The Victorian government will launch a $25 million venture growth fund in an effort to keep startups in the state, a significant policy shift on tech for the state government.
The venture growth fund, which is set to be formally unveiled as part of the state government’s budget on Tuesday, will see the government co-invest in local startups. It comes after the state government launched the Victorian Business Growth Fund earlier this year, which is focusing on “long-term growth opportunities”.
The eligibility criteria for the new venture fund have not yet been released.
The new fund marks a significant tech policy shift for the Andrews government, which has previously focused its efforts on funding the infrastructure that supports the tech startup sector through the independent agency LaunchVic.
LaunchVic was created in 2016 to deploy the state’s $60 million innovation fund, and has dished out grants through more than 10 rounds. This funding came to an end last year, with the agency providing a further $10 million for the 2019-20 financial year.
With the state budget delayed due to the COVID-19 pandemic, LaunchVic was given a further $4.92 million for the July to December 2020, and further announcements on its future are expected on Tuesday.
With the new fund, the Victorian government will now pick winners and co-invest in startups in the state as equity participants in an effort to help them grow and keep them local, Treasurer Tim Pallas said.
“I wonder how many of these great ideas have just gone missing or gone overseas as a consequence of us not being prepared to be a bit strategic in terms of our interventions,” Mr Pallas said.
“This will be one of a number of issues where you will see that innovation will drive productivity, will drive employment, and that is the key focus of the government. We know that particularly the Reserve Bank, and the Productivity Commission, has made observations that access to loan capacity is extremely difficult for commercialising companies.
“It’s even more difficult for those companies that don’t have a substantial capital base but have a great idea.”
It’s unclear how LaunchVic will work with, or compliment, the new venture growth fund, or whether the state government will continue to fund startup infrastructure through that agency.
The Victorian Business Growth Fund will be looking at later-stage companies, and closely mirrors a federal government fund that is yet to get off the ground.
The Victorian government has contributed $50 million to its fund, while First State Super has stumped up $200 million.
State Innovation Minister Martin Pakula established an innovation taskforce at the start of the year to support the rollout of the Victorian government’s “innovation agenda”.