Government co-financed "Hybrid" Venture Capital Programmes (1)

Australia Innovation Investment Fund

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AU Australia
Web http://www.innovation.gov.au/Innovation/Policy/Pages/InnovationInvestmentFund.aspx
Maturity

Concept

About the project Edit

Example of a public investor ci-investing with private investors with more than 50% of the Fund provided by public sources (pari passu mode).

Themes

In what ways is this project unique and creative? Edit

Such a public initiative helps in setting up a Fund. It also helps to build a sufficiently big fund to benefit from economies of scale. Investing in "pari passu" with private investors does not have direct profit distribution effects (see other examples of hybrid Venture Capital Programmes.

What is the social value of this project? Edit

What is the potential of this project to expand and develop? Edit

The IIF program was announced in 1997. It is a co-investment scheme whereby the Government licenses private sector fund managers and provides them with capital for investment which must be matched (at an agreed ratio) with capital raised by the fund manager from the private sector. Fund managers are licensed through a competitive merit-based selection process. They are responsible for all investment decisions, which are made on a commercial basis in accordance with their own investment practices, subject to the IIF program guidelines. Funds operate for a period of 10 years.

IIF venture capital funds invest in early stage companies commercialising Australian R&D and enable private sector investors to leverage off public equity capital. By demonstrating the returns achievable from investing in such companies, the IIF program aims to attract additional private sector investment in early stage venture capital.

The program is in its third round. Round one commenced in 1998 and licensed five fund managers, and Round 2 was announced in 2000 (commenced in 2001) and licensed four fund managers. Round 3 was announced in 2006 and has the capacity to license up to 10 fund managers. As of July 2011, seven fund managers had been licensed.

What was the triggering factor of this project? Edit

What is the business model of this project? Edit


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