The announcement of the $2b Breakthrough Victoria Fund (BVF, ‘the Fund’) by the Victorian Government is an enticing carrot for fast growth and emerging businesses – but is it the right one for you?
The BVF is clearly a commercial fund looking for commercial returns to allow ongoing reinvestment. There are no grants on offer here. However, the announcement suggestsoperation beyond the 10-year investment horizon, with businesses perhaps allowed to re-invest sale proceeds and interest — effectively meaning that the Fund will have no life-cap. This would allow BVF to invest at the earlier stages of your business’s growth cycle, then work with you over the long term to ensure a significant economic impact. If this translates into a true investment approach it will enable many companies to build strong, long-lasting businesses.
Breakthrough Victoria has confirmed that it plans to invest via equity, debt or a combination of both, whichever is appropriate. This should mean that local entrepreneurs and business people will be able to establish a fair value for their hard work.
Now, to the more sobering considerations in deciding whether Breakthrough Victoria is the right partner for you. BVF is a fund centred on building the Victorian economy, which means that it will only invest in businesses based in Victoria, particularly those established in one of the six employment hubs identified on the website: Arden Macauley, Bundoora, Clayton, Fisherman’s Bend, Parkville and Waurn Ponds. Ask yourself whether the necessary skills will be available in, or be attracted to, one of the above labour hubs, and if you are elsewhere, whether it makes sense to move your business to Victoria.
Also, remember that, although the Fund is independent, set up as a separate business entity, directors are still appointed by the Victorian Government, with ex-Premier John Brumby as initial Chair. This may mean that BVF investment rules will be subject to changes in Government policy from time to time, with the fund not always used as an independent investment vehicle. That said, over the last 10 years, the Victorian Government has become known for its light touch regarding investment interference in the innovation space, so let’s hope that continues.
As mentioned earlier, the Fund will be looking to generate commercial returns equivalent to, or better than, other early-stage investment funds, so, when the guidelines are released, expect a requirement of 5-10 times return on investment. They will also expect to see well-thought-out business plans with achievable milestones against which they will release funds.
The crucial issue will be whether you are able to connect with the individual BVF investment managers, and how they will extend your connections and networks to grow in the market.
How to apply, stream fact sheets and FAQs are available from Breakthrough Victoria
Contact gemaker Managing Director, Natalie Chapman, at email@example.com for enquiries and application support