The Research, Commercialisation and Startup Fund (RCSF) is the South Australian Government’s (SA Government) new $28 million assistance program for businesses and research enterprises. It provides a further opportunity for businesses and entrepreneurs to obtain government funding to launch or scale up their enterprises.
The RCSF will be managed by the Department for Industry and Skills and is focussed on the former Royal Adelaide Hospital site, now known as Lot Fourteen.
The fund’s focus
In the RCSF Guidelines’ (Guidelines) introductory statement, the SA Government stated that the program will ‘favour a broader approach to growing the economy by addressing fundamental issues such as the cost of taxation imposed on business, reducing red tape and improving infrastructure’.
This is encapsulated in the Guidelines’ industry financial assistance principles which must be met in all funded projects. One of these principles provide that projects must be capable of introducing new and significant technologies, capabilities, capacities and expertise that broaden the base of the South Australian economy or alternatively create net additional employment in industries which are considered to provide competitive advantages to South Australia.
This approach is complemented by the SA Government’s emphasis on deriving community-wide benefits through the program’s funding. Another key industry financial assistance principle provides that all projects should not result in the displacement of existing businesses.
Eligible applicants
Applicants must be a South Australian-based legal entity that is a business, an industry association, university, independent research institute or state government research institute. The entity must be financially viable, registered for GST and have an Australian Business Number.
Nevertheless, special circumstances may exist to allow entities located outside of South Australia to apply. These entities must be able to demonstrate a commitment to relocate and maintain the relevant enterprise in South Australia.
Funding streams
The $28 million pool will be channelled into three funding streams:
- The Strategic Research Initiatives supports research initiatives creating innovative solutions which contributes into industry or commercial outcomes that address economy-wide challenges for South Australia;
- The Startup and Early Stage Company Incentive supports entrepreneurs looking to start up, or scale their early staged businesses; and
- The Entrepreneurship and Innovation Ecosystem Initiatives supports programs, events and activities with a broader benefit to the startup community.
Presently, only the Startup and Early Stage Company Incentive stream is available for application. Calls for proposals and timing for the remaining two streams will be specified from time to time.
Startup and Early Stage Company Incentive
For most businesses, this will be the most suitable stream for application. It provides for three entry pathways. The duration for each pathway is three years subject to negotiations. The three pathways are:
- The Bootstrap pathway where founders/CEOs can apply for a 1:1 matched funding from a minimum of $20,000 and up to $100,000;
- The Incubator pathway where founders partnering with incubators, accelerators or value-add investors can together apply for a 2:1 matched funding (minimum partner investment of 50% cash required) from a minimum of $20,000 and up to $100,000; and
- The Scale-up pathway where founders and investors can apply for a 1:1 matched funding (minimum investor contribution of 50% required) from a minimum of $100,001 up to $1,000,000. This pathway is specifically geared towards companies that are addressing a known gap in the market with significant private investment and is open to applicants who previously received funding from the Bootstrap or Incubator pathways.
In order to successfully apply for this stream, the applicant must demonstrate the following criteria:
- The applicant’s organisation does not have a turnover exceeding $1,000,000 per annum and it is not able to fully fund the project;
- The project involves development of a novel product, process or service with potential markets beyond South Australia;
- The proposal demonstrates sustainable, competitive advantage through ‘high barriers to entry and uniqueness that cannot be easily replicated’;
- Evidence of technical and/or commercial feasibility is provided; and
- Access to relevant know how and/or necessary intellectual property is provided.
In addition to the above, successful applicants awarded with grants greater than $100,000 in value must repay a 3% revenue royalty until the value of the grant has been repaid. However, no repayment is required if no income has been earned after 10 years from the project completion date.
Applications can be submitted at any time and can be strengthened if applicants can provide evidence that they have obtained advice and guidance from business development and commercialisation experts.
Implications
Given the unique requirements of the RCSF and in particular, its Startup and Early Stage Company Incentive stream, prospective applicants should carefully consider the way in which they frame their proposals and projects. For example, an application should make clear that the project in question will not negatively affect other businesses in South Australia. In addition, prospective applicants eyeing grants greater than $100,000 in the Startup and Early Stage Company Incentive stream must consider their ability to repay the requisite 3% royalty payments to the SA Government.
Our IP, Technology & Media team has extensive experience assisting young ventures and startups to navigate their legal requirements while also ensuring commercial and IP needs are protected. Please contact a member of our team if you would like to discuss your business needs, or if you require assistance to apply for the South Australian government assistance programs.
This article was written by Luke Dale, Partner and Stephanie Leong, Law Graduate.
P: +61 8 8205 0580
E: lcdale@hwle.com.au