In a significant shift from recent innovation policy, the Victorian government will take direct equity stakes in high-growth local companies through a new pilot fund, announced as part of the state’s budget.
The 2022-23 Victorian budget, unveiled by Treasurer Tim Pallas on Tuesday afternoon, included more than $78 million for the state’s manufacturing sector and $65 million for various efforts to attract and retain innovative companies.
New investments in the budget include a $20 million equity investment pilot fund, which will target “young, highly innovative companies” looking to expand in areas that match Victoria’s growth priorities, which include medical technology and advanced manufacturing.
Through the fund, the state government will provide funding in exchange for an equity stake in the company.
This is a marked shift in policy for the Andrews government, which has previously shied away from directly investing in startups and tech firms, instead opting to invest in the surrounding infrastructure for the ecosystem through LaunchVic.
“This will ensure we will not only lure the world’s brightest innovators to Victoria, but also that Victorians share in their success,” the budget papers said.
The state government launched the Venture Growth Fund in last year’s budget, but this fund offers debt funding to startups rather than taking equity.
A further $40 million over two years will go towards attracting new businesses to Victoria through the International Investment Attraction Fund.
“International investment is so important for our economy, bringing new opportunities for trade and boosting local businesses – and that ultimately means more jobs for Victorians,” Mr Pallas said.
“As our borders continue to open to the world, we’re getting out there and making sure everyone knows Victoria is the place to invest, innovate and grow your business.”
The Victorian budget also includes $78.3 million in new funding to support the state’s manufacturing sector.
This includes $40 million for the Victorian Industry Investment Fund which will provide grants to rapidly growing businesses, particularly those supporting supply chains that underpin the state’s economic resilience.
This will function as a new stream of the existing Jobs and Investment Fund.
There will also be $20 million provided to the renewable energy and low carbon component manufacturing sectors, and a $750,000 top-up for the Fishermans Bend Innovation Precinct project.
“From food production to health and financial services, we’ll back companies that invest in technology and their workers – it’s good business for Victoria and it’s great for Victorian jobs,” Trade Minister Martin Pakula said.
“Every Victorian deserves the security of a good, stable job with a decent wage – that’s why we’re investing in sectors like advanced manufacturing, fintech, medical research and renewable energy. As these sectors grow, it just makes sense to invest in them to create more jobs for Victorians.”
Up to 300 internships in digital and manufacturing sectors will be created through a $4.5 million budget investment, while $1.5 million will go towards the Defence Science Institute. More than $2.5 million will be provided for the Defence industry workforce development plan.
Funding has also been provided for the development of a Victorian critical minerals prospectus, which will draw from new geoscience data to identify favourable geology and early exploration investment opportunities for priority critical minerals, while the state government will also deliver grants for critical minerals development.
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