Yesterday’s Victorian budget brought a hefty deficit and some questionable policies for small businesses. But, for the startup and tech community, there is plenty to celebrate.
Following the announcement of a $25.7 million venture growth fund yesterday, the state government doubled down on its support of Victorian tech and innovation.
Far from overshadowing Victoria’s other startup support systems, the growth fund appears to be a relatively small part of the plan.
Here’s what’s in the Victorian budget for startups.
$40 million for LaunchVic
As part of the Jobs Plan, LaunchVic, the Victorian startup agency, has been given an additional boost of $40 million over the next four years.
That’s intended to boost growth in the startup ecosystem and promote entrepreneurship, particularly in regional Victoria.
LaunchVic is also overseeing the rollout of some of the other significant new measures, including the Victorian Startup Capital Fund and the Women’s Angel Sidecar Fund.
Victorian Startup Capital Fund
The state government will invest $60.5 million into the Victorian Startup Capital Fund, a so-called ‘fund of funds’. That investment will be matched by private sector investors such as super funds, family offices and high-net-worth individuals.
Ultimately, it is expected the fund size could reach $120 million, which will be invested into VC funds, which in turn will invest in early-stage startups.
The idea is to boost capital available for early-stage startups, leading to growth and job creation, while also boosting the VC sector in Victoria.
Women’s Angel Sidecar Fund
A $10 million Women’s Angel Sidecar Fund will offer up to $250,000 in co-investments into women-led startups, addressing the access-to-capital challenge women founders often face.
Again, it is expected the funding will be matched by private sector investors and angel investors, ultimately unlocking up to $30 million in early-stage funding.
The fund is intended to help women-led startups to grow and scale, and to attract more women into entrepreneurship.
Venture growth fund
The $25.7 million venture growth fund will also be focused on encouraging investment into Victorian startups, however, the funding will be structured as a loan, rather than as an equity investment.
Elsewhere, the government has pledged $50 million for an R&D cashflow loans initiative.
Startups and SMEs claiming the federal government’s R&D Tax Incentive will be able to apply for low-interest loans from the state government, covering up to 80% of their forecast refundable tax offset.
A further $13 million has been pledged to “promote cooperation” in R&D and commercialisation, the budget papers say, although it’s not clear exactly what that will entail.
$2 billion Breakthrough Victoria Fund
While not specifically focused on startups, the state government is investing a significant $2 billion into a Breakthrough Victoria Fund, which will invest in research and innovation over the next 10 years.
This fund will focus on areas in which the state is already strong — life sciences, food and agriculture, manufacturing, clean energy and digital technologies each receive special mention in the budget papers.
A further $80 million is also committed to targeted investment incentives, designed to attract international businesses to Victoria.
Finally, the state government has announced a $64 million digital skills and jobs program, designed to help people in need to upskill and transition into digital roles.
That’s in addition to a new $626 million Digital Future Now scheme, which will focus on removing connectivity ‘black spots’ and getting unemployed people into digital skills training and internships.
The budget has been widely welcomed by the Victorian startup community.
Startup Victoria chief executive Judy Anderson said in a tweet that startups have been “given a seat at the big kids’ table”, while Leigh Jasper, LaunchVic chair and co-founder of construction tech success story Aconex, called the budget “a huge vote of confidence” in the startup sector.
— Emma Coochin (@EmmaCoochin) November 24, 2020
The Vic Gov has just announced more than $180m for Vic’s startup ecosystem. A huge vote of confidence in the sector. Thanks to Gov for their vision & recognition of the role startups play in accelerating economic recovery of the State #startupaus #vicbudget #springst @LaunchVic
— Leigh Jasper (@leighjasper) November 24, 2020
“Startups are proven job multipliers. For every high skilled job they create, a further five jobs are created in associated service sectors in the broader economy,” Jasper said in a statement.
The measures will “accelerate the economic recovery of the state”, he added.
In particular, Jasper pointed to the fund-of-funds as a “game-changer”, that will bring much-needed capital to boost to Victoria’s early-stage startups.
Predictably, this was also welcomed by the VC community.
“This is one of the most direct policy responses we’ve seen towards plugging the funding gap for early-stage startups in our startup ecosystem,” Will Richardson, managing partner at Giant Leap Fund, tells SmartCompany.
Both the fund-of-funds scheme and the venture growth fund serve not only to bring government investment into early-stage ventures, but to empower existing angel investors and VC firms to invest more.
“It will help drive more diverse teams in terms of gender and multicultural backgrounds,” he says.
Of course, women also celebrated dedicated startup support — as well as some of the other measures to get women into work.
“This has been on my dream wall of wish post-its,” Girl Geek Academy Sarah Moran said in a tweet.
THIS IS FREAKIN AWESOME 👏
This has been on my dream wall of wish post-its 😍😍😍
— Sarah Moran 👗 (@SarahMoran) November 24, 2020