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Announcement of successful BITS Incubator Centres, 12 pm, 10 April 2000, Parliament House, Canberra [Building on IT Strengths]



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SENATOR THE HON RICHARD ALSTON Minister for Communications, Information Technology and the Arts Announcement of successful BITS Incubator Centres 12pm 10 April 2000

Parliament House CANBERRA

I'm delighted to be here today.

This launch marks another key step forward in the development of the Building on IT Strengths Program, otherwise known as BITS - although let me assure you there's nothing "bitsy" about it.

Only recently in February we announced the members of the BITS Incubator Program Advisory Panel.

Today I am very pleased to be able to announce the names of the Incubators that will be offered funding under the $78 million Building on IT Strengths (BITS) Incubator Program.

The Government is very proud of BITS, and particularly this important program.

It's a program that's right for now.

You know Australians are waking up in a world which seems to change so rapidly that we all need flow charts to keep up. Technology is seemingly changing by the minute -before we know it we'll be phoning our microwaves, reading emails off our toasters and speaking to our children face-to-face off TV screens on our wristwatch mobiles.

For business it's very serious. There's an enormous imperative to keep up, but somehow to also see through the hype to what the information economy is really about: how it can make your operation more efficient.

Technology is opening a portal into a new world of opportunities and markets.

For people who have ideas there has never been a better time to be in business.

Australia more than ever needs innovative, highly skilled people to drive our hi-tech, IT&T industries forward. People who are not too afraid to take risks. People who are also happy to know there's a Government out there prepared to remove the roadblocks and provide some incentives.

In the broadest sense we are doing a number of things to help Australia's innovative

industries and individuals make the most of this new economy - to add value by exploiting opportunity.

We want to see more money coming into the country to be invested in IT&T firms, ergo our recent business tax reforms which are of particular benefits to start-ups and the venture capital industry.

The halving of the CGT rate for individuals has increased after-tax rates of return -thereby making both "angel" investments and entrepreneurial activity in innovative start-up ventures more attractive.

Founders and investors in start-up companies have also benefited from the introduction of scrip-for scrip rollover relief.

They are no longer subject to a CGT liability when there is an exchange of interests in companies or fixed trusts because of a takeover. This reform enables the restructuring of rapidly growing innovative businesses, and means Australian companies face similar tax treatment to their US and UK counterparts.

IT& start-up companies often use share option schemes to remunerate skilled employees who have foresaken higher paid jobs in established firms to join risky start ups at much lower paid positions. The lower CGT rates and the scrip-for-scrip rollover relief have made these schemes more attractive for employees.

The venture capital industry has also benefited from the Government's business tax reforms. Pension funds from designated countries are now able to invest tax-free in Australia's early and expansion stage venture capital market - matching the treatment they receive at home. Australian superannuation funds receive a similar benefit in relation to investments made through Pooled Development Funds. These changes have provided vital new sources of investment capital for innovative start-ups.

But tax changes will only benefit those companies which are successful, and to be successful they need to attract investment.

So the Government is helping our young companies to become investment ready - to put their best foot forward to attract these hungry venture capitalists. And believe me the VCs are out there, circling around and they are increasingly focussing on Australia.

For example, just recently Dave Carlick, partner of VantagePoint Venture Partners, a fund with more than $2.5 billion in assets was in Sydney and said how Australian technology companies had a lot going for them - a view not often heard from US venture capitalists.

He has already put his money where his mouth is by investing $US5 million in Sydney start-up SpotOn, which recently launched its browser enhancer in the US.

Mr Carlick is keen to meet more start-ups - and he's planning to come to Australia two to three times a year.

He had been "stunned by the quality of the talent and innovative thinking, and the progressive nature of the technology marketspace" in Australia.

We believe the BITS Incubator Centres Program can help to deepen this wellspring of talent in the Australian IT&T sector, and to sharpen the skills needed to succeed in this

highly changeable environment.

Today I am very pleased to be able to announce the names of the Incubators that will be offered funding under the BITS Incubator Program.

As you know the broader $158 million BITS program was funded from the sale of the second tranche of Telstra.

Just to remind you, the key objectives of BITS are to:

Improve strength and competitiveness of Australian information industries sector ● Enhance opportunities for commercialisation of Australian ideas and R&D ● Foster linkages between key players leading to increased innovation ● Promote development of IT&C business clusters ●

Incubators are designed to incorporate a structured business growth program, including access to various types of early stage finance, make use of an experienced Board, management team and advisory panels, provide business coaching and mentoring, and provide firms with channels to product markets, including through national and international partnerships. The facility will provide specialised accommodation services and high-bandwidth Internet access.

The role of the Incubator Program is to assist incubators increase the success rate of new business formation in the Australian information industries. These incubators will provide a supportive environment and early stage funding to assist start-up firms to turn ideas and R&D into successful businesses.

The objective of the BITS incubator program is to fund incubator centres which:

improve the rate of commercialisation of IT&C ideas and R&D; ● assist IT&C start-up firms, and start-up firms which use IT&C as a key business driver, reach their full potential; ●

play a significant role in the national innovation system; and ● can become viable in the medium term without ongoing support from the BITS Incubator program. ●

The program is also about:

Encouraging involvement of financial institutions, including venture capitalists, in incubator consortia; ●

Providing access to world class services and facilities by incubator firms; ● Getting incubator graduates ready for second stage venture capital funding; and ● Providing significant opportunities for venture capital funds in promising innovative high technology start-ups. ●

Worldwide, there are various approaches to incubator design.

We recognised early on that an incubator which is appropriate in Western Australia, for example, may be very different to a model which will work in New South Wales.

This is reflected in the 47 applications we have received from across Australia.

I would like to congratulate all applicants. This has been a highly competitive process and a number of high quality proposals were received.

Such as the successful ACT proposal, representatives of whom are here today. This project aims to create a strong high technology business incubation system for the Capital Region supported by the Government and private sectors. It will complement other commercialisation initiatives in the region and promote the ACT Region as a centre of IT&C excellence.

Finally I would also like to express my thanks to the Advisory Panel, who assisted with the assessment process. Under the chairmanship of Mr Norman McCann, the panel provided independent expert advice based on its members' wide-ranging knowledge of the local and international information industries and their experience in growing Australian companies.

Well now to the nitty-gritty. You've got the details of the successful applicants there in your media release, but right now let me officially announce the names of the Incubators that will be offered funding. They are:

Bluefire Group in NSW, receiving $6.0m ● IT Catalyst, in NSW, receiving $7.37m ● Information City, in VIC, receiving $8.0m ● Australian Distributed Incubator - Emerge, multistate, receiving $7.0m ●

E-Park, in NSW and VIC, receiving $5.0m ● InQbator, in QLD, receiving $9.5m ● Perth Ideas Centre of Technology (PICT), in WA, receiving $10.0m ● SA BITS, in SA, receiving $10.0m, and ●

Capital Region Technology Business Centre (CRTBC), here in the ACT, receiving $8.0m. ●

THANK YOU

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