Slide 1

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 2

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 3

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 4

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 5

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 6

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 7

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 8

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 9

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 10

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 11

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 12

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 13

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 14

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 15

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 16

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 17

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 18

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 19

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 20

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 21

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 22

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 23

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 24

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 25

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 26

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 27

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 28

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 29

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 30

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 31

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 32

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 33

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 34

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 35

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 36

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 37

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
–
–
–
–

Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU


Slide 38

Funding for Innovative
Developments In South Africa
Towards an innovative and
entrepreneurial mindset for
our SMMEs

Ntokozo Mthembu,

Pr. Eng., PhD

CHALLENGES

•
•
•
•
•
•
•
•

Energy / power shortages
Traffic congestion
Water shortage
Water pollution
Weather fluctuations
Poverty
Housing shortage / Squatter camps explosion
Crime (in all its forms – ATM bombings; hijackings,
murder)
• Corruption

INVENTION
An invention is a new form, composition of matter, device, or process.
Some inventions are based on pre-existing forms, compositions, processes
or ideas. Other inventions are radical breakthroughs which may extend
the boundaries of human knowledge or experience.
Wikipedia

An invention is useful only to the inventor unless it is offered to the public,
however niche that public may be.
Invention is the mother of necessity
RealInnovation.com

INNNOVATION
Invention that gets out into the world is innovation, and as such it may
be a major breakthrough, it may have a minor or incremental impact
or its effect can be in between these two extremes.
Wikipedia

If the invention improves some product, process or service for the public,
then that invention transforms into an innovation.
RealInnovation.com

Innovation is the specific instrument of entrepreneurship...
the act that endows resources with a new capacity to create wealth.
Peter Drucker

ENTREPRENEURSHP
Entrepreneurship is the practice of starting new organisations
or revitalizing mature organisations, particularly new businesses
generally in response to identified opportunities.
Entrepreneurship ranges in scale from solo projects
(even involving the entrepreneur only part-time) to major
undertakings creating many job opportunities
Wikipedia

Entrepreneurship is a process whereby enterprise is employed and
leads to the pursuit of opportunity through new ventures. ...
www.reading.ac.uk

THE MODEL

COMPETITIVE INNOVATION
Thinking process

Transformation process

Value-add process

System of idea generation

ENTREPRENEURSHIP
market driven

INNOVATION

INVENTION

economically driven

scientifically driven

Beneficiation of ideas – degree of usefulness

Organisations
& Businesses

Value-added
Products &
Services
Non-value
Products &
Services

INNOVATION SYSTEMS OF
GOVERNMENT
the
dti

Technology and Human Resource in Industry
Programme

THRIP

SPII
stp

G
O
V
E
R
N
M
E
N
T

DST

INNOVATION FUND

Support Programme for Industrial Innovation
SEDA Technology Programme

Innovation Fund
Council for Scientific and Industrial Research
National Research Foundation

CSIR
TIA
NRF

DME

DSM

ARC

DOA

Technology and Innovation Agency (Organic)

Demand Supply Management

Agricultural Research Foundation

THE DTI MODEL

THRIP

INDUSTRY / UNIVERSITIES /
GOVT

PARTNERSHIP

the
dti

E
I
D
D

SPII

MATCHING
PRODUCT PROCESS
DEVELOPMENT

TECHNOLOGY TRANSFER
PROGRAM

stp
INCUBATORS

EIDD – Enterprise and Industry Development Division

SUPPORT PROGRAMME
FOR INDUSTRIAL INNOVATION
PROGRAMME

OFFERINGS

CRITERIA

Technical Innovation
PARTNERSHIP

SPII

MATCHING

Economic Merit
Project Management

Managerial Capability
Technical Capability
PRODUCT PROCESS
DEVELOPMENT

Financial Ability

For South African registered companies
and individuals

Development in RSA
IP to reside in RSA

SPII FUNDING INCENTIVES
GRANT INCENTIVES
PARTNERSHIP

COMPANY
SIZE

MAXIMUM
GRANT

SPII %
CONTRIBUTION

TECHNOLOGY
RATING

Large
> 200 employees
> R51mil Turnover
> R19mil assets

> R1.5 mil

50%

Significant;
Global outreach

MATCHING
Medium
< 200 employees
< R51mil Turnover
< R19mil assets

R1.5 mil

50% - 75%

Significant;
Global outreach

PRODUCT PROCESS
DEVELOPMENT
Small
< 50 employees
< R13mil Turnover
< R5 mil assets

