Investor visa holders in Australia will have to allocate at least half of their funds to local startups and emerging companies as part of a raft of government changes to the Business Innovation and Investment Program.
Under the changes, investor visa holders in Australia will be required to invest 20 per cent of their funds – $1 million for significant investor visa holders – into venture capital or private equity funds, and a further 30 per cent into managed funds focused on growth companies.
The reforms were flagged when the government altered the scheme in 2015, and had been originally promised by mid-2017.
They will now come into effect from July, at the same time as a number of other reforms to the Business Innovation and Investment Program (BIIP), including the slashing of the visa scheme to four streams: business innovation, entrepreneur, investor and significant investor.
Under the current Complying Investment Framework scheme, a significant investor visa holder must invest $5 million in Australia.
Of this, a minimum of $500,000 must be invested in eligible Australia VC or growth private equity funds, $1.5 million must be invested in an eligible managed fund or listed investment company investing in emerging companies, and the remaining $3 million into managed funds.
The new changes will require visa holders in both the investor and significant investor streams to now invest 20 per cent of their funds in VC and private equity, doubling the current levels. A further 30 per cent will be invested in emerging companies through a managed fund, with the other half to a managed fund.
The total investment amount for the investor stream will also be increased from $1.5 million to $2.5 million, and the Complying Investment Framework will also be applied to this element of the scheme.
This means that at least half of the investments made by those on investor or significant investor visas will be made into startups or emerging companies – $2.5 million for significant investors and $1.25 million for investors.
The changes will help ensure there is more funding and support for Australian tech firms and growth companies, Mr Hawke said.
“Over $15.9 billion has been invested into the Australian economy since 2012 and the changes taking effect from 1 July will see this figure continue to increase,” Mr Hawke said.
“Australia is an attractive destination for investors and these changes will directly benefit emerging enterprises, the commercialisation of Australian ideas and research and development.
“Increased investment thresholds and the adjustment of investment ratios to focus more on venture capital and private growth equity will better support innovation and emerging enterprises in Australia.”
The Australian Investment Council has been pushing for these changes for several years, and its chief executive Yasser El-Ansary said they will ensure an “important flow of capital to support fast-growth businesses”.
“Increasing the venture capital and private equity component…will provide direct benefits to job creation and growth through the development and expansion of innovative companies which will provide flow-on advantages to the economy,” Mr El-Ansary said.
“With a clear path to permanent residency, significant investors are likely to continue to invest into Australian businesses for the long-term after they have met the visa requirements. These are the small-to-medium-sized businesses that will generate real jobs and economic growth.”