Red tape and a lack of transparency holding NSW startup grants back: report

Startups aren’t applying for government grants and taking advantage of the funding on offer because of arduous red tape and a lack of transparency in the process, a new report has found.


The Committee for Sydney published the report, which examines the most effective ways for governments to “lead from behind” and help foster a startup ecosystem.


Building the startup ecosystem in NSW: from grants to collaboration centres on the barriers to startups receiving grants and business incentives from the state government, and ways to improve this process.


With help from KPMG, over 75 startups were surveyed for the report.


It found that although the awareness of government grants among startups is high, the participation rate is much lower, with only 39% of those that are aware of grants, actually applying for one.


The survey found that a major reason for this is the time-consuming red tape and paperwork involved with applying for these incentives.


“A lack of resources means startups must make a choice between spending time on product development, customer engagement, grant applications and seeking other forms of funding,” the report says.


This “long, arduous process” means many startups are forgoing seeking government assistance entirely.


“The paperwork and process is so bureaucratic that most startups find it easier to go to crowdfunding and other options,” one of the surveyed startups says.


“The language of public servants can be hard to decipher,” another adds.


The report finds that the R&D tax incentive has the highest rate of uptake among the NSW startup community, while also providing the highest return on investment.


A lack of transparency in the grants process has also been flagged as a major barrier, especially in terms of the criteria not being clearly displayed.


“Often hours can be spent looking at grants and incentives you think are applicable only to find something excluding you hidden in a later document or page,” the report says.


The report has four key recommendations to improve these government business incentives.


It says there needs to be improved education and awareness of what’s on offer, a more efficient and effective application process, greater transparency throughout, and more strategic use of the grants and incentives.


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Denham Sadler is the editor of StartupSmart. He was previously a journalist at the publication and has worked as a freelancer for the Guardian, the Saturday Paper and the ABC. In his spare time he likes puns and jaffles.