Sponsor's Message

The smile was because I know exactly where this company is coming from, and I've heard many others express similar levels of frustration with the whole Technology Grants scheme run by the Ministry for Economic Development.

Even though (or perhaps because) I was approved for $36K in funding under this grants scheme, I have to say that the system is badly flawed.

When making application for my own grant, I was warned that my pitch should emphasize the fact that I was undertaking work that had a fairly high risk of failure.

It seems that projects or ideas which are a less likely to succeed are far more likely to gain approval (and taxpayer funding) than those which are a dead cert. Perhaps the rationale is that dead-certs are more likely to gain private funding and therefore be less entitled to cash out of the public purse -- I don't know.

Anyway, when I rolled up with a good (but unproven) idea for a technology project, I was welcomed with open arms and the crown's coffers were opened to the tune of $36K.

However, it seems that if you roll up to this government with something hot, as Bulletin Wireless supposedly did, the government isn't really interested at all -- even if it's got the potential to drag in millions of dollars in overseas funding.

What's more, I can verify Bulletin's claim that, in order to secure a grant, you are encouraged to "fudge" the facts in order to meet the qualifying criteria -- since these criteria are so unrealistic that nobody would be likely to get a penny otherwise.

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Ultimately, one of the reasons I didn't uplift my $36K grant was because I felt that my own project was indeed too risky for the government to be gambling money that ought be better spent on things such as healthcare and education. (big mistake eh?).

Before this column turns into another round of government-bashing, maybe it should be pointed out that perhaps there is some merit to funding only the riskier projects.

Maybe the government does have a point that the dead-certs, if they are in deed so promising, would be better supported through private funding, by way of commercial venture capitalists.

Perhaps the government's objective is to pick only those with long odds, because long odds pay bigger dividends than favourites do?

Well I'd have to agree whole-heartedly with these arguments, if it weren't for a few problems.

Firstly, there is still no real venture capital industry in New Zealand.

If you want money to develop a good idea then you're still going to have to mortgage your own house, borrow from friends, family and anyone else who will listen -- or just give up.

Secondly, and based on my own experiences, I really don't think that the government is in a position to pick winners and, as a result, far too much of the grants money may well be wasted on ideas or projects that could never have worked.

The problem with a grants scheme such as the one that we currently run is that it really is just a roll of the dice.

Take my X-Jet technology for example. I really don't think they called in anyone with an in-depth understanding of pulsejet engines or computational fluid dynamics -- so how did they know that offering me $36K of taxpayers' money wouldn't be the same as flushing that cash down the toilet?

Of course any scheme that properly vetted the viability of the applications it received would consume the vast majority of its funding budget in simply hiring consultants to scrutinise those proposals, so that approach is entirely impractical.

As a result, the grant money tends to go, not to those who might make best use of it, but to those who are more skilled in pitching a good story and filling out the myriad of forms in a manner that pleases the bureaucrats. As well as a "treaty business", I believe we have a "grants business" which is exploited by those companies who are well versed in sucking as much money as they can from Jim Anderton's open purse.

And there are other iniquitous things occurring within the whole technology grants system.

I have heard from someone in a very good position to know, that IT projects are given a very low ranking when it comes to handing out cash. This is substantiated by the number of software developers I've spoken to who have had perfectly good proposals rejected.

If I had the money, I'd use the official information act to try and find out exactly how many of the projects funded by these grants have actually paid dividends to the NZ taxpayer.

I'm sorry, but if government is really serious about funding hi-tech startups and good ideas here in NZ, they need to stop buying photo-opportunities that show Anderton standing beside some grateful recipient of up to $100,000, and implement a fairer system instead.

Yes, I have a number of ideas for such things, and if Jim wants to hear them (which I strongly doubt he does), he knows my email address.

Until this is done, I fear that the present scheme is actually contributing to the outflow of our best and brightest people and ideas.

In the meantime, I strongly encourage those who think they're good at filling out forms and interpreting bureaucratese to apply for their own grants. Never look a gift horse in the mouth folks.

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