R 500, 000

50% - 85%

Newness of product;
Local market

SPII FUNDING INCENTIVES
BEE INCENTIVES
Guideline

PPD

Matching

Partnership

• No BEE

50%

50%

50%

• Women

75%

65%

50%

75%

50%

+ Disabled >50%
+ BEE empowered
(> 25% shareholding)

• BEE ownership:

85%
(> 50% shareholding)

SPII FUNDING REQUIREMENTS
QUALIFYING COSTS
Personnel
Testing & Trials

Travel

Licensing

Direct Materials

Quality Assurance
& Certification

Capital Items / Tooling
Software
Documentation

Subcontracting &
Consulting

Patents

SPII FUNDING REQUIREMENTS
NON-QUALIFYING COSTS

• Development for single client
• Basic and applied research
• Projects receiving other government funding
• Military projects
• Where SPII contribution is not significant (at
least 20% of total project costs)

SPII FUNDING REQUIREMENTS
DEVELOPMENT AND INTELLECTUAL PROPERTY
RIGHTS

• Development and subsequent production must take place
within South Africa.

• IP embodied in the resultant product and/or process:
– To reside in a South African registered company for the duration
of the development and the subsequent repayment period
– A proportion of the intellectual property rights (IPR) established in
the development of the funded project be ceded to the IDC for the
duration of the project and the subsequent repayment period
– The IPR, whether registered or unregistered, are owned jointly by
the recipient and the IDC as determined by the prorated
percentage of funding and the direct cost to the project at the time
of approval

• No simultaneous projects from the same company

Innovation - SPII ICT/Software Projects
•
•
•

•
•

The general SPII Programme Guidelines apply to all projects, however, where a
significant portion of the SPII-defined project consists in the development of software,
there are additional specific qualifying requirements.
These additional requirements apply specifically to the application of the defined
innovation with regard to software and ICT projects.
As a preliminary, in addition to the normal due diligence process conducted for each
project, a software due diligence process is also conducted through the appointment
of a software specialist that undertakes to evaluate the applicability of software
innovation as per the SPII Guidelines.
A key consideration is that the software guidelines apply across all schemes equally –
i.e. the software must be considered internationally innovative to be considered
qualifying.
Other considerations include the experience and expertise (capability and maturity) of
the project team to carry out the development, licensing and deployment, market
demographics and positioning, design process, architecture and software
environment.

Innovation - SPII ICT/Software Projects
For a product to be considered innovative for SPII it should be:
• Functionally unique and advanced
• More efficient
• Lower cost
• If process driven it should be a substantial improvement/change of the original process
• The innovation should predominantly be the result of technical development as opposed to
research/studies and should emphasize technical innovation.
Software innovation includes projects where:
• A new and unique product with clear benefits is developed. These benefits can range from new
unique features to specific attributes that have never been seen in a product before.
• A unique enhancement to a product with clear benefits is developed. The new features added to
the product are such that the entire product can be seen to be innovative.
• A new software development which provides substantial efficiency improvements. These
improvements could include a product being substantially easier to use, being substantially faster
etc.

Innovation - SPII ICT/Software Projects
•
•
•
•
•
•
•
•

New software products/programmes will be considered innovative if they offer
substantial functionality or cost savings that is not available in other products on the
market.
Innovation can apply to a new algorithm, a solution allowing a substantial integration
of existing programs, a product suite or a single product.
Software methodologies will be considered as innovative if the processes involved
are substantially different from existing methodologies and if they offer a substantial
benefit to software development.
A new language can be considered innovative if it does not currently exist and will
offer significant benefit to the software community.
New tool boxes may be considered as new software products if the additional
functionality is considered substantial.
Product upgrades will be considered as innovative only if they offer substantial
additional functionality that is not available in competing products.
Enabling existing package for the web-type applications and internet coupling
development will not be considered as a qualifying activity.
Integration will be considered as innovative if the components have never been
combined before and if the resultant product provides significant functionality not
available in competing products.

