Decoding the new Commercialisation Australia grants program

Adrian Spencer, chief executive of grant consultancy GrantReady, is gearing up for a big year.

The opening of the Government’s new Commercialisation Australia grants program has him marshalling all his grant writing experts to handle the volume of inquiry he’s expecting to flood into his Melbourne firm.

“This is the biggest new grant for Australian business in years,” Spencer says.

The $196 million program is the centerpiece of the Rudd Government’s innovation policy and is designed to replace the Commercial Ready program that was axed in the Federal Budget handed down in 2008.

That means there will be lots of pent-up demand for the new grant, as innovative companies try to get their commercialisation efforts back on track.

And given this is a merit-based grant program, it’s likely to be highly competitive.

To help you understand how the new grants work and what you’ll need to get one, we’ve asked Spencer to take part in a special SmartCompany Q&A.

Adrian, what exactly is Commercialisation Australia? It sounds like a government agency, but really it’s a grant program?

That’s right. Commercialisation Australia is a merit-based, competitive grants program to assist companies to commercialise their ideas. There are four basic components:

• Skills and Knowledge – up to $50,000 to access specialist advice and services.
• Experienced Executives – funding of up to $200,000 over two years (up to $100,000 per year) to engage an experienced chief executive officer or other executives.
• Proof of Concept – grants between $50,000 and $250,000 to assist with testing the commercial viability of the business model or idea for a product, process or service.
• Early Stage Commercialisation – repayable grants from $250,000 to $2 million to develop a new product or service to the stage where it can be taken to market.

Is the grant for companies that have already developed a product or service and need help to take it to market?

No. Many people are making the mistake that this program will support marketing and sales programs. It is really designed to help with the steps prior to commercialisation. In that sense, the program title is confusing. In reality, the activities to be supported are pre-commercialisation and innovative.

To avoid some confusion, examples have been given, showing that ‘Early Stage Commercialisation’ activities can include:

• Product development
• Testing and documentation
• Tooling-up for full scale production
• Establishment of quality control
• Market validation
• Establishment of management teams
• Initiation of sales and marketing
• Execution of IP strategy

Which companies are eligible?

As a starting point, you must be a non tax-exempt company incorporated under the Corporations Act 2001. The following alternatives exist:

• A researcher applying through an Australian university or Publicly Funded Research Agency (PFRA) commercialisation office.
• An individual applying through an eligible partner entity.
• An individual who warrants to form a non tax-exempt company incorporated under the Corporations Act 2001 if the application is successful.

Then there are few more specific ones:

• The combined annual turnover of the applicant for the three years preceding application must be less than $10 million per year for the Skills & Knowledge and the Proof of Concept programs and less than $20 million per year for the Early Stage Commercialisation program.
• You must have ownership or beneficial use of the IP for your commercialisation project.
• You must be able to demonstrate that you are able to fund your share of the project costs.
• You also need to comply with the Equal Opportunities for Women in the Workplace Act 1999.

Funding your share of the project – what does that mean?

It is important to be aware of funding requirements should you be successful. The biggest of these requirements applies to the Early Stage Commercialisation category, where grants of between $250,000 and $2,000,000 are repayable. The conditions of repayment are that once the company has achieved $100,000 or more in accumulated sales it must begin to apply 5% of sales towards repayment of the grant.

It all sounds good, but it also sounds pretty familiar. Have similar programs existed before?

Yes. Commercialisation Australia was launched just before Christmas and has the suspicious look of a re-wrapped offering, presented to exactly the same audience.

In the last few years the Australian innovation community has been offered a suite of programs with similar objectives, such as COMET, Commercial Ready, Commercial Ready Plus, Climate Ready, BIF and now Commercialisation Australia.

Is there a real difference between them? And are we gradually getting a better package as time progresses? Time will tell.

So what is really different about these programs?

There are a number of points that distinguish it and should lead to the provision of successful and strong support. These include:

• Three distinct stages of commercialisation support, more integrated than before.
• Transitional assistance between each of these stages, leading to sustained support for the whole life-cycle of a project.
• Multiple entry points for applicants, as well as multiple exits in an attempt to lead more directly to capital investment, licensing, joint ventures, fast failure or referral to other programs.
• The lower turnover thresholds.
• The use of case manager and mentors.

How will the case managers and mentors operate?

Case managers are assigned to approved applicants, and match up businesses with appropriate volunteer mentors. These mentors should be able to add great value to your project, as most of them will have commercialised products or services, and will have specialist knowledge in particular markets and industries. As applicants need change, for example by progressing from research to proof-of-concept, individual mentors can also be changed, ensuring the knowledge and skills available to companies is always tailored and relevant.

We have seen from experience that some companies flourish with this type of support and others just find it interfering. Either way, the case managers will certainly have their work cut out.

What about the application process? What sort of things will I need to address?

The pre-application checklist (you can download it here) lists five areas that you will need to talk about in your application:

• Need for funding. Here you will need to explain why you have insufficient funding to complete the project and why you have been unable to find funding from an alternative source.
• Commercialisation plan and potential. Here you will need to explain how you have appraised the potential for your project, defined your target market and examined any route to market issues.
• Market opportunity. Here you will need to talk about the size and make-up of the market, including how you’ll gain an advantage on your competitors and what support you might have from existing customers.
• Management capability. Here you will need to explain your company’s expertise in commercialisation, project management and business management.
• National benefits. Here you will need to explain how your product will improve “Australia’s participation and competitiveness in the global economy” and discuss the “spill over” benefits from the project.

The national interest bit sounds a bit intimidating.

Not really. You just need to think broadly. Every good Australian project has a national benefit. Sure, a successful commercialisation phase might make you wildly profitable, but ask yourself, ‘how does this help the economy?’. Consider the flow-on economic benefits, employment generation and creation of IP. There is a lot you can include.

I know you are a grant consultant, but could you have a go at the application yourself?

It is important to remember that the program is competitive. Just completing the form is not enough. While most of our clients are truly capable of completing the form and doing the paperwork, they use GrantReady to get a competitive edge.

The areas where applicants struggle include:

1. Lack of time and underestimation of the effort involved.
2. Confusion regarding the questions asked and interpreting what is required.
3. Inability to tell a concise, coherent and compelling story.

The applications are assessed according to merit criteria. If you can score well on these, then you have a good chance.

Also, some categories are more straightforward than others. I would suggest that you probably don’t need a consultant to help with the ‘Skills and Knowledge’ program.

And how long will I have to wait to find out about the grants?

That’s one of the great things – we understand the applications will be assessed regularly, cutting down on long waiting periods, although don’t expect instant results.

CA could prove to be a great source of capital for your company this year.

Adrian Spencer is the chief executive of Melbourne-based grant consultancy, GrantReady.