Comments on: COMMERCIAL READY SCRAPPED. TIME FOR A ‘FLASH’ PROTEST?

By: Australian Anthill

Australian Anthill — Tue, 08 Jul 2008 11:00:06 +0000

[…] 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 […]

By: Michelle Melbourne

Michelle Melbourne — Thu, 19 Jun 2008 00:28:54 +0000

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

By: Nick Ray

Nick Ray — Wed, 04 Jun 2008 03:46:12 +0000

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.

By: Kris Gale

Kris Gale — Wed, 04 Jun 2008 00:20:58 +0000

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.

By: Mike Nicholls

Mike Nicholls — Tue, 03 Jun 2008 07:44:00 +0000

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

By: Steve Hardy

Steve Hardy — Fri, 30 May 2008 06:55:54 +0000

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.

By: Chris Thomson

Chris Thomson — Fri, 30 May 2008 06:00:08 +0000

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.

By: Justin Spangaro

Justin Spangaro — Thu, 29 May 2008 16:03:25 +0000

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.

By: Tim

Tim — Thu, 29 May 2008 10:25:46 +0000

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.

By: Don Maclennan

Don Maclennan — Thu, 29 May 2008 08:10:54 +0000

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