Denham Sadler
May 16, 2017

Redesign hit to incubator program

StartupLand

Redesign hit to incubator program

Alex McCauley: The much heralded but little seen incubator program is moving away from its original goals

The Federal Government “refocusing” of the incubator support program is a “perplexing” move that demonstrates how innovation has fallen off its list of priorities, according to StartupAus CEO Alex McCauley.

Last week’s federal budget revealed that the $23 million previously allocated to the Incubator Support initiative would be scrapped, and would instead be used to focus on regional innovation development.

The scheme was first announced in 2015’s Innovation Agenda, with $8 million in funding going towards supporting existing incubators and the development of new ones, along with supporting ‘experts-in-residence’.

It received a further $15 million in funding early last year as part of the Turnbull Government’s election campaign, with applications opening in September.

The initiative was supposed to provide grants of up to $500,000 for new and existing incubators, and funding of up to $25,000 to support an expert-in-residence. The government provided up to 50 per cent of a project’s total value, with the applicant having to provide 30 per cent up front.

“Incubators are the training grounds for tomorrow’s innovative businesses and they are a vital component to a successful and healthy sector. A successful startup ecosystem is a key component to the Turnbull government’s plan for boosting growth, creating new jobs and industries and improving quality of life,” former Minister for Innovation Greg Hunt said last year.

According to the department’s website, the scheme has only provided funding to one project since, with the Darwin Innovation Hub granted $500,000 earlier this month to develop a “custom-built incubator environment to support a pipeline of startups in the Northern Territory”.

A small line in last week’s budget revealed that the initiative, which is part of the Entrepreneurs’ Program, would be “refocused” to target regional incubators and accelerators.

This change will initially save the department $300,000 in 2017-18, and will then cost $1.5 million in 2018-19 and a further $1.8 million in 2019-20. No further information was included.

A spokesperson for the Department of Industry, Innovation and Science said the new program is “currently being designed” and will be launched later this year.

“The Incubator Support initiative is being refocused to better reflect the importance the Australian Government places on regional development. The changes will support regional startups by improving the capabilities of regional incubators and accelerators and will build on the current program,” the spokesperson told InnovationAus.com.

“The changes will reflect the government’s ongoing commitment to the $23 million Incubator Support initiative of the Entrepreneurs’ Program.”

While the focus on innovation in regional Australia is welcome, the fact that the funding has been stripped from another program has confused the local tech and startup sector, StartupAUS CEO Alex McCauley said.

“I think it’s a good thing that the government wants to support startups in the region. But it’s a shame that the funding has to come from funding that’s already been allocated for other incubator support measures given this is supposed to be one of the central pillars of the government’s agenda,” Mr McCauley told InnovationAus.com.

With only $3.3 million allocated to the new program, Mr McCauley said it’s disappointing that the government had to take it out of a successful existing initiative.

“To not be able to find that money in the rest of the budget, to have to reallocate that from an existing program that is by all accounts working well, seems perplexing. [The incubator initiative] had been well received by the community - it seems odd that this money has to be taken out of a successful program,” he said.

Runway Geelong chief executive Peter Dostis has also slammed the changes, labelling them a “tokenistic gesture” without any real impact.

“I can’t see anything here that shows the government is addressing the issues which already exist,” Mr Dostis told SmartCompany.

Instead, Mr Dostis said the government needs to address existing issues with the program, including the requirement for incubators to provide 30 per cent of the funding upfront, and the “fuzzy” selection criteria.

The federal budget also allocated $10 million for the creation of “innovation labs” in South Australia and Victoria as part of the $100 million advanced manufacturing package.

This newfound focus on regional innovation is a positive move, Mr McCauley said.

“I think startups and tech have a big role to play in helping regional Australia grow and mature with the rest of the economy, delivering the benefits of the new economy to the regions,” he said.

“Both parties are committed to bringing some of the benefits of tech to the region, and a big part of that is to make more of Australia understand that this stuff matters and that it has a positive impact on our economic future,” he said.

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