Investment NSW has been inundated with requests from startups for funding under the MVP Ventures program after it was paused for six months last year, delaying the arrival of grants to the sector.
Officials from the agency on Friday revealed almost 350 applications have been received since the program targeting early-stage startups and small and medium-sized enterprises reopened with a reduced funding envelope in December.
The sheer number of applications have resulted in delays to application processing times, Investment NSW deputy secretary Katie Knight confirmed, with the agency unable to meet its promise of a 15-day first pass assessment in some cases.
“We acknowledge that there have been some delays in some processing. We have had a very large number of expressions of interest,” Ms Knight told a NSW Budget Estimates hearing on Friday afternoon.
“We are certainly diverting our resources to manage those as quickly as possible. But what I would say is that we’re communicating frequently and we’re being very transparent about where we’re at with that process.”
Liberal member of the Legislative Council Jacqui Munro, who was asking questions of MVP Ventures, said she was aware that some startup founders have been waiting “for over two months to get a response”.
Of the 349 submissions received to date, Ms Knight said that 172 applications have received first pass assessment, with 23 of those continuing to the next stage, which requires that applicants submit a detailed application.
Nine of the 23 applicants have submitted detailed applications for second pass review, with only three approved for funding. Six are continuing to be assessed by Investment NSW, which has 30 days to do so.
Ms Knight could not say whether any of the MVP Ventures applications put on hold when the program was paused in May last year had received funding but agreed to take the question on notice.
The funding delays follows a significant drop in venture capital funding last year, with data from Cut through Ventures and Foklore Ventures this month showing startups received less than half the $7.4 billion they got in 2022.
Under the reinstated MVP Ventures program, matched grants of up to $50,000 are on offer to support NSW-headquartered firms with an annual turnover of less than $1 million and fewer than 20 full-time staff.
The funding is significantly less than the $200,000 in matched funding available under the former government’s version of the program, with the total funding available ($3 million) around a third of what was previously available ($10 million).
In September, the state government confirmed MVP Ventures, along with four other grants program, would continue following the Comprehensive Expenditure Review, but that reduced funding would be available.
Other programs like the Future Economy Fund were cut ahead of the last year’s Budget by the former Coalition government, while the Department of Enterprise, Investment and Trade also had its operating budget reduced by $180 million.
The NSW government is currently reviewing its innovation and industry policy, with plans to release an Innovation Blueprint that resets its relationship with innovators in the state later this year.
In a consultation paper released this week, Investment NSW challenged respondents to “focus on ways to develop a relationship with government that is more collaborative than transactional”.
Minister for Innovation, Science and Technology Anoulack Chanthivong earlier on Friday said the blueprint was about making sure that the “relationship with the government… is not just one of simple cash grants”.
“Whether it’s the semiconductor sector, whether it’s the startups, whether it’s the scaleups, there’s nothing innovative about handing out cash alone. Its actually much broader than that,” Mr Chanthivong told Budget Estimates.
While Mr Chanthivong said we “need to find alternative… public finance”, he would not answer questions from Ms Munro on whether NSW is considering investment vehicles like that of Queensland’s venture capital fund.
“Investing in these areas is actually about driving productivity and prosperity in this state. What are you doing? Will you commit to an investment vehicle like the other states have?” Ms Munro said on Friday.
