Australia establishes A$83m VC fund

A government-backed vehicle will commit capital to portfolio companies in the IT, biotech and clean energy sectors.

The Australian government has set up the Innovation Investment Follow-on Fund, an A$83 million ($57 million; €42 million) venture capital fund.

The fund will commit capital to more than 20 fund managers, which have portfolio companies in the biotechnology, biomedical, information communication technology and clean energy sectors. The capital provided to managers will be used exclusively for follow-on investments in specific portfolio companies. It will not be invested in funds managed by these GPs.

The government will finance the fund by reinvesting money it receives from distributions and realisations.

Currently, 112 companies are eligible for the scheme. The process will be a competitive one with the venture firms competing for funding, according to a government spokeswoman. Companies that stand to benefit from the fund employ at least 1,000 people.

“Making money available for reinvestment will boost confidence and help shake loose additional private sector capital,” Kim Carr, minister for innovation, industry, science and research, said in a statement. “Funds will flow to companies as soon as possible,” he added. 

Last week, in neighbouring New Zealand, government-backed fund of funds New Zealand Venture Investment Fund (NZVIF), committed NZ$20 million ($11 million; €8 million) to the Endeavour Growth Fund, which makes venture and early expansion investments in the science and technology sectors.