So I really didn’t do much this week. I have always suffered from occasional days where my productivity drops off and I achieve virtually nothing. I found that working solo this was much harder to arrest and control.
In the spirit of full disclosure it was more like two weeks. With a fairly sharp decline in the second half of week 4, the entire loss of week 5 and the first half of week 6. I had overrun set aside in the schedule, I had hoped that if it was needed it would be due to external factors… but it means the impact isn’t as bad as it could have been.
Rather than leave this entry completely depressingly empty I’ll pad it out with an informative rant on grants.
Prior to my move to the Geelong region every time I heard the city mentioned in the news it seemed to be attached to another bundle of money. Especially around the Federal election it seemed like politicians were determined to drown Geelong in largess.
So when I hatched this deranged plan and moved to the region looking into these buckets of cash was always on my todo list. I’m starting a business, it’s new and innovative, in the right area and I may even have to employ people one day. It is something a number of people I have talked to have also mentioned.
I will foreshadow slightly by saying that everybody who raised it was from out of the region. None of the local accountants I talked to raised it, the one I brought it up with is well connected with the regional community and knew nothing about them.
Grants are awarded by the Federal and State Government departments, councils as well as private businesses. I suspect in the past being aware of a grant was a big problem so the government has made that part of the process much easier, with their Grant Finder website.
Using the Grant Finder you select your region by state, industry and a few other elements. It then provides a list of relevant grants to look up the details of. My list was roughly 220 items long. I managed to cull this down to about ten worth looking in to. I will mention though that the City of Melbourne has an impressive collection of grants if you a starting a small business in the Melbourne CBD.
The big daddy of grant funds is the Geelong Region Innovation & Investment Fund (GRIIF), probably better known as the Ford fund. Money was tipped in by the Federal Government, the Victorian Government, Ford and later Alcoa. Roughly half the money is for Northern Melbourne where the Ford suppliers and trickle down employment is actually located. $29.5M is allocated for Geelong.
So far $18M has been spent in two funding rounds. Money is provided on the basis of creating permanent jobs, all funds must be matched by the receiving company. The grants must be at least $50k but in practice most are well over $1M, the smallest awarded is $230k. This corresponds to roughly $30k per job. From the grant summaries it seems like the grants are bringing forward planned expansion and investment, not necessarily bad but useful to note in evaluating the scheme.
What I found interesting is that the last round closed on the 29th of May 2014. There has been no announcement of a third round, when I inquired as to when a third round was likely to occur I was told “at this stage no future rounds or potential dates have been announced.”
All money from the grant must be spent by the end of the 2015/2016 financial year, this is an important element of the fund because it corresponds to the timeline of the Ford job losses. Assuming you want a grant to expand your company with a new manufacturing facility I see a crude timeline of:
* 2 months to prepare the grant
* 1 month to evaluate the grants
* 1 month to plan the details of the expansion
* 6 months to buy the equipment, probably custom built and sea freighted
* 1 month to install and commission
With this very ambitious timeline you are looking at 11 months to finish the grant based works and get the funding. Given that the money must be spent in the next 15 months it seems like they are running low on time. I know accounting games can be played to bring the spending forward but I assume the government wouldn’t run the program planning for this.
The cynic in me suspects that the government could not provide any updates until too late, then quietly close it. I don’t know the details of how the remaining money would be divided and returned but I believe all of the parties would be happy to pocket the funds.
The Geelong Advancement Fund (GAF) is a Victorian Government initiative run out of the Regional Development Victoria department. GAF has $11M to “drive jobs growth, increase skills and innovation and deliver economic and community infrastructure in Geelong.”.
So far two rounds of funding have been run, the most recent closed on the 30th of May 2014. The first round spent $3.65M on two projects, I can’t find details on the second round actually being awarded. It certainly seems as if the fund has not been exhausted but no further funding rounds have been announced.
The consistently named Greater Geelong Industry Fund (GGIF) is another Victorian Government initiative. Often lumped in with the GAF, together they are called the Geelong Development Fund.
One round of funding has been run and awarded, there are references to IXL getting $180k for example. The fund seems to have disappeared though, links to it are dead, there are just lots of announcements on its creation. The Department of State Development, Business and Innovation (DSDBI) now the Department of Economic Development, Jobs, Transport and Resources (DEDJTR?), which administers the fund only mention it in old financial reports.
