Australia must create better incentives to attract foreign capital and investment including from wealthy business people in Hong Kong to help boost the nation’s seed-stage venture capital sector.
Stoic Venture Capital Partner Geoff Waring welcomed the Australian Government’s proposed review of the tax treatment of venture capital funds as a key measure to help lift the nation’s economy and global competitiveness amidst COVID-19.
The venture capital industry in Australia is supported by the Venture Capital Limited Partnership (VCLP) and Early-Stage Venture Capital Limited Partnership (ESVCLP) tax incentive schemes.
“We look forward to consulting with the Australian Government to identify how we can enhance Australia’s incentives for investment in venture capital,” Dr Waring said in a media statement.
“That includes providing supportive tax and investment incentives for migrant investors who contribute significantly to Australia’s venture capital industry.”
However, Dr Waring said the number one priority was improving incentives and global competitiveness for investment in venture capital to support the growth of genuine seed-stage start-ups.
The Australian Investment Council’s latest annual investment activity yearbook 2020 shows angel and seed-stage venture capital has declined significantly since 2017.
“Incentives should be revised to better enable seed-stage fund managers to attract capital from migrant investors and raise funds to support the growth of Australian businesses,” he said.
Dr Waring said the Business Innovation and Investment Program including the Significant Investor Visa, Investor Visa and Premium Investor Visa programs could be the driving force behind Australia’s ailing venture capital sector.
The SIV has already contributed almost $12 billion in investment to Australia so far.
“Immediate action could be taken to plug gaps in lost capital as a result of COVID-19 related falls in immigration, by encouraging a higher proportion of high net worth migrant investors to apply to these programs,” he said.
Stoic Venture Capital also welcomed the fast-tracking of 5,000 people a year for permanent residency under the Global Talent and Temporary Activity visa.
“Global competition for capital and talent is heating up and Australia must do more if it is to attract it’s fair share,” he said.
“Wealthy migrants such as prominent businesspeople from Hong Kong have unique expertise and are keen to bring their capital and talent to a new home.
“Skills and experience across a diversity of sectors will help Australia innovate and ensure the nation is prepared to respond to future crises like COVID-19 and the health and economic challenges these pose to our communities.”