Research cash: $45m up for grabs

Increased willingness by firms to spend on research and development means Technology New Zealand has boosted this year's grant funding pool by 40 per cent to $45 million.

Manager Suki Siriwardena said there was strong demand for matching funds from the Technology for Business Growth scheme.

She said Technology New Zealand had a multi-year rolling budget.

"We can bring forward cash when required, and put cash back when it is not required," she said.

Funding criteria includes not only that the technology being developed is innovative but that the firms are able to deliver it commercially, that they are committed to the particular project at management and board level and they have the right people on board to deliver.

Firms are required to put at least 20 per cent of the project cost up in cash, and many spend far more.

"The key to our investment approach is that it delivers outcomes to New Zealand, many of them financially based."

Siriwardena said the Technology for Business Growth scheme is snowballing, with some firms coming back for more.

"These are the companies which deliver the best outcomes, so we have no problem investing," she said.

In December, the organisation processed 30 applications and approved $12 million in investment.

Demand came from all sectors, including energy, biotech, software, electronics, even artificial reefs, Siriwardena said.

She said that growth reflected a buoyant economy and steadily rising investment in applied research and development by innovative companies that knew they needed to keep ahead to be globally competitive.

"Our role is to partner with these firms and to share in the technical risk of these developments, to create long-term and sustainable capability," said Siriwardena.

She said the level of investment in individual projects was also going up, with 42 projects having each received more than $400,000 of investment from Technology New Zealand.

"If you don't spend enough on R&D up front, you may miss the window of opportunity."

Technology New Zealand also boosted this year's potential funding for its Technology for Industry Fellowships from $6 million to $11 million.

Siriwardena said most of the money was likely to go on the expert part of the scheme, rather than to student researchers.

"We changed the scope," she said. "In the past the focus was on pure research and development, but we now recognise New Zealand has shortages in areas like intellectual property management, project management and product design which these fellowships can really help."

In December, 33 fellowships were approved for a $1 million subsidy.

Internet network specialist Endace Measurement Systems is on its second Technology for Business Growth grant, $717,352 to develop an IP router.

Chief executive Selwyn Pellett said the first $100,000 grant in 2001 helped it develop high-end filtering and data manipulation capabilities, which spun off into other products.

"The taxable income and profits from sales of that technology resulted in a 900 per cent return on investment for the taxpayer, with another 1000 per cent return from personal taxation from the new employees we were able to hire," Pellett said.

He said developments from the IP router had gone into multiple products.

"Technology New Zealand is very strict - you have to prove you have the capability to invest your own money and have the staff and technological capacity to do what you say."

He said while firms like Tait Electronics and Fisher & Paykel might be able to get bank or shareholder funding for research, many mid-sized companies struggled.

He said Technology New Zealand could make a difference between whether companies stayed or were lured to places like Australia or Singapore, which offered generous support incentives.

"This is not an attractive place to build a technology company. You are far away from major markets, we have a tax system unsupportive to research, no access to capital and the banks are totally unsupportive and ill-informed," Pellett said.

"It can be done. If you create one [Navman founder] Peter Maire, one entrepreneur and back them, you can create 1000 jobs."

R&D boost

* Qualifying projects must be innovative.

* The developer must be able to deliver the finished product commercially.

* Management and boards of grant recipients must be committed to the funded products.

* Grant recipients must put up 20 per cent of the project cost in cash.