The Department Annual Report (page 173) lists grant recipients and shows IXL getting $60k, not the $180k announced in the budget speech. There are six recipients listed for a total of $695k.
I don’t know the details of government grant awarding but it looks like the government announced a $4M fund, awarded $700k with lots of nice press releases all along the way and have since pocketed the remaining $3.3M without anyone saying boo.
R&D Tax Concession
The R&D tax concession is listed on the grant finder, it isn’t a grant but worth mentioning anyway.
This tax deduction has been around for a while and was significantly reworked in 2011. The legislation is actually one of the better references, the AusIndustry web designers simply point at the legislation (without links) whenever you look for details such as who is eligible. The ATO website also has good information.
To summarise (my simplified understanding):
* You must be a company doing R&D work
* You must pre-register for the tax concession
* You receive a tax deduction of 45% of your R&D expenditure
* You must have deductions of at least $20k on R&D (at least $45k expenditure)
The tax concession seems to be designed for established companies not early phase startups such as myself. Without paying a salary I probably won’t reach $45k, I am certainly not planning to spend that much. My expenditure is also going to be split across two financial years.
As a tax deduction it is also far more useful for businesses that make a profit, which I don’t have, yet.
This Optus/SingTel funded “grant” looks like standard VC seed funding (money for equity) that they have somehow gotten listed on grant websites. It is the kind of deceptive amoral manoeuvre that VCs specialise in, I am surprised more haven’t listed themselves.
Industries for Today and Tomorrow
Industries for Today and Tomorrow is a Victorian Government program run out of the Regional Development Victoria office. It is designed to assist medium to large businesses grow and increase employment.
Technology Development Voucher
The Technology Development Voucher is a small grant up to $50k for small to medium sized technology based businesses. It is designed for discrete work with a supplier such as a design firm. I was hoping to use it to help fund the required product certifications. However the program was suspended after the recent Victorian change of government and there is no indication of if it will resume or be replaced.
The EntrepreneursÃ¢â‚¬â„¢ Infrastructure Programme is a substantial Federal business assistance program introduced in 2014. It replaces eight previous industry participation programs and is designed to be a one stop shop for business support and growth. A private grant consulting group provides a solid summary.
The EIP has three branches which seem to operate independently.
* Business Management – Breaks down into four offerings, partially funded consultant run evaluations which can then lead to assistance with supply chain, growth services or growth grants.
* Research Connections – Linking businesses with universities and CRCs with funding for the collaboration.
* Accelerating Commercialisation – Assisting and funding businesses to commercialise their concept.
Of the three the branch I am interested in is Accelerating Commercialisation. This has several offerings, the portfolio, commercialisation advisers, the expert network and grant funding.
The portfolio is a list of businesses who have applied, 554 so far. Not much more to it but we can run up some quick interesting stats, I have included some tables at the end of this section. In particular the number of registered businesses relative to population shows some surprising growth areas.
The Commercialisation Advisers are a small group of individuals with prior senior experience in growing companies, most are either practising consultants or VCs. All portfolio members are assigned an advisor to assist them with high level advice, they also assist with the application process. There is also an RFT process which hasn’t yet been completed for commercialisation advisers, it isn’t clear how this relates to the existing group.
The Expert Network is a larger group of experienced advisors, either domain experts or individuals with experience growing companies. The list of experts is confidential, the commercialisation adviser arranges the link between the participant and the expert. Interestingly experts aren’t paid, which suggests that the commercialisation adviser probably is.
In addition to joining the portfolio an applicant can apply for grant funding. This has a stricter assessment process and limitations on what the grant money can be used for. All grant funding must be matched.
I am considering applying to join the portfolio, I don’t think applying for funding is likely to be successful or worthwhile at this point. Assistance in navigating the business world would be rather useful though.
|Manufacturing, Engineering & Design||228|
|Software & Web Design||185|
|Computer Systems & Hardware||72|
|Health & Medical||122|
|Business & Communications||93|
|Agriculture & Food||78|
|Energy, Mining & Resources||69|
|Infrastructure & Building||54|
|Defence, Security & Safety||40|
|Entertainment, Tourism & Sport||31|
|Automotive, Aviation, Marine & TCF||24|
|Education & Training||21|
|Textiles, Clothing & Footwear||2|
|Region||Count||Population (k)||Count per 100k|