous argument to the national innovation review at innovationreview@innovation.gov.au and, of course, to their government representatives.
Allan
May 28th, 2008 at 5:32 pm
Visit sunrise’s website and email to suggest a story similar to the cutting of the regional grants programme.
If enough email them they will ask Rudd what he thinks he is doing on National TV.
Maybe James Tuckerman and some VC’S could argue the innovators case.
scott
www.winepacs.com
May 28th, 2008 at 6:16 pm
Instead of Ice Cream - it seems that going commando in the streets attracts media attention - ala taxi drivers and pensioners.
Imagine all of us innovator geeks with our lilly white skin, glasses- ruffled hair in white lab coats scaring the bejeevas out of city commuters - they might reinstate the CG Grants and double it to $4 billion just to put our lab coats back on.
May 28th, 2008 at 6:20 pm
Is this the work of the geniuses invited to the 2020 summit?
May 28th, 2008 at 6:41 pm
James, we’re behind you 100%. Please keep in touch an let us know what develops.
People Power!
May 29th, 2008 at 9:58 am
It appears that one of the reasons behind scrapping CR is that most firms that received the funds would have been funded in other ways. Strangely, they seem to forget that this assumption is made in hindsight after the business has become successful and investment-worthy due to, in part, the CR program.
Having received a COMET grant it was amazing how quickly the phone started ringing as suppliers and potential businness partners became aware of our project. This was something that we could have never orchestrated ourselves as we simply did not have the network or the brand.
Anyone involved in the applications for these Government programs know that it is a very hectic and timely process but what is also does is prepare the business for the next stage of growth. Further, Investors look at these programs to qualify the projects that have some chance of success and the government should not underestimate what their stamp of approval does for a project, company etc. CR acts as a hub of sorts to bring many business partners together and its dismantling will leave a void and will stiffle innovation.
May 29th, 2008 at 11:05 am
The Commercial Ready is a life blood in the capital starved technology start up land. It is also a major employment and training ground for young scientists and engineers in entrepreneurship and global business. So much for the much promised support of innovation and “education revolution”. To where?????
May 29th, 2008 at 11:29 am
I’m an expat Yank who grew up in Silicon Valley when apricot orchards still grew in the Valley. I migrated to Australia in 1993 and met some of the best and brightest people working in technology so I asked myself with this quality educated talent why couldn’t you do a startup in Australia like they do in Silicon Valley. So I did and all the knockers told us how we would fail, we have now devloped a very successful profitable internet company with over 99% of our sales exported employing many bright software engineers and managers. I thought this would be a good thing that would be recognized by politicians, government and the community.
Sadly, I have come to the conclusion that nobody in power really cares about creating new industries, jobs or wealth in technology as long as the mining boom continues. It is neither in the heart or minds of politicians to see the long term benefit of creating new technology based industries that utilize this nations intellectual capacity and employ people in good jobs.
Reality is there is little funding available to commercialise world class technology in Australia. If it weren’t for the government’s R&D START grant my company wouldn’t exist. I know another budding entrepreneur with great technology was about to submit his application for an R&D Grant vital for his companies survival. I don’t know what will happen to him now, I think the government is making a huge mistake and is penny wise pound foolish. After creating a successful Australian technology company, my advice to any budding entrepreneur in Australia is to move to Silicon Valley or get a job in the public service, go home at 5PM and enjoy the laid back life style Australia has to offer.
May 29th, 2008 at 12:15 pm
As many of you know, our clients have been major supporters of venture capital managers and the new commercialisation funds. I have now discussed this program termination widely and it is apparent we have been too removed from public view. I met yesterday with the Innovation Review Panel and believe the Panel will listen but we need to maintian the protest.
I ask for your help in three ways.
First, continue to send your coments to the Government (PM, Treasury, Finance, Innovation, Communications), with all copied to the Panel and get all your investees to also do so. PLease note the Panel has re-opened itself for submissions on the CR propgram and the more sent the better. But NOTE the Panel will close its proceeses in only a few weeks from now to write its report. The panel is open to ideas about replacement programs.
Second, I now want to prepare and distribute across the governments and the Panel a profile of active venture interests stories. I am proposing to do this under the banner of which ones do you want us to cut or which investor should we turn away or something to that effect (ideas welcomed). It is clear that we need a strong PR campaign. I need to distribute this task so am asking each of you to help by preparing a word doc with each comapny briefly profiled along the lines of:
Based on discoveries at the (uni, research centre, elsewhere) XCoy is developing therapeutics, products services / or is commercialising a technology that will benefit ( who/how). Then an indication of the stage of commercial development and the work yet to be done. Please note if a CR or other program grant had contributed to the company’s progress (got it across critical hurdles) or would contribute. Include the logo if possible.
