Howard said there's a risk grants could subsidise poor business models in a type of "start-up welfare" , and cultivate a culture aimed at impressing bureaucrats rather than promoting innovation.

"Our gut feeling has been that by devoting time and attention to government grant applications, you risk taking your eye off the more important task of building great products for customers," Howard said. "There's a risk that in making your business concept seem sensible to grant approval officers, you may be less inclined to be bold and ambitious."

"I've seen other entrepreneurs get a bit addicted to government grants, and in doing so have built companies that are modestly successful but will never change the world."

Instead, he gave the thumbs up to the tax concession and, along with his co-founder Fenn Bailey, believed it strikes the perfect balance between government support and personal commitment.

The pair were at a pivotal point in Adioso's history when they accessed the concession. They had exhausted all the money raised from investors but still hadn't finished a key feature of their next-generation travel search engine. The tax credit helped the company stretch its dollars.

"We ran out of the money we raised from investors and had actually had not reached our development milestones and were actually in a bit of financial trouble," Howard said. "What the R&D rebate allowed us to do was spend a few more months on risky speculative development work, that we really wouldn't get investors to fund."