Innovation - SPII ICT/Software Projects

•
•

Software applications that aim to serve a single client will not qualify for SPII support.
Embedded software development will only be considered for support under
exceptional circumstances. It will be considered if it represents a minor component of
the development.
• Any project that results in intellectual property restrictions imposed by exclusivity
agreements or similar will not qualify for support if they inhibit the optimal
commercialization of the project.
SPECIAL CONSIDERATIONS:
• Any computer and related hardware and/or off-the-shelf software (e.g. operating
systems) or other tools required for development purposes will generally not be
considered as qualifying costs.
• Web-enablement and platform migration will not be considered as qualifying costs.
• Where software (e.g. process software) will form an integral and inseparable part of,
and will be essential for the functioning of the prototype and eventual product, such
software may be approved, on a case by case basis, as a qualifying cost. This will not
include any type of licensed software.

0
Misc.
Manufacturing

Furniture

Transport

Motor Vehicles

Electrical
Machines

Mechanical
Machines

2007

Metal

Basic Iron & Steel

2006

Minerals - Non
Metallic

Plastic

Rubber

Chemicals

Paper & Wood

Wood

Textile & Clothing

Foodstuffs

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined - Approvals by Sector
(excluding SIC366 - Electronics & Software)
2008

16

14

12

10

8

6

4

2

0
Software

Medical

Audio & Video

Power Electronics

2007

Security

Telecommunication

2006

Control &
Automation

Office & Business

Transport

Test &
measurement

Dataprocessing

Components

Total SIC366

Number

Innovation - SPII ICT/Software Projects

SPII Schemes Combined
Breakdown of SIC366 - Electronics and Software
2008

40

30

20

10

Innovation - SPII ICT/Software Projects

•
•
•

The SPII Programme is committed to developing the Electronics and Software
sectors as is evident from the growing support to this sector.
With regard to this sector, the previous graphic indicates the level of support to the
Electronics and Software sector – All these projects contain some significant portion
of software development in each of the relevant categories.
The Software category refers to pure software development projects that may not be
specifically classified in any of the other specific categories.

SPII APPLICATION PROCESS
AND EVALUATION
Application

Approval

Disbursement

Monitoring

Applicant
prepares
proposal

Due diligence
investigation

Achievement
of
predetermined
milestones

During
development

•Submitted to IDC

Basic
assessment
•Scanned for
completeness
•Evaluation by
IDC appointed
consultant

•Establish
appropriateness
•Prepare report for
SPII Panel

SPII Panel
Meeting
•Approve / Reject
application

Legal
Agreements
•Prepared for
signature

•Technical audit
•Financial audit

•Variations

Post
Completion
•Annual
information to the
dti for 3 years

IMPACT OF SPII
Performance Data

1 April ‘06 to
31 March ‘07

1 April ‘05 to
31 March ‘06

1 April ‘04 to
31 March ‘05

Total local sales (R mil)

138,4

139,0

165,8

Total export sale (R mil)

836,9

173,2

636,8

Total sales (R mil)

975,3

312,2

802,6

Taxes paid – Company Tax

223,3

7,8

79,3

Shop floor jobs created

1 773

2 262

R & D as % of sales (%)

21,9

16,8

13,4

Number of completed
projects surveyed

125

124

155

Number of responses

62

113

(R mil)

3 145

136

3-YEAR
WINDOW

443,2
1 646,9
2 090.1

310,4
7 180
17,4
404
311

BEE IMPACT OF SPII
•

A total of 29 applications from BEE companies were approved in 2006/07 compared
with 24 in 2005/06, equating to 35% of total approvals by number (2005/06: 34%) and
21% by value (2005/06: 18%).

•

Combined approvals for BEE projects accounted for 35% by number and 21% by
value of total approvals during 2006/07 (33.8% by number and 17.7% by value in
2005/06).

•

BEE companies have indicated a preference for the PPD scheme over the
Matching scheme with 41% of 2006/07 grant approvals under the PPD Scheme going
to BEE applicants.

•

For the year ended March 2008, the total amount approved to companies with
significant BEE shareholding (>25%) was Rm15.7 with BEE companies (>50%)
receiving approvals to the value of Rm13.5.

•

Combined approvals to BEE companies for the year ended March 2008 accounted
for 33% by number and 21% by value. Similarly, with regard to womenempowered companies, these received a total of 20% by number and 10% by
value, of approvals.

