Incubator's First Hatchlings
Sydney Morning Herald
Tuesday March 5, 2002
The Commonwealth's IT company incubator program has reached the 100-company milestone.
A report on the 2000-2001 financial year performance of the $78 million Building on IT Strengths (BITS) program, funded by the part sale of Telstra, shows communications and related technologies were the most popular.
The report shows that although New South Wales led the number of applications for places at more than 550, Victorian incubators accepted the most start-ups; 33 compared with 22 in NSW.
Acceptances in the second half of last year, although not detailed in the Department of Communications IT and Arts report, swelled the total number of companies accepted for incubation to 105 at the end of last year.
The dot-com crash had made it harder to get outside capital, the report said, but a total of $12 million in private funds had flowed to the participating companies and $1.2 million to the incubators.
Slightly more than $23 million in government funds had been paid to the 10 incubators in the period covered by the report.
Only five companies had graduated from the program by last June, having used up their incubator funding, met their performance targets and prepared themselves to move to profitability or further venture capital funding.
One company that received funding was Third Millennium Management, which was sponsored by the Australian Distributed Incubator.
Third Millennium, which has offices in Melbourne and Christchurch, has produced labour management software to cut business costs and presented its software to a forum in Adelaide last week held before the World IT Congress.
ADI has invested about $2million in 10 start-ups, six based in Melbourne, one in Brisbane and three in NSW.
Unlike some incubators which provide more services than cash, ADI doles out about $200,000 cash directly to the companies to help launch, as well as providing some services.
Other ADI beneficiaries include a maker of micro-array technology to allow fast genetic sequencing of animals, an online backup service, an athletes' Internet fitness service, a wireless solutions consultancy and a software games developer.
ADI's investment manager, Charles Gillies, said the company had attracted about $2million in ``angel funding" for its companies.
He said the fact incubators worked closely with new companies was an incentive for venture capitalists to invest.
``It's no longer the 22-year-olds with the business plans," he said.
``These are guys with serious business acumen and they are now doing it in the IT space and you just know they are going to be successful," Gillies said.
© 2002 Sydney Morning Herald
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