Changes to the Complying Investment Framework (CIF) for the Business Innovation and Investment Program (BIIP) will have a dramatic impact on the future of many startups in Australia that are desperate for seed-stage venture capital investment.
Investment manager Atlas Advisors Australia is making a last-minute call for the Australian Government to prioritise the effective use of migrant investment to fill critical funding gaps in Australian seed-stage venture capital.
Executive Chairman of Atlas Advisors Australia Guy Hedley said the heavy hit to seed-stage venture capital in recent years was compounded by frustrating delays in the processing of BIIP applications.
“This is stymying the flow of funding for seed-stage venture capital and emerging companies which Australia’s economy needs to create future jobs and revamp industry technological capabilities,” Hedley said in a statement.
“It currently takes around two years for an application to be determined, compared to five years ago when timeframes were vastly more efficient – between six to nine months.”
The number of primary visas granted has significantly declined. Approved applications fell to 135 in the year from July 2019 to July 2020 from 191 in the previous corresponding year.
In 2015, when applications were processed at their fastest, there were 879 approved.
Hedley said speeding up processing for BIIP applications could unlock more than $100 million that capital-starved startups needed to grow in the post-pandemic economy.
“Many seed-stage startups are facing a funding shortage because of the impact of COVID-19 on the riskiest stage of venture capital,” he said.
“Fast-tracking approval for BIIP applications could help innovative Australian companies in areas such as life sciences and agribusiness to survive and thrive beyond this period of uncertainty.”
The Australian Government could get better use out of migrant investment by redirecting funds under programs such as the Significant Investor Visa program away from emerging listed companies, property and bonds towards venture capital.
The government can achieve this by increasing the allocation towards venture capital from 10 per cent to 20 per cent, while the mandatory investment period should be extended from four years to five years.
“Stimulating seed-stage venture capital would significantly increase startup growth, jobs and industry technological capability – making it a far better deal for Australia.”
Atlas Advisors Australia is a funds manager and investment advisory business, operating between China and Australia offering a wide range of financial services and wealth management solutions.