BEE IMPACT OF SPII
• Support in terms of the Matching and PPD Schemes currently remains
only available to SMME companies.
SPII Schemes Combined
Funded Projects by Asset Size
0 - 1 Million Rand
1 - 10 Million Rand

10 - 50 Million Rand

> 50 Million Rand

100%
80%
60%
40%
20%
0%

2006

2007

2008

BEE IMPACT OF SPII
BEE Approvals as a percentage of Total Approvals

60.00%

50.00%
40.00%
30.00%
20.00%

Actual

Budgted
Combined

Actual

Budgted
Partnership

Actual

Matching

Budgted

0.00%

Actual

10.00%

Budgted
PPD

Percentage of BEE Approvals

70.00%

BEE IMPACT OF SPII

Number of Approvals

BEE Approvals vs Total Approvals Per Scheme - 2008
80
70
60
50
40
30
20
10
0

Total
BEE

Matching

PPD

Partnership

Scheme

Combined

BEE IMPACT OF SPII
HONOURS RECEIVED BY BEE SPII RECIPIENTS
The dti Technology Awards

•

Nguni Juice CC was awarded the prestigious Chairman’s award for the development
of the Tonic & Energy Drink Project. November 2007, Port Elizabeth

•

TMI Consultancy was awarded the dti SPII Technology Awards under Small
Company Category for its Generic Simulator Platform. October 2008, Bloemfontein

•

Afrovision Sports Equipment of Claremont Village, Makopane, Limpopo was a
second finalist for its Stekma Sports Project. October 2008, Bloemfontein

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:

Grant Amount:
Global Solution:
Sponsors:

Cedux Technologies (Pty) Ltd
Electronics
The BlueVoice: a voice over wireless internet
protocol (VoWIP) for voice services over
unlicensed and licensed wireless networks
R475K
Communication
Messrs Rapelang Rabana, Matshona & duToit
Computer Science Graduates – UCT

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Lafret Trading
Miscellaneous Manufacturing
Electro Mechanical Pet feeder: automatic
pet feeder for both water and solids
R275K
Thapelo Moloi & Co
Engineering Graduates – Wits Technikon

CASE STUDIES
Product Process Development Scheme
Company:
Industry Sector:
Project Description:
Grant Amount:
Global Solution:
Sponsors:

Nguni Juice CC
Chemicals and Pharmaceuticals
Tonic, energy juice: a tonic and energy drink
R415K
Norman Mpedi

CASE STUDIES
Matching Scheme
Company:
Project Description:
Grant Amount:
Global Solution:

Prism Payment Technologies (Pty) Ltd
Prism encrypting pin pad: PIN encryption
system for autoteller machines
R970K
Crime

CASE STUDIES

Matching Scheme
Company:
Project Description:

Grant Amount:
Global Solution:

MLS Test Systems CC
MLS10 APT: A mobile accelerated pavement
testing unit, used as a load simulator on roads
being constructed in order to verify their load
bearing capacity
R1.27 mil
Road infrastructure durability

CONTACT US
WEBSITE:

•
•
•
•
•
•
•
•
•

www.spii.co.za

SPII Rules
Application Info
Pro-forma contracts
Annual report
Scheme updates
Champion’s report
Summary of operations
Completed projects
Industry sectors receiving support

FUNDING VALUE CHAIN
Research

Prototype

Incubation

Commercialization

Application
Seda
THRIP

IDC

SPII
Tshumisano Centres
Stp business incubators
Stp transfer fund

Stp technology for women
Innovation Fund

Venture Capital Funding
Commercial Banks
Triumph Venture Capital
Khula

THE SPII APPLICATION
• Information on the applicant
– Name of applicant
– Description of the firm’s history and background
– Size and scope of own /subcontracted expertise

• Information on the project
–
–
–
–
–

Project name and description of the product / process
Nature of innovation
Breakdown of total budgeted costs for development
Milestone activities; project team + subcontractors;
Standards / specifications + manufacturing plan

THE SPII APPLICATION
• Information on Commercialisation
–
–
–
–
–
–

Final end user need + how this need is currently satisfied
Size of potential market
Competition (competitive products / marketing edge)
Potential customer profiles
Marketing objectives + strategy
Pricing structure wrt cost of sales, anticipated profit margins and
volumes (for a minimum of five years)
– Provide sales budget for three years (local / export sales)

• Financial Information
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Audited financial statement – last 2 yrs + latest mgmt accounts
Available sources of finance (Rand value based)
Quarterly cash flows forecast
Valid tax clearance certificate

THANK YOU