The Victorian government has pledged $2.4 million to venture capital firms to set up in the state and raise funding for local startups, setting up competition with Queensland’s venture drive.
The state’s startup agency LaunchVic on Thursday announced it is backing eight funds with $300,000 grants from the second round of its VC Support Program it launched last year.
The funds are: Australian Medical Angels, Ecotone Partners, Era VC, Flying Fox Ventures, Mandalay Funds Management, Pacific Channel Ventures, SBE Australia, and Synthesis Capital.
Between them the eight funds are aiming to raise $300 million and will be able to use the grants to cover establishment costs like legal fees, company registration, new staff salaries and to facilitate capital raising for new funds.
While overall investment into Victorian startups has grown in recent years, there is a continued lack of early-stage venture capital, according to LaunchVic.
“This program is supporting the growth of the local VC sector and placing more capital into the hands of quality founders during those crucial early stages,” LaunchVic chief executive Kate Cornick said.
To be eligible for the grants, funds needed to be ‘brand new funds’ or ‘new to Victoria’, establish a new office in the state and be aiming to raise at least $10 million. Applicants are asked to provide a plan on how they can repay the funding once they achieve returns.
Initially planned to run over three rounds, the second round was pushed back and the third round scrapped earlier this year.
The latest funding for VCs comes after Queensland’s own $130 million VC development fund was able to lure nine firms to the state over the last year.
The Queensland program, which also funds accelerators and diversity programs, requires its VCs to invest 1.25 times the government contribution into local startups.
Victorian Treasurer Tim Pallas said the state’s VC fund will translate to startup support.
“These new VC funds will provide more investment for startups when they need it most, allowing them to scale up quicker and create more high-skilled jobs in critical sectors like medtech and climate technology,” he said in a statement.
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