Sci-tech ministry earmarks R5bn for innovative start-ups
The Department of Science and Technology is looking to establish a R5 billion fund for innovative start-up companies.
This was revealed by minister Blade Nzimande, when he briefed the media ahead of tabling the department’s budget vote. He said the fund is aimed at helping innovators commercialise their products.
“I am pleased to report that progress has been made towards establishing a fund that will help bring locally-developed innovations into the market,” Nzimande said.
“The fund is designed to largely de-risk the early stages of technology commercialisation and business development. An injection of R1 billion per year for five years is expected to make a significant impact in making these businesses more attractive to investors for significant scale-up.”
According to Nzimande, the fund is expected to kick-in on 1 April 2020.
The department’s director-general, Phil Mjwara, said the fund is being mooted in recognising that the country has a number of start-up companies that are trying to commercialise their products, but in the absence of funding, they are unable to upscale and attract investments.
Mjwara said, for example, that one of the challenges faced by SMME innovators was suppliers expressing an interest in taking up their products, but they are not willing to invest in them due to concerns that the companies might not remain sustainable and might shut down “in three or four years’ time”.
He said in this regard, the department is thinking of introducing an insurance programme to sustain SMME enterprises.
Nzimande said the department will, over the next five years, continue to play its role in driving and advocating for increases in investment in research and development as a percentage of gross domestic product, with the aim of achieving the national development target of 1.5%.
“This will continue to be accompanied by the implementation of our tax incentives in investment in research and development.
“With the budget for 2019/20 increased to R8.15 billion from the R7.79 billion allocated in 2018/19, we have identified initiatives to develop new research and development of industries that could help improve South Africa's value addition in what we produce and export,” he said.