Elcano Capital is an ‘early stage’ venture funding business. We welcome discussions or ideas that you think will assist in getting more funding to Australian ‘early stage’ ventures.
What’s happening in 2013 for venture funding?
Access to Investment
The investment decline into venture capital has now been going on for either twelve years (pre-Tech bubble) or five years (pre-GFC), depending on your perspective The main investors, institutions such as banks and insurance companies and corporate super funds, appear to have warmed their rhetoric surrounding the possibility of investment into ‘alternative investments’, however, the perception is that venture capital falls under the umbrella of private equity. This is very unfortunate as there is very little in common between the two sub-asset classes and where private equity is seen to be ‘on-the-nose’ venture capital also suffers, but if private equity is back in vogue then all of the money goes into those funds so venture capital still largely misses out.
But all is not doom and gloom as it is up to us to remind the sophisticated investment managers at these institutions that venture capital is its own sub-asset class and has its own investment characteristics. 2013 needs to be the year we do this.
Australian federal government IIF extended
The federal government has advised that it is extending the Innovation Investment Fund (IIF) by another $350 million over the next three years. This is positive news but does need to be taken in context as there were a few limitations to the IIF program historically and while there being some further funds allocated in the Australian ‘early stage’ investment pipeline, which is good, the same limitations are carried forward.
Elcano Capital has not previously sought a round of IIF funding but is giving serious consideration to this option. We will be deciding before the next round is announced.
There is a need for more managed ‘early stage’ investment in Queensland and it has been quite some time since a local fund was the recipient of IIF funding. We will be seeking discussions with other Queensland based businesses that support ‘early stage’ ventures to discuss the means by which to maximise the benefits to Queenslanders in having a local fund with IIF funding.
Question of credibility
During 2012 (and regrettably several years before this) we received a lot of exasperated feedback from investment management professionals and others that the level of professionalism in Australian venture capital management left a lot to be desired.
There is a world of difference between having previously developed your own IT business, or being a collection of good salespeople, to being able to successfully manage of pool of funds on behalf of others, spread across a range of investments, at differing stages of business development, going through differing economic and legal stages simultaneously.
The paradox of the Australian, and arguably most national venture capital industries, is that the venture capital sub-asset class is one of the most heterogeneous (thus resulting in increased complexity) and yet average venture capital funds have low revenue streams (i.e. a fund of $30M @ 2% management fee has only $600,000 annual income) and low income streams do not permit the hiring of the best available professional managers, advisers, research tools, etc.
Elcano Capital has arguably one of the best investment management teams available to a venture capital manager because that team has a long-term view to the development of our investments, the Queensland and Australian venture capital asset-class, and Elcano Capital. As such our team dedicates time now, receiving little or nothing financial in return today, but for the reward of the future growth we all believe in.
Federal government grants to fire your growth
Commercialisation Australia(Extracted from an article, Federal government grants to fire your growth, smartcompany)
Who for? Any business – there are no restrictions on size, especially with a few different components to the grants themselves.
What for? There are four different aspects of the Commercialisation Australia process:
- Skills and Knowledge, to help businesses access specialised advice.
- Experienced Executives, allowing businesses to access a CEO or other types of senior executives for advice.
- Proof of concept, which provides grants to show the commercial viability of new products
- Early Stage Commercialisation, which provides grants to bring a new product or service to market.
How much? The amount provided under each grant changes based on the category:
- Skills and Knowledge – Grants of up to $50,000
- Experienced Executives – Up to $350,000
- Proof of Concept – Between $50,000 and $250,000
- Early Stage Commercialisation – Between $50,000 and $2 million
When does it close? The Commercialisation Australia program is currently open and information about applications can be found here.