Cuts to BITS will hurt some

INFORMATION technology incubator Entrepreneurs in Residence (EiR) may soon be without Federal Government funding as Canberra prepares to wind down the Building on IT Strengths (BITS) incubator program.

This is despite the Government having committed $36 million in additional funding over the next four years to the BITS program.

EiR chief executive officer Greg Riebe said that, while the organisation would apply for a share of the additional funding, it had been working towards “self sustainability” and would continue operating regardless.

Department of Communication, IT and the Arts (DCITA) officials told a senate estimates hearing last month that only the existing 10 incubators would be eligible to apply for the additional funding, but that the funding would not be available to all incubation firms.

However, up to four of the existing 10 incubators will miss out, based on past performance.

Which of the 10 incubators will be affected is yet to be determined, with DCITA currently designing a competitive process through which incubators could prepare submissions to receive a share of the funds.

Mr Riebe said EiR had “as good a chance as any” of the incubators to receive extra funding, following a Federal Government review of the performance of the 10 incubators.

“There have been some internal reviews; there was a final report that hasn’t been released yet,” he told WA Business News.

“My understanding is that we’ve performed reasonably well. I think we’ve been well received.

“We’ve got a good portfolio of investments that are good quality and that are starting to perform well.

“In terms of EiR, we’ve been working on our self sustainability. We’ve got ourselves to a situation where we can keep ourselves operating. We are really quite excited that the Government will extend the funding and we will be putting our case forward.”

Mr Riebe said the investment and funding market for IT start-ups remained increasingly tough.

“Yes, it is tough. The markets are more diligent and cautious in what they are going to invest in,” he said.

In Western Australia, EiR was allocated $10 million through the BITS program and was established in June 2000 as an ICT incubator in Technology Park, Bentley.

Originally called the Perth Ideas Centre of Technology, EiR offers services designed to accelerate the development of ICT start-ups by providing seed capital, management expertise, legal advice, office space and mentoring.

EiR provides funds of between $50,000 and $450,000 over a two-year period and has assisted companies such as Calytrix, Autumn Care Systems, Imagemation, Intierra and Luceo Systems.

EiR is also able to assist companies in seeking further funding through its links with other investors.

The BITS program started in June 1999 when the Federal Government announced a $158 million commitment over five years to establish the program.

The initial stated aim of BITS was to build the strength and competitiveness of the Australian information sector, including fostering commercialisation linkages with research and development organisations and creating clusters of innovative IT&T businesses.

The program was designed to allow the incubator organisations to become self sufficient.

The initiative funded three core elements, including: establishing incubator centres to assist ICT small to medium enterprises ($78m); advanced networks and test-beds ($40m); and developing Tasmania as an ‘intelligent island’ ($40m).