R&D grants and repayable loans update

Steven Joyce

30 OCTOBER, 2013

New technology incubators to speed company start-ups

New repayable Government grants of up to $450,000 per company will be invested into start-up technology companies to help get them underway, Science and Innovation Minister Steven Joyce announced today.

The repayable grants will be distributed by a new type of private-sector led technology incubator, which will add its own funding to provide at least 25 per cent of the start-up company’s costs on a one for three basis.

Up to four incubators are planned and the total government cost of the scheme is budgeted to be $31.3m over four years. Funding for the programme was set aside in Budget 2013.

“The new incubators are being modelled very closely on the successful Israeli model of company incubation”, Mr Joyce says. “New Zealand has some strong emerging technology companies and a growing high-tech track record.  However we need more technology-based start-ups at the front end of the pipeline. These new Technology-based incubators will speed up that process.”

Funds for the repayable grants and the incubators will be distributed by Callaghan Innovation, the Government’s new High-tech HQ for kiwi businesses, and the first of the new incubators is anticipated to be up and running by July next year.

The grants will be used to fund any of the costs associated with further developing or commercialising intellectual property in the start-up companies.

“The new grants will address a critical gap that early-stage technology businesses face, where they need money to meet start-up costs but they are not yet at a stage where investors will commit capital,” Mr Joyce says.

The repayment of the grants will be applied as a royalty of three per cent on the incubated firm’s gross revenues. International experience has been a repayment rate of around 60 per cent.

As part of the primary grant, the programme will include pre-incubation grants of up to $35,000 for technology-focused incubators to establish whether a start-up idea is commercially viable. The number of pre-incubation grants allocated will depend on the quality of proposals received from prospective start-ups, but will be limited in number so as to not exceed the expected number of full repayable grants per year.

“These pre-incubation grants will increase the pipeline of prospective start-ups for the repayable grants as well as encouraging entrepreneurs towards these technology-focused incubators,” Mr Joyce says.

“Countries like Israel are seeing real success from these sorts of technology incubation programmes. Now we’re joining them in putting a big emphasis on helping these highly innovative start-ups to get off the ground.”

More information on the Repayable Grants Programme can be found at:http://www.msi.govt.nz/get-funded/building-a-community-of-high-tech-entrepreneurs/