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Govt offers $130m boost for Kiwi start-ups

17 May 2013

Budget 2013 is investing nearly $130 million into Callaghan Innovation, designed to encourage businesses to invest more in research and development, and to support new start-ups.

The plans have been backed by Science and Innovation minister Steve Joyce, who believes innovation is crucial to keeping Kiwi companies competitive.

“Business innovation is crucial for New Zealand companies to compete and win in the tough international environment we have today,” he says.

“This package will help our businesses invest more in research and development so they can compete more effectively in international markets.

"Our most successful exporters are generally the most innovative.”

Joyce says $107 million of the additional funding is part of the $400 million internationally focused growth package which is a centrepiece of Budget 2013, while the remaining $23 million is reprioritised from within Vote Science and Innovation.

An additional $98 million over four years will be added to Callaghan Innovation’s business research and development grant schemes, bringing the total funding for these schemes to $566 million over four years ($141.5 million a year).

More of New Zealand’s top R&D performing businesses will be eligible for the schemes according yo Joyce, which will extend the impact of their research and development programmes.

“When the Government reviewed the schemes in 2012, businesses asked us for a simpler approach that provides greater certainty. The revised grant schemes respond to this,” Joyce says.

“They replace the previous Technology Development Grants, TechNZ Project Grants, TechNZ Capability Grants, and Technology Transfer Vouchers.

The new business R&D programmes are:

R&D Growth Grants

• This is an expanded version of the previous Technology Development Grant• A three year grant programme targeted at substantial R&D performers.• Provides 20 per cent public co-funding for qualifying firms’ R&D programmes.• Businesses with a minimum of $300,000 of R&D spending in New Zealand, and at least 1.5 per cent of revenue spent on R&D over last two years will be eligible.• After two years of funding, businesses can be re-assessed for a further three years funding.• The cap on funding per annum will increase to $5 million (from $2.4 million).

R&D Project Grants

• Project grants are targeted at firms with smaller R&D programmes and those that are new to R&D.• Project grants will typically provide 30-50 per cent public co-funding.• Project grants will be repayable under certain circumstances – particularly if a business shifts its R&D activity offshore.• Businesses who receive the R&D Growth Grants will only be eligible for project grants for collaborative cross-industry R&D projects.

R&D Student Grants

• Student grants will provide support for undergraduate and postgraduate students to work within R&D active businesses.• “The increased government expenditure will help incentivise real progress towards the Government’s goal of business R&D expenditure reaching 1 per cent of GDP,” Mr Joyce says.• The Government is also investing $31.3 million over four years to provide repayable funding for start-ups to assist them to become investment ready. Funding will be matched by private sector incubator funding and expertise.

“High-growth, early-stage businesses play an important role in employment growth, commercialising intellectual property and growing new sectors,” Joyce says.

“However, they can face a critical gap when they have significant start-up costs but are not yet at a stage where investors will commit capital.

“To increase the numbers of high-growth firms in New Zealand we need to ensure a greater number of businesses are in the pipeline ready for investors to take to the next stage.”

What do you make the R&D and start-up plans? Tell us your thoughts below