References in the summary to key people/number of employees would be an advantage to give this a personal or growth flavour. Any other commentary that you think is relevant to the circumstances we are facing will be welcomed.
I know this is an imposition but I simply can’t do it on my own. I also want want to use the material to encourage new institutional investors to come into the sector.
And of course the sooner the better.
Third, support the Anthill campaign.
Thanks
Paul Cheever
paul.cheever@accesscapitaladvisers.com.au
May 29th, 2008 at 12:34 pm
The CR horse has bolted. How should Australia react:
1. It is critical to voice the opinion that this decision and the way it was delivered was arrogant and irresponsible at many levels. Basically bad economic policy. It would be good if James could cause media collaboration to deliver this message.
2. It is important to offer a solution and we have a herd of talented cats. Is it concievable we could collaborate to propose solutions.
I notice that Chris Saad has offered to coordinate. I would be happy to contribute the begins of a situation analysis and I am keen to know what others feel are the central policy requirements.
Perhaps James or Chris could offer a place where participants could contribute their thoughts.
Ultimately I am looking for a couple of papers. One that describes the damage done by this decision. One that provides policy proposals supported by credible sources.
It is more work but this issue should be a catalyst for change.
May 29th, 2008 at 1:13 pm
This is a perfect example of why relying on government funding for private enterprise is fraught with peril.
That being said, the way the cancellation of the program was handled is shameful! At a time when Australia is thriving and the government is awash in resource generated tax revenues, it is imperative that other industries not be dealt unexpected policy blows. The resource boom will not last forever, Australia must continue to build its knowledge based economy. Pulling the rug out from under a number of good companies does not indicate to me that the current Federal government are the progressives they purport themselves to be.
In the long term we must work to build a viable and well funded venture capital base in Australia. Then we won’t have to worry about the capricious behavior of government.
Many of the countries where VC thrives enjoy active local investment in venture funds from local institutions. Sadly this isn’t always the case here. Until this occurs on a broader base here in Australia, we will remain handicapped. The VC industry must continue to deliver strong results, and the investors must keep an open mind to local VC as part of their alternative investment policy.
In the short term let’s hope there aren’t anymore surprises looming.
May 29th, 2008 at 1:43 pm
What should we do while we are waiting to hear if our flash protest will be accosting people in Martin Place in our lab coats, or eating pizzas with our laptops on the harbour bridge?
I have seen this advice so far in the comments:
Allan Aaron says
“its imperative that anyone with an interest in seeing this situation redressed makes a strenuous argument to the national innovation review at innovationreview@innovation.gov.au and, of course, to their government representatives.
Tim says:
Perhaps James or Chris could offer a place where participants could contribute their thoughts.
Paul Cheever says:
….I now want to prepare and distribute across the governments and the Panel a profile of active venture interests stories
Liesl asks:
If we want to take an active role in lobbying government, and show quantifiable national benefit of the grants, and the loss to the country of CR dying, where should we make a noise?
I also want to add to the earlier comments about cultural support of innovators. I have also built companies in other countries, and in Australia being an entrepreneur still seems to have the flavour of scorn than glory attached, relative to other countries. It felt very nurturing having a government grant which said “Good on you, keep doing what is in your DNA to do, dont go overseas or start a chain of coffee shops.”
Liesl
May 29th, 2008 at 1:45 pm
We are a company that has been able to attract capital with a view to matching these funds with CRgrant funds. As a result of this have been able to grow a strong talent base within our team that has facilitated a fast tracking of the development of our technologies towards a clinical stage. This develoment would not have been possible without the CR programme.
The abandoment of inovavtion in his country cuts to the core of the governments naivety and lack of understandings of the potential impacts that we will see as a result of this ill concieved policy change.
We have previously resisted grant assisstence from our Asian neighbours due to the availabbility of CR grants and and our desire to develop our technologies and the skill sets around them here in Australia for our collective benifit.
The lobbying efforts of all are now required to force change and a rethink by the governent. This cut makes the government look ordinary on many fronts so lets make sure all hear and know of this policy disaster or should I say lack of policy disaster.
Maintain the rage and hopefully we as a group can seek change.
