Venture Growth Fund

What is the Venture Growth Fund?

The Venture Growth Fund is an initiative which aims to support eligible high-growth startups to access venture credit to scale-up and increase workforce capabilities.

Background

Announced as part of the Victorian Budget 2020/21, the $25 million VGF will see the Labor Government co-investing with institutional investors to give high-growth, revenue-generating startups access to the capital they need to expand their businesses.

OneVentures and Lighter Capital have been appointed as the managers to deliver the Venture Growth Fund.

Objective

The objectives of the Venture Growth Fund include:

increasing the level of investment in start-ups.
upskilling the workforce in Victoria.
developing new industries; and
supporting job creation and economic growth.

Funding

It is expected that the Venture Growth Fund will:

make loans of between $0.5 million and $5 million on a six to 48 months term (the size may vary depending on fund manager’s parameters).
charge interest rates that reflect the relatively high-risk nature of startup investments
make loans that are typically covenant light.
not require personal director guarantees

Eligibility

The Venture Growth Fund is expected to primarily focus on companies that have the following characteristics:

are high growth start-ups with a proven product market-fit and scaling revenues
are growing rapidly
have a low cash burn rate
will either be profitable or will have a clear line of sight to profitability
have strong sustainable underlying unit economics
have substantial equity base with supportive equity investors (typically Series A onwards)

The fund manager will be responsible for managing the assets of the fund and making all the investment decisions.

All VGF loans will need to meet the Victorian Government’s ESG governance policies.

The fund manager will have strong audit, risk, economic impact, and compliance reporting requirements.

More Information

Source

Media Release

The Andrews Labor Government is backing local startups to grow, with a new fund manager announced to help roll out a landmark scheme which will create thousands of jobs across the state.

Leading international fund manager Lighter Capital has been appointed as one of the two managers to deliver the Venture Growth Fund (VGF).

The Government will allocate $10 million of capital to the Lighter Capital Fund, which will also include $20 million from private investors as senior capital and $1.6 million from Lighter Capital as equity capital.

The news of Lighter Capital’s involvement in the VGF follows the appointment of OneVentures as a fund manager for the VGF in November.

Source

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