The Federal Government has today opened applications for its $23 million Incubator Support program, following on from changes to its structure and funding announced by Minister for Innovation, Greg Hunt today. The revised program will now provide larger grants to existing accelerators and incubators.
The Incubator Support program was announced in Prime Minister Malcolm Turnbull’s Innovation statement last year, originally coming with an $8 million funding pool. This funding was then raised to $15 million in June this year. However the initial funding and even the increase were subject to criticism from the startup community, which loudly expressed concern that this would not be enough.
Director of the Melbourne Accelerator Program (MAP), Rohan Workman told the AFR that of the impressive $1.1 billion already committed to innovation, the $8 million tag meant that only a mere 0.7 percent would reach Australian incubator and support programs.
Workman argued that the initial scheme would lock out existing accelerators and incubators.
“Of this $8 million, Australia’s proven accelerator and incubator programs will receive only a tiny amount – up to $50,000 each – in matched funding, while new and unproven programs will each receive up to $200,000,” he said at the time.
Hearing this concern, Hunt today announced the increase in funding for the program – which includes accelerators and germinators in the definition of an ‘incubator’ – and more details around what kind of programs will be eligible and the type of funding they will receive.
New “matching grants” of between $10,000 and $500,000 will be made available over 12 to 24 months for the creation of new incubators in regions or business sectors with strong links to international trade, and for existing, high-performing incubators to expand their services.
Incubators will need to provide 50 percent of the project value or funding in order to receive the grant. Along with this initial grant, incubators will also be able to receive an extra $25,000 in funding for having an entrepreneur-in-residence.
“This ensures startups have access to the top-quality research, managerial and technical talent they need to develop their capabilities and commercialise their ideas,” Hunt said.
Workman welcomed today’s announcement, saying that entrepreneurs-in-residence are a vital part of the support provided to budding entrepreneurs.
“The additional funds will no doubt enable both Australian and international experts to more actively support early-stage entrepreneurs,” he said.
While countless startups have succeeded without going through an incubator or accelerator, for others the support provided by such programs can be invaluable in helping them refine their business models, receive support, and scale.
What’s more, these programs can be equally important for investors. Both programs can provide investors with pre-qualified deal flows and suggest certain startup trends to follow.
In a recent blog post, general manager of BlueChilli, Catherine Eibner provided some distinctions of both programs and what they offer startups and investors. Eibner informed that incubators are not a new concept and have been around since the 1950s to provide small businesses with coworking and collaborative spaces. Today there are over 7,000 incubators world-wide filled with startups, offering teams low cost shared space, mentors and one of the main distinguishing factors – an indefinite working space, not constricted by time.
In 2005, the first accelerator program launched as a specifically designed program aimed to spur a startup’s entry into market. These programs are usually structured around the three to six month mark with investment taken from the host as equity in the startup.
The emergence of these programs around Australia have resulted in the creation of many viable and international business models. For example Flirtey, the most successful drone startup in the world, took part in Startmate’s accelerator program and has since tested drone commercialisation in both US and New Zealand markets.
Hunt said, “Business incubators will increase innovation capacity in Australia’s urban areas, as well as regional and rural Australia and in university precincts by bringing communities of entrepreneurs together to increase the flow of local knowledge and foster collaboration.”
Image: Rohan Workman. Source: Supplied.