Australian government to provide AUS$83m for ailing start-up industry

The Innovation Investment Follow-on Fund's (IIFF) aim is to ensure a future beyond the financial crisis for outstanding start-up companies that are doing groundbreaking work in cutting-edge areas like clean energy, biotechnology and ICT, according to a statement.

Senator Kim Carr, Minister for Innovation, Industry, Science and Research, said in a statement, "If we lose these innovative companies we will never get them back.

"It is essential that we help these fledgling companies ride out the crisis."

The companies that could benefit from the IIFF employ at least 1000 people in high-skill, high-wage jobs, according to the Australian government.

To help these firms ride out the financial storm, AUS$83m will be offered in follow-on funding to over 20 venture capital fund managers licensed by the Commonwealth under existing programmes.

The aim is for these fund managers to invest in innovative firms which are bringing promising new technologies and services to market.

Making money available via the IIFF will boost confidence and encourage the investment of additional private sector capital, the government hopes.

The Review of the National Innovation System called for action to improve the supply of venture capital in Australia. The Review emphasised the importance of a functioning venture capital market to a healthy innovation system.

The Australian government has been actively consulting with the venture capital sector about the impact of the financial crisis. Their response is that without access to capital now, good prospects will fail, and venture capital funds will have no capacity to support companies with great ideas and technologies.

The government will be providing a full response to the Review of the National Innovation System as part of the budget process, but this latest development is part of building a stronger national innovation system.

The IIFF will be funded by reinvesting money that has been returned when firms it previously supported were floated or sold.

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