The University of Wollongong has launched a $10 million seed fund for start-ups which join its new iAccelerate business incubator.
Start-ups accepted by the incubator in its current round of applications will be eligible to apply for capital from the fund.
The university has contributed $2 million to the fund, which is managed by Artesian Venture Partners, and the other $8 million comes from investors.
The fund is a step up for the iAccelerate incubator, which commenced in 2012 and last year moved into a $16.5 million building paid for by the NSW government with funds from the privatisation of the Port Kembla port.
Start-ups will be funded at a number of levels. Forty companies will receive $5000 capital in return for 1 per cent equity and 20 of these will receive an additional $25,000 in return for an additional 5 per cent equity.
A handful of more advanced start-ups will be selected which will be offered up to $150,000 in return for 15 per cent equity (or less on a pro-rata basis).
The seed fund will have rights to participate in further follow-on rounds of investment in companies which come through the process which are successful. The fund is expected to run for four to five years.
All of the start-ups will be able to use space in the iAccelerate building at subsidised rents. Start-ups do not have to be linked to the university to participate in the program.
iAccelerate CEO Omar Khalifa said the $10 million fund, along with the support and mentoring programs available at the centre, would “be the catalyst to grow a unique innovation ecosystem” across Wollongong’s Illawarra district.
“For existing start-ups, the funding will allow them to continue their growth trajectory to a point where they are as a size and scale that makes them attractive to institutional investors,” Mr Khalifa said.
Since its 2012 commencement, iAccelerate has backed 65 companies and created over 200 jobs, but this is the first time the centre has offered to back its participating companies with a seed fund.
University of Wollongong vice-chancellor Paul Wellings said that a business eco-system was emerging around the centre.
“A number of companies have got to a point where they’ve got products and sales from those products. We think revenue is in excess of $5.2 million and the companies’ customers are somewhere in the region of 1.2 million,” he said.
“Would you have imagined that we would have 65 companies in such a short period?”
Professor Wellings said that the start-ups operated in a range of areas with many, but certainly not all, being technology-driven.
He said the iAccelerate seed fund was centre was part of the university’s effort to create economic diversity and sustainability in the Illawarra as it moved from mining and heavy manufacturing to a knowledge-based economy.
“The University of Wollongong prepares large numbers of highly proficient graduates each year and is in a unique position to attract the best start-ups to the region to employ that talent,” Professor Wellings said.
Read more: http://www.afr.com/leadership/innovation/university-of-wollongong-sets-up-a-10-million-seed-fund-for-startups-20170202-gu4fer#ixzz4XuzIPzUv
Follow us: @FinancialReview on Twitter | financialreview on Facebook