May 29th, 2008 at 2:08 pm
My company was one of the twenty or so companies whose applications were accepted and being processed but had not yet contracted with the government.
The government was probably right in saying that most projects will still go ahead without Commercial Ready but they will go ahead with far less benefit to the Australian economy.
For example, we are now planning to outsource a lot of the development work for our project to Eastern Europe where I have had success with web developers working for my web development company Digital Monkey. They will get the work done but the money will flow out of Australia.
Also, we expect the project to take almost twice as long without assistance. This will result in a less commercially viable product due to the massive impact on time to market and the reduced competitiveness that it will most likely bring. This gives our competitors in the US, Japan and Europe a boost.
While this is all bad, I think the axing presents an opportunity for us to lobby for something that I believe will be even more beneficial to startup tech companies than Commercial Ready - tax incentives for Angel Investors to invest in R&D focused companies. This coupled with the removal of prohibitive finance laws which prevent real Angel Funds from being setup would provide a real stimulus to the commercial funding of R&D in Australia.
This will not only help in the short-term, funding startup technology companies, but it will also help to develop Australia’s venture ecosystem from the ground up. Such tax incentives in California are instrumental in encouraging the development of Angel Funds which then feed companies into the venture funds.
May 29th, 2008 at 6:28 pm
My company was weeks from receiving investor funding and applying for a CR grant. Apart from the scarce resources spent with consultants to apply for the grant we now face totally changing the business plan. The component that was going to attract the funding will be scrapped. Jobs that would have been created by the funding will either be overseas outsourced or not undertaken. Short term needs and thinking will replace the intense planning required by the grants and thus inevitably change our product/service offering.
Worse it makes the decision to move the whole operation OS. So instead of the 2 dollars spent here developing talent and supporting the lawyers, accountants and ancillary support industries like design, marketing etc - the one dollar will be exported and spent OS.
The upside is that somewhere a ring road will get funding!!! Winning thinking.
May 29th, 2008 at 7:10 pm
Having the experience of being awarded a grant only to have it cancelled by the last Labor Government when they axed the relevant program, we understand the devastation.
We too were in the middle of a CR application when K Rudd cancelled it; we have spent months of unpaid time and money preparing a CR application which was at the point of lodging the final application.
Fortunately we have also operated under Tax Concession which will provide some assistance.
Entrepreneurs are typically a focused mob but usually on their own obsession, I agree we need a greater voice together
May 29th, 2008 at 9:25 pm
As a business that has spend some time and effort progressing a CR grant application, we are very disappointed with this decision and with the appalling way it has been implemented.
However, I think that Larry Lopez (Comment 26) is absolutely correct in saying we need to build a private venture capital base in Australia. There is an interesting commentary from ABC Radio’s counterpoint program on this very issue at http://www.abc.net.au/rn/counterpoint/stories/2008/2255607.htm
We cannot wait while governments procastinate over this vital issue. All those disaffected by this decision, and in fact all Australians, need to work together to help stimulate innovation investment from the private sector, both locally and overseas.
I’m hoping that James and the innovation community would be interested in this as a way forward, albeit a long term one.
May 30th, 2008 at 3:03 am
The uncomfortable reality for Australian Governments, entrepreneurs and investors alike is that Australia is a tough place from which to commercialise globally competitive innovation. Commercial Ready made a critical difference.
This decision to cancel Commercial Ready will without a doubt result in the premature death of many Australaian innovation companies that would otherwise have been successful wealth creators for Australia, and the migration of many others overseas.
May 30th, 2008 at 5:00 pm
Congratulations to James and Anthill for taking the initiative in this crisis.
As a consultant to technology-intensive manufacturing businesses I’ve worked with clients to plan for CR, prepare CR applications or ensuring the CR grant was used effectively. This experience suggests that:
1) The companies that were recipients of CR grants, and therefore most affected by the cancellation of the CR scheme, are early-stage knowledge-intensive, high-growth: exactly fitting the description of the only manufacturing sector capable of survival in the face of competition from countries with low labour costs.
2) CR reduced the risk to investors and thereby encouraged risk averse super funds to invest in these knowledge-based industries; greatly increasing the volume of VC funds
3) By reducing the amount of equity capital that start-up firms needed to raise, CR gave those firms flexibility about the source of funds and limited the number of firms selling out prematurely to off-shore interests
4) CR enabled some firms to pursue product development projects that would otherwise not have been viable and also encouraged conservative firms in declining industries (TCF, Automotive etc) to venture into new, uncertain but growing sectors after decades of stagnation
Lets keep up the protests to ministers and the Innovation Review. This issue is too important to just become budget road-kill.
