Last month’s Victorian State Budget is being celebrated as a “game-changing tech budget’” on the back of a raft of new funding initiatives for start-ups and small business enterprises (SMEs).
It is perhaps the breadth and depth of the funding that best evidences what the Victorian Treasurer, John Palls, has called the “government’s optimism” in the role that startups and SMEs will play in Victoria’s post-COVID economic recovery.
Here’s a breakdown of some of the more headline announcements.
The VIC Government has flagged a move into the R&D lending market by pledging $50 million for an R&D cash flow 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 per cent of their forecast refundable tax offset.
$2 Billion Breakthrough Victoria Fund
In one of the most significant investments any government has made in innovation for many years, the Vics have allocated $2 billion to a Breakthrough Victoria Fund. The funding is to be spent over 10 years and will be focused on supporting R&D in local businesses in sectors in which Victoria is already strong, namely life sciences, food and agriculture, manufacturing, clean energy and digital technologies.
LaunchVic Receives $40 Million Boost
LaunchVic is Victoria’s start-up agency. Its role is to grow the broader start-up ecosystem by investing in programs, projects and organisations that support startups and help them scale. In welcoming the additional funding, the Chair of LaunchVic, Leigh Jasper, said this multi-million commitment was “a vote of confidence in Victorian Startups’” and recognition that “startups are proven job multipliers”. In this last respect, studies show that for every high skilled job a start-up creates, a further five jobs are generated in associated service sectors. This is just one of the many spillover benefits of cultivating entrepreneurship.
Two other funds established by LaunchVic – the Victorian Start-Up Capital Fund and the Women’s Angel Sidecar Fund – were also the beneficiaries of funding boosts.
Victorian Startup Capital Fund
The Victorian Startup Capital Fund will receive $60.5 million over three years to support early-stage startups. This will inject much needed early stage funding into the start-up and VC ecosystem and will go a long way towards ensuring promising start ups can scale and become the unicorns of the future.
It’s expected that the government’s investment will be matched by private sector investors (e.g. high-net-worth individuals and super funds) which would mean that the fund’s size could well double within the next couple of years.
Women’s Angel Sidecar Fund
In exciting news, $10 million has been allocated to the new Women’s Angel Sidecar Fund which is dedicated to helping women-led startups gain more ready access to capital to grow and scale..
Again, it is expected that the private sector will match the funding, ultimately unlocking perhaps as much as $30 million in early stage funding, with up to $250,000 in co-investments on offer!
Venture Growth Fund
Finally, the Victorian Government have announced that they will invest $25.7 million to establish a new Venture Growth Fund. This is intended to be an anchor investment that will encourage the private sector to tip in additional funds. The aim is address the challenge startups face accessing capital but the focus here will be on low interest loans, for which so many startups have difficulty in gaining approval. It is likely to be well received by founders who will now not necessarily have to make the difficult decision to surrender equity to scale.
As you can see, a lot of trust is being placed in start-ups and SMEs to lead the Victorian economy out of the doldrums post-COVID. It’s especially pleasing to us to see the role that ‘’innovation’’ and ‘’R&D’’ can play in this journey finally being given due recognition. It’s fair to say that there has probably been no better time for Victorian start-ups and/or SMEs to think about making a grant application.