SEAWA funding crisis

THE directors of Software Engineering Australia (WA) will fight a decision to withhold funding considered crucial to the software incubator’s future.

In late July the organisation lodged a business plan with SEA National, the collective group for all such incubators except those in WA and Queensland, seeking funding for its work beyond the current financial year. SEAWA has received $300,000 in Federal funding each year since it was set up in 1998, but that funding ceases in June 2003.

The SEA national board last week rejected the request, saying much of the organisation’s plan was outside the national body’s aims – a claim that SEAWA CEO Stuart Hope rejected.

“I find this very strange. Our business plan is spot-on, as far as we are concerned, with what SEA was set up to do,” Mr Hope said.

He suggested the decision to withhold extra funding was politically motivated, given SEAWA had been critical of SEA National’s procedures in the past. Although the Federal Government had funded all 11 software incubators in Australia, the funds were directed through SEA National, which ultimately controls any variation to the set funding of $300,000.

The chairman of SEA National, Tony Benson, did not return calls from WA Business News.

Mr Hope said SEAWA was seeking support for its cause from both State and Federal politicians, including Communi-cations Minister Senator Richard Alston, who opened SEAWA’s premises in Technology Park in 1999, and State Development Minister Clive Brown.

Mr Hope said Mr Brown had indicated he was prepared to write to Senator Alston to plead SEAWA’s case for more funding.

The network of 11 software incubators across the country was created to support start-up software companies and prepare them for seeking pre-seed funding. SEAWA, for example, currently provides office facilities and business and technical advice to four companies, and a number of its past clients have later succeeded in attracting investor interest.

“The whole idea is to lower their costs – it’s just cost recovery for us, but they get a whole stack of stuff,” Mr Hope said.

“We don’t want to put any pressure on them. If they don’t have the money, they can just write a promissory note that when they get their seed funding they’ll pay us back, or we’ll take a small equity position (usually two or three per cent) if they don’t want to do that.”

Although each incubator is a non-profit organisation, they are expected to attract funds additional to those from government. To achieve this, SEAWA operates as a membership-driven industry representative body and conducts training courses and seminars, including the monthly Entrepreneurs 2 Business function, which is held at the Celtic Club in West Perth.

Mr Hope said SEAWA also was trying to build on the WA-MAID program, which began in July, and create a pre-seed fund for very small companies.

While Mr Hope said this would be a “very, very high-risk proposition”, it would make a significant difference to the companies that received any funds.

“With these start-ups there’s usually a couple of blokes working to support and develop a program, and if they had the pre-seed funding they’d be able to concentrate on building the business,” he said.

“I’m talking $20,000-$30,000 – something very small, but enough to stop them starving to death.”