Venture capital commitment up

AUSTRALIA’S venture capital industry continued to record strong growth in 2000-01, despite the beginnings of a global economic downturn on the back of a 31 per cent increase in registered Pooled Development Fund Schemes.

The sector recorded a 14 per cent increase to $5.7 billion in funding committed to venture capital investments from investors, while there was a 38 per cent increase in funds drawn down to $3.7 billion, leaving a $2 billion pool of funds waiting for a home.

Despite access to funds not presenting a problem for venture capital managers, only 1 per cent of companies reviewed for potential new investments during the year was successful in receiving finance.

The state of the sector portrayed in a survey released by the Australian Bureau of Statistics indicates a total of 107 venture capital managers reviewed 19,157 new investment possibilities and conducted further analysis on 1,364 investments. But just 270, or 1 per cent, of those companies initially considered ended up being sponsored by the venture capitalists.

In the year to June 2001, 89 WA companies had received venture capital compared with 66 in the previous year, placing this State ahead of Queensland and behind only Victoria and New South Wales. Australia-wide the number of investee companies in-creased from 651 to 806.

Australian Venture Capital Association chief executive Andrew Green attributes part of the success of the industry to the Federal Government’s financial support and its decision to introduce Venture Capital Limited Partnerships.

“The industry applauds the Government for its leadership on this profoundly important reform, a reform which will be profoundly important for the out-performance of the Australian economy in the long-term,” Mr Green wrote in the industry newsletter.

“AVCAL is now working closely with representatives of Government to ensure that the legislation that is introduced represents world’s best practice.”

The industry was quick to embrace government-sponsored programs. During the year, 81 of the 150 investment vehicles were participating inn a registered government program, an increase of 26 on the previous year, with most adopting the Federal Government’s Pooled development Fund program.

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