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Minchin announces pre-seed fund design to commercialise public sector research.



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MINCHIN ANNOUNCES PRE-SEED FUND DESIGN TO COMMERCIALISE PUBLIC SECTOR RESEARCH

The Minister for Industry, Science and Resources, Senator Nick Minchin today announced the broad program design for the competitive Pre-Seed Fund for universities and public sector research agencies. 6 August 2001

6 August 2001             01/353

MINCHIN ANNOUNCES PRE-SEED FUND DESIGN TO COMMERCIALISE PUBLIC SECTOR RESEARCH

The Minister for Industry, Science and Resources, Senator Nick Minchin today announced the broad program design for the competitive Pre-Seed Fund for universities and public sector research agencies.

The Pre-Seed Fund is a new initiative which was allocated $78.7 million in Backing Australia’s Ability, a five year vision to build innovation in Australia, announced by the Prime Minister in January 2001.

‘This investment represents a significant commitment to assist universities and Commonwealth public sector research agencies to take the next step and commercialise their discoveries and create new business opportunities,” he said.

‘The fund will enhance the ability of Australia’s public sector to take research from the laboratory bench to the market.   

‘Research and development outcomes from Commonwealth public sector institutions will now have a route to market - this Program will help translate research outcomes into commercial realities.

‘Pre-seed activities which help to transfer research into a marketable product or process could include development of prototypes, field testing, trialing, market assessment and patenting.

‘The proposed delivery model for the fund is similar to the highly successful Innovation Investment Fund approach with some variations to take account of the characteristics of the pre-seed environment. 

‘It provides a sustainable, flexible fund structure that encourages connections between public sector research agencies, investment sources and entrepreneurs.

‘The program design has been developed following extensive consultation with stakeholders around Australia.  The broad parameters of the program are being released now to allow potential fund managers to commence planning their applications.’

Full details of the program guidelines, the fund manager application process and selection criteria will be released on the www.innovation.gov.au website.

It is anticipated that applications for fund managers will be called shortly to enable funds to be operational in the first half of 2002.

*See attachment for design features

Media contact:   Jennifer Eddy, Senator Minchin’s office, 02 6277 7580

CMR413-01

  ATTACHMENT 1

COMPETITIVE PRE-SEED FUND FOR UNIVERSITIES AND PUBLIC SECTOR RESEARCH AGENCIES

DESIGN FEATURES

The Pre-Seed Fund will target commercially promising research and development opportunities at the pre-seed stage within Australian Universities and Commonwealth Government owned research agencies.

The number and size of venture capital funds supported by the Program will depend upon the applications received.  The Government envisages that between four and six funds of between $10 and $30 million each could be established.  All applications which meet the selection criteria will be considered.

Capital from other sources will be sought to complement the Commonwealth Government’s investment.  A ratio of up to 3:1 Commonwealth to other capital, on a competitive basis, is anticipated.  Funds sourced from the private sector will receive favourable consideration as they are expected to ensure a strong focus on achieving commercial returns. 

Fund managers will make investments in individual projects, typically in the range $250,000 - $300,000, with an upper limit of $1,000,000 per project.  However, the Industry Research and Development Board, who will administer the Program, may consent on a case by case basis to increase this limit for particular projects.

Pre-seed activities will include, but will not be restricted to, the development of prototypes, field testing, market assessment and patenting.

Fund managers will be selected in relation to criteria such as:

Experience in commercialisation of research, particularly in the public sector; ● Experience in venture capital investment at the pre-seed stage; ● Ability to leverage additional funding from the private sector and also public sector research agencies and universities; ●

Ability and resource capacity to effectively service clients in regional areas; and ● The level of management fees sought. ●

Fund managers should be private companies that meet the following criteria:

Be no greater than 49% owned by universities or public sector research agencies either individually or as a consortium; and ●

The Board and investment committee(s) must have a majority of members, including the Chair, not drawn from universities and public sector research agencies. ●

Private sector applicants for the role of fund managers will be given favourable consideration if they establish a joint venture with universities and Commonwealth public sector research agencies.

Funds will be structured as 10 year closed end funds with the Commonwealth anticipating repayment of its capital to enable establishment of a revolving fund similar to that which exists for the Innovation Investment Fund.

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