AVCAL welcomes venture capital funding, calls for more
7 December 2011
The Australian Private Equity and Venture Capital Association (AVCAL) welcomes the Commonwealth Government's announcement to fund up to $100 million to venture capital (VC) funds to commercialise Australian innovation and research.
This is pleasingly greater than the expected $60 million which was the remaining allocation for the IIF program.
The funding from the Innovation Investment Fund (IIF) program must be matched by private sector investors before VC fund managers can invest the "IIF tranche four" funds in early stage companies developing new technology.
AVCAL CEO Dr Katherine Woodthorpe said the IIF program has proved successful since it started in 1997, enabling a pool of $524 million of government and private capital to invest in over 100 promising early-stage companies.
A 2010 review of the IIF program revealed that the first IIF round between 1997 and 2000 saw five VC funds raising $197m, which had distributed $362m to their investors.
"The IIF has led to a number of commercial successes and has been able to deliver returns to investors, including the government, which has been able to recycle those funds back into the program."
However, despite the success of the program, there has been no policy commitment to continue the IIF beyond this last round or for the introduction of something to replace it.
Dr Woodthorpe said: "The Government commendably spends over $8 billion a year on research and development but very little on helping to commercialise that investment. The IIF has been a vital program in the commercialisation effort but a lot more work is needed if we want Australia to capitalise on and retain its innovation for national growth and employment."
She said the VC industry has been contracting in Australia and around the world, including the US. VC fund managers take on the financial risk to help innovators commercialise their concepts, and there needs to be greater policy support for these commercial "enablers".
Applications for this last round of IIF funding from VC fund managers close 2 July 2012.
Media contact: Stuart Snell, ph +61 (0)2 8243 7001, (0)416 650 906, firstname.lastname@example.org.
Author: Adrian O’Shannessy, Director, Greenwoods & Herbert Smith Freehills
Author: Dr Kar Mei Tang, Head of Policy and Research, AVCAL