How do I know if my idea is ‘innovative’ enough to receive a grant?
Commercialisation Australia has announced that it is open and ready to accept applications. Read about program rules and eligibility here.
At Lighthouse, we applaud this significant milestone in innovation funding. It well compliments the highly successful Innovation Connect program being run by the ACT Government Department of Industry and Business Development.
A question that we frequently receive at Lighthouse is how is to make a certain grant applications stand out. In highly competitive situations (as is nearly all innovation funding) there are three primary criteria.
Your idea must demonstrate:
significant commercial potential
a high-level of innovation
benefits to the nation (state or territory)
Most technologists and entrepreneurs wouldn't go down the long and difficult journey of commercialisation if they didn't meet at least the first two criteria. The response to the third is nearly always, "I pay my taxes, isn't that enough?"
Nevertheless, many are disappointed when they are knocked back. So, let's delve more deeply by exploring some ways to demonstrate how your idea (project, invention or business) meet these criteria:
Significant Commercial Potential
You must demonstrate that there is a global accessible market for your idea. What does, accessible mean, exactly? There are lots of people in China, for example, but not all of them are in a position to by your product or service today. If you were targeting the Chinese market, your projections would need to reflect this. A project that is focussed totally on a domestic (Australian) market almost never meets this criterion. Your idea must be, ‘born global' and you must be able to clearly identify your target export markets.
Your target market is already attracting private investment. The government doesn't intend to fund you forever. In some cases, they even want their money back. You need to be able to demonstrate a capacity to achieve follow-on funding for your project from the market place. Grant applications that are, ‘matched' by credible institutional investment are stronger than those that aren't.
Why?
It's all about risk mediation. If an early-stage investor also takes the plunge, it indicates to the grant administrator that someone else is sharing that risk. Institutions that are investing other's people's money) will have slightly more credibility than your neighbour or dad's super fund.
If you haven't been successful in raising capital, that's OK. But, you need to demonstrate a clear understanding of investments that are comparable to yours.
High-level of Innovation
The first thing we must agree on is that there is no one definition of innovation. Nominally, it is the result of a creative discovery process that results in an IMPROVEMENT in a process or product. Innovation can also apply to marketing and business models, but as this isn't being funded, (anywhere, to my knowledge) we will ignore those aspects for now.
The creative discovery process (also known as Research and Development) is what has traditionally been funded by governments, e.g. R&D Start. However, interestingly, (from what we can tell-this might change), Commercialisation Australia doesn't fund R&D; it funds the marketing and organisational capacity of that get innovation to the marketplace.
Therefore, we need a ‘marketing' definition of innovation. Novelty is less important here than the ability to demonstrate improvement and/or efficiencies over existing products. To put it simply, your project is ‘innovative' not simply because no one has ever done it before. Frankly, that might be because it is not scalable or horrendously expensive to produce and or so fraught with legal, regulator challenges that investors wouldn't touch it with a barge pole. It is, ‘innovative' because it is, ‘cheaper, faster, better' than the products currently being used and its introduction in to the marketplace would be disruptive (people would stop buying from major incumbents to ‘switch' to you because your efficiencies are so compelling)
Another way to demonstration innovation is using the tools of intellectual property protection. If you aren't familiar with your options, IP Australia produces a great range of products to assist you before you spend money a specialist IP law firm.
No, you don't have to have a patent in order to receive an innovation grant. However, it a competitive situation, your ability to defend or exploit (e.g. sell or license) an IP position contributes to the commercial potential of your project long-term.
Benefits to the Nation (State or Territory)
For some reason, this particular issue almost always catches our clients on the back foot. Perhaps it is because the question is almost invariably at the end of the application and you are completely exhausted by this point. Most companies can generate a decent sentence or two about potential for increased employment and tax revenues. However, this is only a fraction of what the Government is looking for.
Think about this: Australia is chronically out-growing its capacity to support itself. The news is full of stories about inadequate infrastructure, capacity gaps, skills shortage and natural resource constraints. Does your idea potentially ameliorate this in any way? If so, you've figured out how to best answer that question on your application.
Do you understand Australia's broader aspirations in relation to your industry? Are you collaborating with a public University or Research Institution that will potentially benefit from commercial success of your product (e.g. will you assist them in attracting further private or industry funding/support?)
In conclusion, 2010 looks to be an exciting time for early-stage companies in the ACT and Region. ICON, Commercialisation Australia and a growing Angel movement nationally (led in the ACT by Capital Angels) will present entrepreneurs and technologists with a range options for accelerating their innovation. Lighthouse can be your gateway to a range of support. We look forward to seeing you for an individual consultation in the New Year or at one of our events.