A program offering up to $250,000 to support startup incubators was closed by the federal government on budget night as treasurer Josh Frydenberg the government’s innovation credentials.
The Incubator Support Initiative offered between $13,000 to $250,000 of funding for up to two years for incubator projects, covering up to 65% of the cost in regional areas and 50% in major cities.
The program provided “new and existing incubators with funding to help startups develop the capabilities to succeed in international markets”. They incubators provided matching funding for any grants they received.
Many leading names in the space have accessed up to $500,000 in funding from the program over the last four years in the last four years.
The government halved the grant funding to a maximum of $250,000 last year in the middle of the coronavirus pandemic. Karen Andrews was the minister. She was replaced by Christian Porter in a ministerial reshuffle earlier this year.
ISI grant recipients include Startmate, which received $500,000 for its national expansion. The same amount went to YBF for its Mesh dedicated Web 3.0 hub. Antler Australia received $350,000 under the program in 2019, the year it launched locally. Cicada Innovations scored $316,906 for prototyping space and design thinking capabilities for startups; Blue Chilli, $500,000 for the SheStarts accelerator.
Slingshot’s $495,000 2017 grant created the I2N Hunter Regional Accelerator in collaboration with University of Newcastle. ACS received $500,000 to focus on scaleups for its City Labs program.
Dozens of universities used the funding to establish their own innovation hubs, alongside niche accelerators such as RealTechX, Climate-KIC, Cyrise and Melt. The program was popular with many regional and agriculture focused communities.
The federal Department of Industry’s general manager of the entrepreneur’s program emailed organisations the day after the budget, saying that as part of the measures announced on Tuesday night, the ISI “is to be reduced” and that no new applications are being accepted.
YBF Ventures CEO Farley Blackman told Startup Daily that they expected the government “will create others that focus on tangible results to enable Australia to reach further, at pace” following ISI’s closure.
“The Australian technology sector can be twice its current size, which once achieved, will result in massive economic opportunities for Australia and Australians. Government plays a crucial role in nurturing the industry, through grants such as the Incubator Support Initiative which helped create jobs and growth,” he said.
Many of the organisations Startup Daily contacted about ISI’s closure were reluctant to speak on the record.
One said, on the condition of anonymity, that: “I definitely think it is a big loss to the startup ecosystem because it has funded many incubator and accelerator programs who are doing great work”.
ISI was launched in 2016 by the Turnbull Government, with $23 million earmarked to assist with the creation of new business incubators. Around that figure has been expended.
A spokesperson for the Department of Industry, Science, Energy and Resources said the decision will not impact any of the existing grant commitments, and current grant recipients will continue to provide support to startups.
“The Incubator Support Initiativeis one component of the broader Entrepreneurs’ Programme, which will provide more than $450 million over the forward estimates, and has a strong suite of services and networks that will continue to provide commercialisation guidance and funding to businesses at the early and rapid stage of commercialisation growth,” they said.
“The Australian Government also continues to support business innovation, investment and international engagement through other measures, including under the Modern Manufacturing Strategy.
“The changes to the Incubator Support Initiative were a part of the broader Digital Economy Strategy that is investing $1.2 billion to support Australia to be a leading digital economy.”
The closure of the program comes as Opposition leader Anthony Albanese plans to make increased support for startup entrepreneurs a key part of his budget reply speech tonight.