The Innovation Investment Fund is a venture capital program that supports new innovation funds and fund managers with expertise in early-stage venture capital investing.
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Innovation Investment Fund – Overview
The Innovation Investment Fund is a venture capital program that supports new innovation funds and fund managers with expertise in early-stage venture capital investing. It co-invests with private sector investors in venture capital funds to grow early-stage companies to commercialise the outcomes of Australia’s strong research capability.
Objectives
The Innovation Investment Fund objectives are to:
- develop fund managers with experience in the early stage venture capital industry
- by addressing capital constraints and management constraints, encourage the development of new companies that are commercialising research and development
- establish, in the medium term, a ‘revolving’ or self-funding scheme
- develop a self-sustaining, early stage venture capital industry in Australia.
Round 3 Recipients
The three fund managers invited to establish the funds are:
- Carnegie Venture Capital – This fund will focus on providing capital and support to a portfolio of investments in seed, start up and early stage companies. The fund will build upon a successful track record of investing in Australian companies that drive innovation in life sciences, information technology and internet-enabled sectors, clean technology and other industries.
- GBS Venture Partners – This fund will be an Australian life science specialist fund. The fund will invest in companies commercialising Australian biomedical innovation to create new medicines and medical devices to treat unmet global medical needs.
- Innovation Capital Associates – This fund will be a general fund which will continue its established strategy of investing in Australian technology companies with global potential. Potential portfolio companies will operate in the service and high margin manufacturing sectors. The Innovation Capital team will expand and operate from offices in Sydney, Melbourne and Adelaide.
Previous Recipients
- Carnegie Innovation Fund (CIF) – The fund’s focus is on early-stage Australian companies driving innovation in product and process development in the life sciences, information technology and other sectors. The principals of the Carnegie Innovation Fund have long and proven track records in business and in the venture industry. Among the fund’s principals is Mark Carnegie, whose investing track record and contribution to the development of the venture capital industry in Australia rank among the most significant in the country. The Carnegie Innovation Fund has committed capital to allow it, together with the Australian Government, to expeditiously close on a fund of $40 million.
- MRCF IIF Partnership – The Medical Research Commercialisation Fund (MRCF) was established in July 2007 as a seed/early-stage fund supporting the commercialisation of innovations developed within Australia’s medical research institutes and research hospitals. The MRCF started with operational grant support from the Victorian and NSW Governments and eight of the leading medical research institutes from those states as members. In the short period since establishment, the MRCF has seen membership grow to 27 medical research institutes and their associated research hospitals, spanning Victoria, NSW, Western Australia and Queensland. More recently, the Departments of Health in Western Australia and Queensland have also joined the MRCF collaboration.
The MRCF IIF will ensure that there is sufficient capital to provide seed funding for approximately fifteen newly formed companies to commercialise innovations emanating from the Member Institutes. In addition, the MRCF IIF will provide sufficient follow on capital to support the most promising companies, following the seed investment, to a stage where they can be partnered or attract capital from the more traditional venture capital sources. The existing Investors have committed to supporting the MRCF IIF and will provide the $20 million of required matching private capital. - Southern Cross Fund No. 2 – Australian-US early stage fund in the IT, telecommunications, materials and clean technology sectors. Southern Cross’s major strength lies in the way it has structured its business model for venture investing, with experienced people based in Silicon Valley, Sydney and Brisbane. This fund will have strong formalised international linkages. Southern Cross is committed to building a self sustaining Australian venture capital industry which is why they have integrated their business into Silicon Valley, in order to facilitate Information and Communication Technology (ICT) capitalisation and divestment. Southern Cross has a strong commitment to work with domestic investees, both getting them investor ready and then through the expansion stage optimising exit value. The fund’s US presence is a critical success factor for executing this strategy.
- Start-up Australia Fund – Start-up Australia is a leading Australian venture capital company specialising in the bioscience sector. Since it was established in 1997 it has provided institutional investors with attractive investment returns by investing in Australian companies developing products for global bioscience markets. The Start-up Australia Fund intends to invest in early stage companies developing products for global pharmaceutical, medical device, diagnostic, animal health, agricultural technology, food, energy and environmental markets.
Case Studies
The Australian Government’s venture capital programs support new innovation funds and fund managers with expertise in early-stage venture capital investing. The programs co-invest with private sector investors in innovation funds to assist early-stage companies to commercialise the outcomes of Australia’s strong research capability.
- Looksmart is an internet search engine company supported by IIF fund manager AMWIN Management Pty Ltd. Their $2.2 million investment returned $245 million to investors; a staggering 111 times the original investment.
- SEEK is one of the largest online jobseeker sites in Australia and New Zealand. Venture capital investment by the IIF fund manager AMWIN Management Pty Ltd contributed to its early growth strategy. From a revenue base of less than $1 million in 1999 it successfully listed in April 2005 with a market capitalisation of $600 million.
- QRxPharma, a Four Hats Capital investment, has a product pipeline in the fields of pain management and neurodegenerative diseases. Its stock exchange debut made it the largest life-sciences initial public offering in Australia.
- Pharmaxis is a drug discovery company focused on treatments for autoimmune diseases. IIF fund manager GBS Venture Partners Ltd was a seed venture capital investor in Pharmaxis in 1999. Its value grew from $1.4 million at investment to more than $635 million to date.
- Alchemia listed on the Australian Stock Exchange 2003 after the biotechnology company received venture capital investments from four IIF fund managers: Start-up Australia Ventures Pty Ltd, GBS Venture Partners Ltd, AMWIN Management Pty Ltd, and, Coates Myer and Company Pty Ltd. Alchemia is awaiting approval from the United States’ Food and Drug Administration to begin sales of its first product, a treatment for deep-vein thrombosis.
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