Federal Industry and Innovation Minister Kim Carr has announced the establishment of a new $83 million fund to help cash-starved technology companies.
But while venture capitalists have welcomed the extra funding, they have questioned whether it is enough to save many of the ailing businesses.
The new Innovation Investment Follow-on Fund will offer $83 million in funding to 20 venture capital managers licensed by the Commonwealth under existing programs. The money will be re-allocated from existing funds.
Carr says the funding could help save 1000 jobs in the tech sector.
Brigitte Smith, managing director of biotech venture capital company GBS, describes the cash as a step in the right direction, but says it is not clear exactly how the funds will be directed.
According to details released yesterday, the $83 million will be channelled towards companies that have already received support under the Government-sponsored Innovation Investment Fund, the Pre-Seed Fund, the Renewable Energy Equity Fund or the ICT Incubator programs.
But Smith argues that is a very small group of companies, potentially less than 150, and she hopes that the Government intends to help a much broader range of firms.
She argues that about 600 of Australia’s 1200 biotechnology companies face collapse if they don’t get cash in the next 12 months, and it is crucial to help them out as quickly as possible.
“We actually hope that the money can be used to support all investee companies of investor managers to help those late stage companies that we really want to help save.
“It would be a national tragedy if they fell over in the financial crisis when there was Government money that didn’t go to them.”
Smith is also hoping to see more Government funds for innovation in the May federal budget.
Carr said yesterday the Government will make its formal response to Terry Cuttler’s Innovation review as part of the budget.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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