The federal government will give the Export Market Development Grants scheme a $60 million top up in this week’s budget, a popular support program for tech companies and startups.
But industry representative group StartupAUS said that while the funding boost is welcome, changes need to be made to the scheme to make it more friendly to early-stage, high-growth firms looking to export to the world.
The Export Market Development Grants (EMDG) program provides reimbursement for export promotion expenses for businesses with annual turnover of less than $50 million. Eligible activities include attending trade shows overseas, digital advertising, marketing consultant fees and visa fees.
The scheme reimburses up to 50 percent of eligible expenses above $5000, with a total grant on offer of $150,000.
In the last financial year, grants worth $131.6 million were paid to 3,706 different companies, with an average grant of just over $34,000.
The EMDG has had its annual funding of $131 million frozen since 2014. The extra $60 million is over three years, and will help to create more local jobs, trade minister Simon Birmingham said.
“Through the EMDG scheme we’re supporting businesses to increase their marketing and promotional activities in international markets so they can connect with new customers and grow their exports,” Senator Birmingham said in a statement.
“This funding boost will help Australian companies get more exposure in international markets allowing them to develop brand recognition and form relationships with potential customers, that we know is so critical to export success.”
The scheme is especially popular among early-stage tech firms. StartupAUS CEO Alex McCauley said he welcomed the funding boost but hopes there are also changes to make the program more friendly to these high-growth companies.
“The EMDG funding boost is positive for the sector. We’ve been recommending strengthening the program for a while, because we know scale-ups who are looking to develop international markets love EMDG,” Mr McCauley told InnovationAus.com.
“Most startups are looking to sell into global markets very quickly – often even from day one – so in a lot of ways they are the most natural exporters we have. Supporting this sort of internationalisation will help drive national income for Australians from digital exports, with dividends across the whole economy.
“So the funding boost is great. Now we need to work on how to make EMDG better tailored to high growth digital exporters. We look forward to working with policy makers to keep improving this excellent program.”
Increased funding for the EMDG scheme was a key recommendation from Innovation and Science Australia’s recent 2030 report, but this wasn’t mentioned in the government press release.
ISA found that of the SMEs that accessed the EMDG, 45 percent went on to increase employees by at least 73 percent, and 52 percent increased their turnover in excess of the same threshold.
“Given the role of exporting in stimulating innovation, there is clear value in increasing the number of high-growth firms accessing export markets. However, a common barrier to exporting for smaller firms is the knowledge, time and resources involved in developing an export strategy. This will be a more significant issue in future, as both the opportunity and complexity of export markets expands,” ISA said in the report.
ISA also recommended that the government investigate how to better target the scheme so a larger proportion of the funds go towards high-growth businesses.
This is something that StartupAUS has also lobbied for over many years, but there was no mention of any further changes to the scheme by the federal government.
Under the current scheme, it is “impossible for businesses to be confident” of their returns when they are submitting claims, as some of this is depending on how many other companies apply to it, and there are also long wait times for receiving the claim.
“While many startups looking to expand overseas also benefit from the EMDG, it has limitations which make it less well-adapted to startups than to traditional exporters. Cash is critical for startups, and waiting more than a year to be reimbursed for eligible costs often radically diminishes the benefit provided by EMDG,” the StartupAUS Crossroads 2018 report said.
The group recommended that a new stream be launched under the EMDG allowing early-stage businesses to immediately claim a smaller capped rebate.
Tuesday night’s federal budget will also include $3.4 million to improve the participation of girls and women in STEM fields, with $1.8 million of this going towards the Science in Australia Gender Equity initiative.
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