The number of deals is shrinking but venture capital still hit a record in Australia

Venture capital in Australia hit a record $US630 million ($AU849 million) in the 2017-18 financial year, up 12% on the previous 12 months, despite a drop in the number of deals, according to Venture Pulse Q2 2018, a quarterly report by KPMG.

Over the three months to June, $US209.09 million of startup investment was recorded in Australia, up from the $US169.8 million the previous quarter.

However, the number of deals was 27, down from 31, continuing a trend for bigger raises to more mature startups.

“Venture financing continues to rise in Australia, keeping pace with worldwide trends,” says Amanda Price, Head of KPMG Australia High Growth Ventures.

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A leading VC partner explains what’s missing from Australia’s tech startup scene

It’s been just over 100 days since I relocated back to Australia to join the incredible gang at Airtree Ventures.

I had previously worked with the London-based Summly until our acquisition by Yahoo (California based), and then as a venture investor at White Star Capital (New York and London based). As a result of these experiences, I was privileged to have an insider view on the growth of the London and New York tech communities.

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New Zealand’s biomedical sector to benefit from Australian Government initiative to make Australia a global leader in life science research commercialisation

Medical Research Commercialisation Fund (MRCF) creates fourth and largest fund
Wellington, 15th December, 2016 – The Australian Government’s launch of the AUD$500 million Biomedical Translation Fund (BTF) this week, an initiative to make Australia a global leader in the commercialisation of biomedical discoveries, will benefit New Zealand’s biomedical sector, says Dr Chris Nave, Managing Director of venture capital firm, Brandon Capital.
The BTF is a pool of public and private capital which will be managed by three venture capital fund managers who were announced this week. Brandon Capital has been allocated to manage the largest fund of AUD$230 million comprising AUD$115 million from the Commonwealth government matched with AUD$115 million from private investors.

The new fund, the MRCF BTF, is the fourth and largest investment fund of the Medical Research Commercialisation Fund (MRCF). Brandon Capital manages the MRCF, a unique collaboration between over 50 of New Zealand’s and Australia’s leading medical research institutes and research hospitals. These organisations contribute biomedical investment opportunities to MRCF funds as well as their expertise to support the development of these discoveries.

In April this year New Zealand joined the MRCF, enabling New Zealand research organisations to become members of the fund and seek investment support for emerging technologies from the third MRCF fund, MRCF3, an AU$200 million fund. Currently six New Zealand research institutes are members of the MRCF*.

“This is a bold and visionary initiative by the Australian Government to ensure Australia reaps the benefits from our world-class medical research,” says Dr Chris Nave, who is also Principal Executive of the MRCF.
“On all measures, Australia and New Zealand produce some of the world’s leading biomedical research, but unfortunately, too often, we see promising discoveries leave our shores early in development, with little value returned. The size of the MRCF BTF provides the opportunity for these technologies to be developed to much later stages in Australia, and in some cases through to the market and importantly patients, retaining greater value and leading to the creation of new jobs and income. The BTF program will be transformative for local industry, providing the ability for research discoveries to be developed from concept to commercialisation in Australia.”

While New Zealand member institutes will not be able to participate in the MRCF BTF, the new fund significantly deepens the pool of investment capital under management by the MRCF, with the advantages that brings to all members. Promising early stage medical discoveries from New Zealand member institutes can continue to seek investment from MRCF3 and follow-on funding.

Duncan Mackintosh, Brandon Capital New Zealand’s Investment Manager says the new fund means there is now AUD$430 million investment capital available for promising biomedical research, giving the MRCF real scale. “The MRCF is the largest life science investment fund in Australia and New Zealand by quite some margin. We are now competing at a global level and this will benefit our New Zealand investments by getting them greater attention internationally. It will also help us to attract offshore capital for New Zealand discoveries, attention from strategic partners and will mean we can attract and retain talent to run New Zealand investment companies.”

The BTF will see $250 million of Commonwealth government funding matched with private sector capital, creating $500 million for investments in companies with medical research projects at advanced pre-clinical, Phase I and Phase II stages of development.

The MRCF BTF private investors include CSL Limited, Australia’s largest and most successful biotechnology company, and the leading superannuation funds, AustralianSuper, Hesta, Statewide and HostPlus.

Brandon Capital is ranked as one of Australia’s top performing venture capital firms**. MRCF BTF will focus on supporting later stage opportunities, with the MRCF3 continuing to seed promising early-stage discoveries.

CSL Limited will be the only biopharmaceutical investor in the fund and will provide both investment capital and later-stage development and commercialisation expertise.
“CSL is a strong supporter of the need for a greater focus on translational research in Australia. The opportunity for the BTF to support the development of promising discoveries, onshore, is very exciting,” says Dr Andrew Cuthbertson, Head of Research and Development, CSL.

“The MRCF-BTF will not only have access to the pipeline of opportunities and capabilities of its member medical research organisations, it will also have access to the global medical research development capability and expertise of CSL,” says Dr Stephen Thompson, co-Managing Director at Brandon Capital.

It is anticipated the MRCF BTF will begin making its first investments in early 2017.

*New Zealand MRCF members: Auckland Cancer Society Research Centre, University of Auckland; Institute for Innovation in Biotech, University of Auckland; Brain Health Research Centre, University of Otago; Malaghan Institute of Medical Research; Ferrier Research Institute, Victoria University of Wellington; Callaghan Innovation.

**In an Australian Financial Review ranking of Australia’s top performing venture capital and private equity funds (31 August 2016), Brandon Capital’s Brandon Biosciences Fund 1 was ranked second.

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Powerhouse makes first investment post-ASX listing

Christchurch-based Powerhouse Ventures has already made its first investment since listing on the ASX last week – taking a stake in a cancer diagnostic system.

