TIA Workshop Energy Sector Funding Targets

09 Nov 2011
09 Nov 2011

TIA are also interested in funding initiatives that are similar to existing technologies already in the market where they can demonstrate cost reduction, increases in efficiency and replacement of imports. These are proven markets that are well defined and the easiest to penetrate. This certainly opens up the scope of fundable projects.

In the biotech/biofuelsarea in the First Generation (conventional biofuels ex sugar, starch and vegetable oil): its about mobile processing, scale 'down', increase in throughput rate and flexible feedstock processes. In Second Generation (Genetically modified feedstocks, algal processes) its about feedstock innovation, processing microorganism innovation, industrial enzymes, process development and business model innovation.

This is the first Sector Strategy that has been publicised by TIA having just been approved by their Exco last Monday. TIA also announced that they will be focussing more on industry interaction and needs analysis - this will be useful to feed back 'problems' to universities, especially from local Western Cape industry, so that research can be focused on providing solutions.

TIA are also striving to build up a picture of who the industrial players are in a particular sector - useful information for universities seeking to commercialise technologies. The Chamber of Commerce has requested TIA's assistance in setting up a "Technology Support Centre" that SMMEs can seek support from. TIA is also keen for universities to provide them with information, mapping out expertise within the universities and highlighting technology development in the sector so that this can be taken to the SMMEs.

A hurdle that is under review, is the need for universities to contribute 10 to 20% matching funding in projects that seek Technology Development Funding (which is the Fund most suitable for HEIs). Whilst in the past projects have been approved where this contribution has been made on an 'in kind' basis, TIA have now moved to wanting this in 'hard cash'. It is acknowledged that universities are unlikely to have this funding available and this is where the role of Angel investors is important. They can co-invest in these early-stage projects and effectively leverage their investment.

In terms of a return, TIA typically seeks a royalty, but they have realised that VCs are not keen on royalties, so if required, will convert this to an equity stake. Typically the funding 'cap' is R15 million (and minimum is R1.5 million), but where a number of HEIs and industry players are in a consortium funding of up to R60 million would be considered.

Criteria for award of funding include:

  • IP position - is it novel and inventive
  • Market attractiveness (need and problem that a solution is provided for)
  • Social and economic impact
  • Team and consortium (want commercial skills and also the involvement of the Technology Transfer team at an institution)
  • Alignment with TIA sectors
  • Technical viability of the proposal
  • Commercial viability and scalability (can one scale to meet demand quickly)
  • Prior investment, partnerships. Letters of Intent from potential customers provide concrete support for applications
  • Investment risk and potential financial return

In terms of processing an application:

  • The Investment Assessment Committee (IAC) review the application as the first step. There are two IACs: Industrial (Advanced Manufacturing, Energy, UCT and Mining) and Biotech (Health, Agro, Industrial Biotech).
  • If approved, due diligence is conducted
  • The IAC reviews the outcome of the due diligence
  • Presented to the ExCo who can make the funding decision if the project is
  • Presented to Board, where funding >R12 million.

There are incentives for companies and SMMEs to partner with universities for their technology development - so great opportunities for universities. This 'partnership' can be as loose as outsourcing the work to the university.