What is the Australian Venture Capital Fund of Funds (AFOF)?

The Australian Venture Capital Fund of Funds (AFOF) is a  program to encourage investment in a portfolio of early stage venture capital limited partnerships (ESVCLPs) and venture capital limited partnerships (VCLPs). It offers tax incentives and provides diversification and flexibility for the fund and its investors.

 

Background

The Australian Venture Capital Fund of Funds (AFOF) provides a structure that encourages investment in a portfolio of  registered EVCLPs and VCLPs. The program can also invest in eligible direct investments of those funds.

Fund managers can apply  to Innovation and Science Australia to register a partnership as an AFOF.

The Department of Industry, Innovation and Science and the Australian Taxation Office (ATO) jointly administer the program on behalf of the Australian Government.

 

Eligibility

An Australian Venture Capital Fund of Funds (AFOF) must be a new partnership rather than a restructured existing partnership.

Investments must be made in accordance with the VCA and ITAA 1997 [Subdivision 118-F]. The only debt interests an AFOF may hold are permitted loans.

An Australian Venture Capital Fund of Funds (AFOF) must meet ongoing registration and reporting requirements under the VCA to maintain its registration.

Registration may be revoked if a partnership contravenes the legislation.

You can apply to register if:

  • you are a limited partnership or incorporated limited partnership established in Australia
  • each general partner is an Australian resident

You can’t establish an AFOF by restructuring an existing partnership. This program is for new partnerships only.

In addition, you must have a partnership agreement that:

  • requires the partnership to remain in existence for between 5 and 20 years
  • requires partners to contribute their capital as and when required under the agreement
  • prohibits the addition of new partners except as provided for in the agreement
  • prohibits increases in committed capital except as provided for in the agreement
  • confers on the general partner the right to require partners to contribute their committed capital to the partnership
  • includes a plan outlining its intended investment activities

There is no minimum capital requirement for full registration as an AFOF. However, the general partner must advise that the fund has sufficient capital to begin its investment program.

 

Timing

Applications open on an ongoing basis.

 

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