May 30th, 2008 at 5:55 pm
Unfortunately the “valley of death” for funding of early stage companies has just become much deeper. The Commercial Ready Plus program in particular provided vital support for these small companies which have traditionally been very difficult to finance. The removal of the program is a an extremely short sighted move.
June 3rd, 2008 at 6:44 pm
Fully support your protest.
There is very little early stage VC money available in Australia and in much smaller amounts per investment than in US. (we have VC funding but I see my peers in similar companies in the US getting 10x the investment for similar businesses).
Large funds in Australia may have 100-200m to invest. Recently I pitched to 2 funds in US who between them had $13 billion under management and $2 billion to invest immediately.
We spent time and wages worth approx $10k in preparing and was within a week of lodging our application when Comm Ready was axed
Its ok for a Government to take office and make changes to programs or launch replacement programs. However to cut a program and provide no replacement and no plans for a replacement for the foreseeable future is not very forward looking.
Governments think in years, innovation businesses think in weeks or days. It will mean a lost year for Australia’s Innovation Businesses and nothing will get that back.
Sadly without sounding too liberal, I just dont thinkLabor gets Business, its just something that pays wages for their union workers.
They dont understand how to start, grow or run one they dont understand what it takes.
They dont understand that it takes 1000s of entrepreneurs all having a shot at the title to produce a BHP, QANTAS, Google, Westfield or any of the innovative businesses that we all admire and that employ millions of workers.
Mike Nicholls
CEO
Enikos
June 4th, 2008 at 11:20 am
A major factor in the decision was last year’s Productivity Commission (PC) report on public support for innovation.
The PC report opposed support programs where the projects would have occurred anyway ie. where there is no additionality. The scrapping of Commercial Ready was accompanied by a government spokesperson referring to the report’s findings.
This is flawed thinking. Most Commercial Ready projects are likely to be undertaken at some level. The support provided by the grant enables the R&D to be carried out at greater depth, quality and speed. In other words, more R&D (additionality) on the projects that the market conditions support.
Attempting to design programs that only support marginal projects is a folly and this misunderstanding of what additionality is should be the subject of submissions to the National Innovation Review as highlighted above.
June 4th, 2008 at 2:46 pm
I had high hopes that a Labour Government would show the same initiative and wisdom in developing a cohesive industry strategy which was last seen during the era of John Button in the eighties.The ” Project Grants Program” has been around in various guises since the early eighties which in itself indicates the assistance provided and the outcomes measured were worthwhile. Many reviews have been commissioned since the original Program inception and would have recommended discontinuation of the program if it had not proved to be effective.
For businesses that are run through trust structures they have no support of any kind now unless they restructure their operations at great expense.
This is purely a cost cutting measure and unless you are a “green industry”, for the general innovative SME out there in the industrial and business heartlands of Australia there is now little support left for R& D and export development. One can only hope that the Federal Government might wake up to this fact and at least increase the R & D write-off back to its original rate of 150% and also look at a less bureaucratic grants program to support industry wide innovation.
June 19th, 2008 at 11:28 am
A recent trip to Seattle in the US to showcase our Australian software technology has redoubled my conviction that the Australian Government has made a critical error in its decision to cut the funding for the important CR initiative. What it can achieve is to help companies bring their innovative ideas to the marketplace faster than their competitors: the time-to-market advantage.
And with the company itself matching the government funding dollar for dollar, the program is an extremely cost-effective way for the government to both trigger and nurture innovation.
In our case, we had secured $1.2M of private equity funds from Singapore to meet the dollar-for-dollar CR criteria. And we were just days away from a decision on the grant application - that we were expecting to be positive - as the matched funding element was the final milestone we were required to achieve. After close to 18 months and 1000 hours of effort (easily $200k), it is an injustice to have the doors slammed on us after so much work.
Sure, Treasury will say that industry will get on with it anyway, and this is true. However, the government is grossly naïve to think that they cannot positively influence the acceleration of a competitive advantage for Australian technology in helping companies get traction in the market early.
Let’s keep working together to bring about a positive change.
Michelle Melbourne, Intelledox
July 8th, 2008 at 9:00 pm
[…] we desperately hope is that the poor showing is not a reflection of the industry as a whole. We voiced our anger at the close of Commercial Ready and I recently heard rumour that the ICT Secrets program has also […]