AVCAL calls for reforms ahead of Australian election

Recommendations include a fast-tracked limited partnership vehicle to encourage foreign investment into high-growth businesses, as well as the removal of regulatory impediments to superannuation funds investing more money into private equity and venture capital.

"Foreign investment has always played an important role in fueling the Australian economy," Yasser El-Ansary, CEO at AVCAL, said in a statement. "Our current framework does not have the right balance between welcoming overseas capital, and ensuring Australia's national interests are protected. The reality is that foreign investment is crucial to the funding of small and medium sized Australian businesses."

Suggestions to encourage more superannuation support for PE and VC include more relaxed foreign investment rules and a shift regulatory focus towards net returns and long-term growth of only around 0.5% for all superannuation money. To promote a more robust start-up ecosystem AVCAL advises government funding for commercialization and business skills courses, as well as an investigation of opportunities for long-term private/public co-investment pathways.

The organization has also mooted a Biomedical Translation Fund (BTF) to commercialize health and medical research discoveries in order to overcome local bottlenecks in the process of clinical trials and both regulatory and marketing approvals. The government formally announced its intention to create a A$500 million ($373.8 million) BTF late last year whereby private fund managers would allocate investments of between A$5-20 million for projects past the proof-of-concept stage.

This range of growth capital support has been critically absent in Australia's start-up ecosystem, according to AVCAL data. Over the last five financial years, only 19% of VC-backed companies received later or expansion stage funding, down from 30% of companies in the prior five-year period.

Momentum in addressing this issue has resulted in a string of new tax incentives for early-stage investors in Australia's 2016-2017 budget. These amendments include a reduction of the minimum holding period to qualify for a 10-year capital gains tax exemption and a tightening of requirements to ensure that there is no existing affiliation between investors and target companies.

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Australasia
• Regulation
• Venture
• Early-stage
• Australia
• Growth capital