Venture Capital Discussion Group – views from the front line

Boardroom ConversationFor the second Significant Investor Visa discussion forum, the venture capital managers had the opportunity to hear from front line market participants on what potential clients are saying about the new SIV investment framework, as well as get an update from the NSW State Government on the progress of the program.

How is the SIV 2 program going?

Suzanne Gillham from NSW Trade and Investment said that for NSW is not just about an investment, it is about creating long term relationships which will benefit the state and “anchor to the state in a myriad of ways”.

The flow of applications has been a steady, with double figures and starting to pick up. Whilst there is a backlog for SIV 1, it won’t impact SIV2 as the programs are being processed concurrently.

Their new marketing manager had been compiling a promotion plan to increase visibility of the state which will include delegation to China, so watch this space.

How do Chinese clients feel about the changes?

Mr Chi Wah Chung from Bank of China, Sydney shared that clients in China don’t know about Venture Capital. They believe VC is high risk and they could lose all their capital.

Under the previous program, the majority of applicants had not problem with investments such as government bonds, bank notes etc. However under the new program, they are concerned about the venture capital and small companies as they don’t want any loss of capital after the 4 year visa term.

The primary objective is to migrate to Australia and “invest safely” for security of their capital. They done mind only making 1 or 2%, but don’t want to lose any. Unfortunately, venture capital is a different asset class to other investments in that it is illiquid and not tradable. Therefore, once a fund is selected, it cannot be redeemed and switched to another manager.

From a migration perspective, Ivan Chait of Santa Fe  Visa and Immigration also reiterated that the applicants primary purpose with SIV is to have the certainty of permanent residency. They are not investing for return, but to live in Australia. Whilst they concerned with the risk of venture capital investments, they need time and help to understand these investments .

The key benefit of SIV is no age limit where many other visa limited after age 55, and no need to speak English. SIV (temporary) is tax effective and provides pathway to permanent residency.

 Compliant Funds – where to source?
  • AusIndustry – lists all ESVCLP/VCLP’s on their website. It does not filter for the ones that are open and prepared to accept SIV monies
  • Australian Venture Capital Association – lists some funds on the website, but only for AVCAL their members, not all the registered funds
  • Financial Services Council (FSC) – currently doing list of compliant funds for emerging companies and balancing items for their website.

Having to get information from several sources may be confusing for applicants. By engaging with trusted partners and specialists who can provide a one-stop-shop approach would provide a more seamless experience for the applicants.

Productivity Commission Report

This research recommends the SIV program should be scrapped, however the participants noted it is only early days of the program and they have limited and potentially out of date data which suggests there are only a tiny number of applications. The report also doesn’t consider the multiplier effect of relocation of the impact of HNW famines and businesses over future years.

From venture capital industry perspective there is a “dearth of sources of capital for growth style companies” so a injection of a new funds source is much needed.

For more insights and to access the report, check out our article here.

“Demystifying VC” – Think Global delegation to include venture capital showcase 

This years annual “Invest in Australia” mission to the Asian Financial Forum (AFF) in January 2016 will include a special event in Hong Kong to provide a platform for a range of venture capital managers to educate local migration agents and intermediaries on the Australian venture capital sector and their individual offerings.

The two day AFF conference which attracts 2,000 plus attendees from around the globe includes  the “Invest in Australia” stand, business matching orgainised by Hong Kong Trade and Hong Kong PE & VC association. and a range of networking opportunities.

Those VC and other SIV compliant managers who would like to be included should contact Stacey Martin, Expat Advisors Community or Katya Dobinson at Think Global as soon as possible to secure their place in the delegation which is from 17th to 22nd of January, 2016.

To see key outcomes from the first VC discussion group, go to the link here.