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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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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What does it take for agritech business to Sprout?

An agritech incubator is back for a second season of growing business ideas. But will they take root?
The problem is well-known: there are more people in the world than ever before, so there’s more need for food than ever before. But more people also means there’s less available land to grow that needed food. What is one to do?
That’s where agritech innovation accelerator Sprout comes in. Working with agritech startups from across New Zealand’s primary industries and boasting a bevy of big-name partners including BNZ, Callaghan Innovation, KPMG, Air New Zealand and Massey University and counting Fonterra as its supporters, the incubator has some serious firepower – or in this case, seeding power – behind it. Programme manager James Bell-Booth says it’s proof there’s a serious appetite for agritech ideas. “We have a lot happening around incubation and acceleration,” he explains. “We’re after ideas from the paddock to the plate.”
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KPMG: Make migrants take a risk

The AANZ backs calls for more wealthy migrant money to be directed into early stage ventures. Some of our most active and effective angels are migrants. We need more!

Growth-focused investments should be required over passive ones such as government bonds, says report.

High-profile business organisations are calling for investor migrants to be required to channel more cash into productive, growth-focused New Zealand investments rather than safer options such as bonds.

Almost 80 per cent of investor visa recipients’ funds currently ends up in government and corporate bonds, according a paper published by professional services firm KPMG.

“Whilst these [bond investments] are still beneficial to New Zealand, some simple changes to our immigration policies can bring diversity and may help better leverage these migrants’ funds and valuable networks to help New Zealand business grow and expand,” KPMG said.

Business incubator The Icehouse, which is also calling for a policy overhaul, describes passive investments such as bonds as “lazy money” that does nothing to address capital constraints facing companies.

“Changing the rules on entry and for allocation could better align investment with the need to grow New Zealand’s economy and to increase its productivity, while aligning a stream of investment from the private sector, rather than relying on the Government to step in.”
KPMG said Kiwi businesses would require more than $420 billion in capital by 2025 to support the export growth required to achieve the Government’s Growth Agenda.

Its analysis suggested a $115 billion shortfall that would need to be funded by foreign investment.

“KPMG believes the best way to grow the economy is for investor migrants’ capital to be deployed in funding New Zealand businesses, particularly start-ups and early-stage businesses.”

Canada and Australia already require a portion of investor migrants’ funds to go into “at risk” investments.

New Zealand’s current investor immigration policy, which came into force in 2009, has attracted over 1600 applicants with over $3.7 billion to be invested into this country, according to KPMG.

There are two visa categories – Investor Plus and Investor – for migrants who want to use their capital to gain residence in New Zealand.

The latter requires a minimum of $1.5 million to be invested for four years, but applicants must be 65 or younger, meet English language requirements and spend at least 146 days in New Zealand in each of the last three years of the four-year investment period. They must also provide $1 million in settlement funds.

Investor Plus migrants must invest at least $10 million for three years but face no language or age requirements and have to spend only 44 days in New Zealand in each of the final two years of the investment period.

The Icehouse suggests some policy changes that could help channel migrant funds into more productive investments, including:

• Introducing a third investor visa category requiring $5 million to be invested, 10 to 20 per cent of which would have to go into growth investments such as angel, venture capital or small cap private equity funds. In return, other requirements would be reduced or eliminated.

• Amending the Investor Plus category to require a 10 per cent (or higher) investment in growth capital funds or direct investments.

Icehouse chief executive Andy Hamilton said migrant capital could also be deployed in other areas, such as creating new residential housing stock or regional economic development. KPMG said a portion of migrant investor funds – possibly 20 per cent – should be invested into angel or venture capital.

“This could be through a designated fund which has the same investment profile as the [government-backed] New Zealand Venture Investment Fund (VIF).

“This would offer some comfort to migrant investors that the portion of their investment capital at risk is being invested in early-stage companies that the New Zealand Government is happy to support through VIF.”

Yue Wang, KPMG’s director of immigration services, said most investor migrants would welcome such changes if they came with benefits such as faster visa processing or reduced requirements. “I don’t think it’s going to necessarily put them off.”

Angel Association executive director Suse Reynolds said changing investor migrant rules to direct a portion into growth investments would provide a “terrific boost” for early-stage companies.

“If wealthy migrants were required to invest into the growth areas of our economy, it will bring the New Zealand rules into line with what is happening in other developed countries.”

She said early stage investment would also help migrants integrate into New Zealand society as it was “a very collaborative affair”.

“It’s not just the capital but the networks and skills the providers of that capital bring to the table.”

See KPMG paper here

First published on nzherald.co.nz 14 Sept 2015

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How the mathematics of venture capital has changed and what it means for start-up exits

Fascinating article about the role some of the big accounting firms – specifically mentioning our sponsor KPMG – are playing introducing strategically placed startups to corporate acquirers with commentary about the impact this might be having on the size of exits.

Floating on the stockmarket could fall out of vogue for start-ups backed by venture capital in favour of trade sales to incumbents, because of lower demand for massive exits.

Jeremy Colless, the managing partner of Artesian Capital Management, told a roundtable on innovation hosted by KPMG on Monday that the trade sale option was becoming more viable because “the mathematics for venture capital firms” had changed.

Read more on www.brw.com.au

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