$100k tech transfer grants prove too big for most NZ firms

by Peter Kerr

July 4 (BusinessDesk) - A small uptake has forced the Ministry of Science and Innovation to lower the threshold for companies wanting to use its new technology transfer vouchers.

The entry level has dropped to $30,000 from $100,000 for small companies wishing to obtain government 1:1 co-funding of research and development projects.

To the end of June, 10 projects targeting high-value manufacturing had been approved at six accredited university, polytechnic and Crown Research Institutes science providers across the country.

SMEs have put up $1.209 million for approved projects, with another five voucher-based plans worth $422,000 yet to be considered.

The TTV scheme has $5 million a year assigned over a four year initial period, and from July another eight research organisations have been accredited and agritech projects also incorporated as part of the definition of high-value manufacturing.

The TTVs are aimed at businesses without in-house research capability, but which need new and innovative products to increase profit and market share.

"We suspected at the time we begun the vouchers that $100,000 would be too large, and there was a lot of debate around that number," said project coordinator, Tony Brenton-Rule.

"We've learned from practical experience that that is too high, and have lowered our settings."Brenton-Rule says based on overseas observations it is not surprising that the voucher scheme is slow in starting.

"Both Finland and Denmark's voucher schemes started slowly, then gradually ramped up," he said. "From our point of view, we don't have many companies like Fisher & Paykel Healthcare, who have a lot of experience with R&D. What we do have are a lot of competent smaller firms, who don't have much experience with research."

Brenton-Rule said it takes time for SMEs with little or no familiarity of using outside research expertise to grow comfortable in such a relationship.

"What is interesting is that while firms begin small, with success their R&D spend expands," he said.

Initially, SME spend through the TTVs is more aimed at the today's problems or the short term close to market end of the spectrum. Later firms are confident to spend more on the research, longer term projects that may have a five to seven year time frame Brenton-Rule said.

"The data shows that smaller firms have a nibble at first, and tend to move from development intensive to research intensive," he said. "Getting SMEs into R&D is a tough bullet to crack, but once you see companies getting success and adding value to their products they start putting more money into this side of things for life.

"He said that the evaluation of the TTVs is an ongoing project within MSI, and there will be another review at the end of the year. Given the time required to set up and deliver an R&D project, it will be 18-24 months before companies' success can be determined.

As other SMEs note the success of TTV investing companies, Brenton-Rule expects to see a ramping up of interest in the scheme and that the overall business investment in science will continue to grow.

"I expect the scheme will be well past the $5 million a year in four years time," he said.

Brenton-Rule said that three TTV applications were turned down in the first eight months of the scheme. But these companies had their own in-house R&D capability and all were encouraged into MSI's allied scheme, the Technology Development Grant which provides a 20% government input.

(BusinessDesk) 13:07:36

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