Murray inquiry to focus on venture capital

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In a speech on his Financial System Inquiry last week, chair David Murray voiced his interest in exploring ways to create a “more dynamic” venture capital funding environment in Australia.

The comments were welcomed by the Australian Private Equity and Venture Capital Association Limited (AVCAL) who have highlighted the significant challenges in fundraising across both the venture capital and private equities industries in recent years.

AVCAL’s 2013 yearbook, which was released last December, revealed that fundraising for the 2012-2013 financial year totalled $867 million, down from $3,271 million for the previous financial year.

CEO Yasser El-Ansary said the Murray inquiry will offer opportunities to identify how policy and regulatory frameworks can be reformed to foster a more innovative economy that supports the growth and expansion of Australian businesses.

“Private equity and venture capital funds invest in businesses that account for around 4% of Australia’s GPD, who in turn support over 500,000 jobs across almost every industry sector of our economy – but there is the potential to invest significantly more than that in the future,” he said. “We have to take the opportunity as part of this inquiry to look at how Australia’s $1.8 trillion superannuation industry can play an even more significant role in helping to drive investment in Australian businesses.”

El-Ansary said there are a number of very clear policy changes that can be made that will better align the long-term interests of superannuation fund members with the long-term investment horizon.

Supporting innovation and backing businesses that can create competitive positions in the global marketplace will be an essential part of creating a more dynamic Australian economy, he said.

AVCAL is set to lodge its submission to the Financial Services Inquiry at the end of this month.

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  • Innocent Observer on 24/03/2014 10:10:53 AM

    I'm not sure it's a lack of capital that is holding PE back (VC's a different kettle of fish) but it is good to see superannuation funds increasing their investment in PE.

    VC is always going to have a challenge in marrying opportunities with capital but there are ways that the government could help streamline the process (instead of access to VC being on a "who you know" basis). Overcoming this challenge will potentially keep more companies in Australia (or at least keep companies from burning out before they have time to succeed). I would prefer to see the govt. making 30 or 50 VC investments p.a. than kicking another $50m p.a. toward keeping outdated and uncompetitive industries alive.

    Will be interesting to see what ideas AVCAL and Murray come up with.

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