It invested A$500,000 (NZ$514,880) in Ferronova’s system developed by Victoria University of Wellington and the University of South Australia.

Magnetic probes allow surgeons to more accurately assess the spread of cancer throughout the body.

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KPMG to drive economic growth through support of entrepreneurism across Indigenous communities

KPMG has today launched a series of proposals aimed at spurring the economic growth of the Australian Indigenous community. To encourage further involvement in business and entrepreneurship, KPMG has developed 20 recommendations in conjunction with Indigenous thinkers to focus on areas of innovation, education and the Empowered Communities reform.
The Igniting the Indigenous Economy report, conducted by KPMG revealed that the gap between Indigenous and non-Indigenous Australians is now showing some signs of closing in key areas. While this gap may be closing, the progress of employment for the Indigenous community is still poor. KPMG acknowledges that the employment gap for Indigenous Australians vanishes for those who attain a high level of education.

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Investible launches education program for first time angel investors to democratise Australia’s investing community

Australian startup generator Investible has today launched First Angel, a new education program for first time angel investors. The 12 month program aims to fill the knowledge gap of local angel investors in the early stage investing process.
The First Angel program was launched by Investible cofounders Trevor Folsom and Creel Price to democratise angel investing in Australia and generate a more diverse investing community.

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Aussies poaching our firms – NZX boss

The boss of New Zealand’s stock exchange has compared local companies listing across the Tasman to “welcoming Australians into an All Blacks training camp and allowing them to take our best players”.

Speaking at a Trans-Tasman Business Circle panel event in Auckland this afternoon, Tim Bennett called on Kiwis to be more nationalistic about this country’s sharemarket.

He said New Zealand would never allow Australia to take members of a national sports team.

“But we seem quite happy to do that with some of the companies that we promote for listing in Australia,” Bennett said, adding that the NZX needed to be viewed as a “national asset”.

In recent months New Zealand tech firms Volpara Health Technologies, 9 Spokes and Powerhouse Ventures have announced plans to skip the NZX and list on Australia’s ASX.

That followed Christchurch-based jetpack maker the Martin Aircraft Company’s decision to list in Australia last year.

Meanwhile, jewellery retailer Michael Hill received shareholder approval this afternoon to shift its primary listing from the NZX to the ASX.

Such moves have generated a lot of media commentary and Bennett’s comments suggest the sharemarket operator is taking to heart the loss of potential local issuers to the ASX.

That’s particularly understandable given quiet state of New Zealand’s listing and initial public offering market.

Only one IPO, chicken producer Tegel, has taken place on the NZX this year, while there have been 27 floats and listings on the ASX in the past two months alone.

But Bennett said caution was needed when comparing the NZX with its vastly bigger counterpart in Australia.

“There’s a lot of discussion about NZX versus ASX and I’d just like to put it in a bit of context,” he said. “The market capitalisation of the Australian market is about 15 or 16 times the New Zealand market.”

Bennett said ASX’s growth had not only been driven by the size of the Australian economy but also other factors such as a strong sense of nationalism around that country’s capital markets and compulsory superannuation.

The NZX did well when put up against more comparable exchanges such as those in Denmark, Turkey, Norway and Israel, Bennett said.

New Zealand Superannuation Fund head of investments Fiona Mackenzie, who also joined the panel, said the $30.3 billion fund was concerned about a lack of liquidity growth in the local market.

“We think some of the key areas to focus on there would be diversity in terms of market participants [including] brokers, fund managers and listed issuers,” Mackenzie said.

She said New Zealand was a “Goldilocks market” when it came to IPOs, which was a challenge for increasing the number of listed issuers.

“Absolutely everything has to be right [to get an IPO completed],” Mackenzie said.

She said there was much room for improvement when it came to corporate governance in New Zealand.

“We’re engaging with companies both individually and via the Corporate Governance Forum,” Mackenzie said.

Gareth Morgan Investments chief investment officer Simon O’Grady said a concerted effort, including through tax policy, was needed to improve access to this country’s capital markets.

“There’s going to be at some point in the next few years … a London or New York of Asia somewhere and we need to be part of that environment,” O’Grady said.

First published – NZ Herald 23 June 2016

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UniSA’s improved cancer detection technology a magnet for commercialisation

Researchers at the University of South Australia’s Future Industries Institute will join forces with New Zealand based nanoparticle specialist Boutiq Science and major IP investor, Powerhouse Ventures to develop an improved system for cancer detection that relies on magnetic rather than radioactive tracers.

While traditional radioactive tracers have been a mainstay for detecting the spread of both breast cancer and melanoma in lymph nodes, they have proved less effective in other cancers such as head and neck, gastrointestinal and oesophageal cancers, where nodes are closely packed or clustered.

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Start-ups praise tax law ‘triumph’

The senate has passed new early-stage start-up investment tax measures, hailed by StartupAUS as a ‘triumph’ for Australia’s start-up ecosystem.

The legislation, which will give concessional tax treatment to investors including a 20 per cent non-refundable carry forward tax offset on investments in qualifying companies, passed today with bipartisan support.

The measures also include a 10 year exemption on capital gains tax, provided investments are held for 12 months or more.

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Aussie Angel Investment research report launched

StartupSmart, an Australian news and advice resource reports that a North American investment research group plans to partner with an Australian angel investor network to reports on Australian private investment activity.

Representatives from the Angel Resource Institute (ARI), which publishes the quarterly Halo reports, and the Australian Association of Angel Investors (AAAI) will sign a contract and commit to expanding ARI’s research.

“ARI has worked with AAAI for years, and we are excited to formally partner with them on the Halo Report: Australia,” said ARI chairman Michael Cain in a statement. “Angel investing is a global market, and now our research will reflect that same internationalisation.”

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