Part 1: Sovereign Industrialisation Programs. Why Governments Are Paying Startups to Make Things
A look at the programs governments are running to rebuild domestic manufacturing and what a founder needs to know to access them.
Something changed in the way governments think about manufacturing around 2020 and the shift has not reversed. What changed was not political fashion but lived experience: a pandemic that exposed how much of the world's essential production had concentrated in a small number of countries and a small number of factory complexes, followed by shipping disruptions and energy shocks that showed the cost of long supply chains when conditions turn hostile. Governments that had spent thirty years encouraging manufacturers to go wherever labour was cheapest began spending substantial sums to bring production home or at least to countries they trusted.
The language that emerged from this shift is sovereign capability or sovereign industry and the phrase appears in policy documents from Canberra to Brussels to Seoul. What it means in practice is that governments have decided certain kinds of manufacturing are too important to import and are willing to put money behind that belief. For a startup founder who is building something physical the practical implication is significant because much of that money is accessible to small companies and the programs designed to distribute it are often poorly understood and therefore underused.
This article looks at what five of the most active programs look like on the ground and what a founder needs to do to access them.
Why Sovereign Manufacturing Matters Now
The case for sovereign manufacturing is not purely defensive. Governments that invest in domestic production capability are also investing in what economists call industrial complexity which is the capacity of an economy to make things that require a collection of skills and inputs working together. Countries with high industrial complexity tend to grow faster and recover from shocks more reliably than countries that have allowed their manufacturing base to hollow out.
The more immediate argument is supply chain resilience. During the early months of the pandemic many wealthy countries found themselves unable to produce basic medical equipment domestically and dependent on suppliers who were simultaneously under pressure from their own governments to reserve production for local needs. Semiconductor shortages in 2021 and 2022 shut down automotive production lines in countries that had no domestic chip manufacturing. The lesson was clear enough that it produced legislative action in the United States with the CHIPS Act and the Inflation Reduction Act and equivalent programs in most major economies.
For a founder the important thing to understand is that these programs are not designed to help large incumbents protect market position. They are designed to build new capability and new companies represent new capability in a way that an established manufacturer operating an existing facility does not. Many of the programs described below explicitly prioritise early stage companies and novel processes over existing industry.
There are a number of industrial and manufacturing programs by country and region to incentivise entrepreneurs to build things, these include the following programs.
Australia — The National Reconstruction Fund provides debt, equity and guarantees to Australian businesses in seven priority sectors including defence, critical minerals, medical science and renewables with no fixed application rounds. Smaller companies access the fund through the Industry Growth Program which offers matched grants from $50,000 to $5 million for prototyping and commercialisation projects. The R&D Tax Incentive returns 43.5 cents per dollar of eligible R&D spend to companies under $20 million turnover and is available regardless of sector.
Singapore — The Enterprise Development Grant covers up to 70 percent of project costs for Singapore registered businesses undertaking capability or innovation projects and is open to companies of any size. Startup SG Founder provides $30,000 in startup capital with matched mentorship for first time founders and Startup SG Equity co-invests alongside private investors on approved deals. RIE2030 beginning April 2026 at SGD 37 billion emphasises semiconductors, robotics and AI manufacturing with strong public private partnership structures.
South Korea — The Ministry of SMEs and Startups allocated $2.23 billion across startup programs in 2025 including the Super Gap Startup project which provides funding, office space and industry matchmaking for technology and manufacturing startups. The Korea Development Bank administers low interest loan pools across strategic sectors and semiconductor startups can access a one trillion won ecosystem fund alongside subsidised access to mini fabrication facilities for process testing. R&D tax credits for companies in national strategic technology areas reach up to 50 percent of qualifying expenditure for SMEs.
Europe — The Net Zero Industry Act creates fast track permitting for manufacturing projects in solar, wind, batteries, electrolysers, heat pumps and related technologies across all 27 member states and any company manufacturing in these categories can apply for Net Zero Strategic Project status through national contact points. The EU Innovation Fund provides direct grants for commercial demonstration projects in net zero manufacturing and member state programs in Germany, France and the Netherlands stack on top within state aid rules.
Canada — SR&ED returns up to 35 percent of eligible R&D expenditure as a refundable tax credit for Canadian controlled private corporations up to a $6 million annual limit and capital equipment costs were reinstated as eligible in 2025 making it particularly useful for manufacturing startups. IRAP provides non-repayable grants up to $10 million covering 80 percent of technical salaries for SMEs and is accessed through regional industrial technology advisers before a formal application is needed. The Strategic Response Fund at $5 billion suits growth stage companies ready to commit to large scale production investment.
In the next article (Part 2) we look at these incentive programs for manufacturing in more detail at Part 2 Government Industrialisation Programs.
