Another $350 million for innovation fund under Venture Australia

Start-ups look set to benefit from a new $350 million round of equity funding through the federal government’s Innovation Investment Fund, announced as part of the Venture Australia package.

Venture Australia is a $378.6 million package designed to facilitate the growth of innovation-driven businesses by improving access to finance and business expertise.

It forms a key part of the government’s industry and innovation statement, titled A Plan for Australian Jobs, which was released over the weekend.

Part of the package is a new $350 million round of equity funding through the IIF.

According to Industry and Innovation Minister Greg Combet, this will stimulate private sector investment in the venture capital market and provide management expertise to grow start-ups.

Meanwhile, Treasurer Wayne Swan said the government will return all financial profits from successful joint ventures under IIF funding to the existing Revolving Fund.

“The Revolving Fund will guarantee the continued cycling of capital for supporting the competitive firms of the future,” Swan said in a statement.

The Australian Private Equity and Venture Capital Association has welcomed the announcement, applauding the government for undertaking a “thorough collaborative engagement process”.

“We are particularly pleased to see the recognition of the importance of the venture capital industry,” AVCAL said in a statement.

AVCAL said the new round of funding through the IIF will be a “great boost” to venture investing in Australia, especially taking into account the equal amount of private capital that will be invested alongside.

“The commitment that any money returned to the government will be recycled through the program is also very welcome,” it said.

The Venture Australia package will also see changes to tax concessions, designed to provide clarity and certainty for private sector investors, and to facilitate investment by angel syndicates.

The government has also pledged to promote success stories of new Australian firms to global venture capital markets in a bid to attract international investment.

Other major components of the Industry and Innovation Statement are as follows:

• A new $27.2 million Enterprise Solutions Program to help SMEs gain access to public sector markets.

• Extending Enterprise Connect to provide services to more SMEs across more sectors, including professional services, information and communication technologies, and transport and logistics.

• A new Growth Opportunities and Leadership Development (GOLD) initiative to provide support for SMEs with high-growth potential.

• Establishing up to 10 Industry Innovation Precincts to boost collaboration between businesses and researchers to develop much-needed skills, technologies and capabilities.

The government has also made changes to the R&D Tax Incentive.

Businesses with annual turnover of $20 billion or more will no longer be eligible for the incentive, but will be eligible to claim their R&D expenditure under general tax law provisions.

The change will add a third tier to the eligibility requirements for the program, and targets the program to SMEs. It will apply to income years starting on or after July 1, 2013.

Companies with a turnover of less than $20 million doing eligible R&D can receive an uncapped fully refundable offset if they are in tax loss and, from 2014, eligible companies will be able to receive refunds as quarterly credits.

It is these savings that will fund the measures announced in the government’s Industry and Innovation Statement.