{"id":54036,"date":"2023-10-20T16:26:11","date_gmt":"2023-10-20T16:26:11","guid":{"rendered":"http:\/\/startupsmart.test\/2023\/10\/20\/significant-investor-visas-hope-remains-three-months-after-reforms-startupsmart\/"},"modified":"2023-10-20T16:26:11","modified_gmt":"2023-10-20T16:26:11","slug":"significant-investor-visas-hope-remains-three-months-after-reforms-startupsmart","status":"publish","type":"post","link":"https:\/\/www.startupsmart.com.au\/uncategorized\/significant-investor-visas-hope-remains-three-months-after-reforms-startupsmart\/","title":{"rendered":"Significant Investor Visas: Hope remains three months after reforms – StartupSmart"},"content":{"rendered":"
\"\"<\/div>\n

Despite some initial fears, Australian investors say it\u2019s far too early to be worried that changes to the Significant Investor Visa program<\/a> have driven international investors away rather than refocused funds on innovation and startups.<\/p>\n

\u00a0<\/p>\n

The changes,<\/a> which aimed to ensure affluent migrants invest in riskier, younger companies rather than in real estate and the like, came into effect at the start of July.<\/p>\n

\u00a0<\/p>\n

As part of receiving a visa through the scheme, applicants must now invest at least $500,000 into venture capital, and a further $1.5 million in emerging companies through a managed fund or listed investment company.<\/p>\n

\u00a0<\/p>\n

This is now a large chunk of the overall $5 million that must be invested over four years as part of the SIV.<\/p>\n

\u00a0<\/p>\n

It\u2019s a matter of time<\/b><\/p>\n

\u00a0<\/p>\n

The government made the changes with the aim of rerouting capital from \u201cpassive investments\u201d into \u201cinnovative Australian business\u201d, but a recent Financial Times<\/i> article<\/a> claims that demand for these Australian investor visas has \u201cslowed to a trickle\u201d.<\/p>\n

\u00a0<\/p>\n

The article says that only seven SIV applications have been submitted since the revised rules were introduced in July, with the new changes deterring potential applicants.<\/p>\n

\u00a0<\/p>\n

But Starfish Ventures<\/a> co-founder John Dyson says it\u2019s \u201cdefinitely too early to tell\u201d if the changes will be effective in supporting Australian startups.<\/p>\n

\u00a0<\/p>\n

\u201cIt\u2019s hard to know. From speaking to numerous stakeholders, it\u2019s going to take a while for the volume to ratchet up,\u201d Dyson says.<\/p>\n

\u201cThere\u2019s a big backlog under the old investment regime so it\u2019ll take a while to work through and for the new regime to be explained and promoted to stakeholders in China.<\/p>\n

\u00a0<\/p>\n

\u201cAs always there\u2019s going to be challenges. There\u2019s lots of uncertainty, and that\u2019s as much around people getting used to the new regime.\u201d<\/p>\n

\u00a0<\/p>\n

Although the changes may not increase the number of SIV applicants, they will ensure more money is invested in Australian startups, Blue Sky Funds<\/a> investment director Elaine Stead says.<\/p>\n

\u00a0<\/p>\n

\u201cI don\u2019t think we know if they have been effective or ineffective yet,\u201d Stead says.<\/p>\n

\u00a0<\/p>\n

\u201cThis capital will now be directed into investments that will have a much greater impact on productivity and economic growth.\u201d<\/p>\n

\u00a0<\/p>\n

Rampersand co-founder<\/a> Jim Cassidy agrees, saying venture capital is always a long process.<\/p>\n

\u00a0<\/p>\n

\u201cThe scheme has only been in effect for less than three months so it\u2019s a little early to tell, especially considering the mechanics in venture capital investments are not as simple or quick as buying bonds or shares from an open market,\u201d Cassidy says.<\/p>\n

\u00a0<\/p>\n

\u201cFor the first few months there will undoubtedly be some hesitation around the scheme as investors get their heads around the new regulations. However, this scheme has the potential to be incredibly successful.\u201d<\/p>\n

\u00a0<\/p>\n

Hopes remain high<\/b><\/p>\n

\u00a0<\/p>\n

Hopes are still high among the Australian investor community that these changes will positively impact the venture capital market.<\/p>\n

\u00a0<\/p>\n

\u201cWe definitely see it as a positive development for the industry,\u201d Dyson says. \u201cWe\u2019re just trying to work hard and see if it\u2019s an opportunity.\u201d<\/p>\n

\u00a0<\/p>\n

Stead says the changes are very likely to increase the amount of VC in Australia in some form.<\/p>\n

\u00a0<\/p>\n

\u201cI think they will absolutely increase the total pool of venture capital, which can only improve investment in innovation,\u201d she says.<\/p>\n

\u00a0<\/p>\n

\u201cBy showing international investors we are world-class not just in innovation but in competing globally in generating returns for investors, we will continue to attract more international capital.\u201d<\/p>\n

\u00a0<\/p>\n

Impact investor Geoff Gourley says the changes could also change the way Aussie founders look at investments.<\/p>\n

\u00a0<\/p>\n

\u201cIn some part I believe the changes will encourage Australian startups to work with organisations that can link them to international investors,\u201d Gourley says.<\/p>\n

\u00a0<\/p>\n

\u201cThe Australian startup ecosystem needs to think global. We need to get on the international stage and make some noise, be big and make ourselves heard.\u201d<\/p>\n

\u00a0<\/p>\n

The SIV changes could eventually benefit the entire Australian startup community, Cassidy says.<\/p>\n

\u00a0<\/p>\n

\u201cIt will kick-start a really positive cycle where entrepreneurs have more access to capital in Australia and choose to stay here to build and grow their business,\u201d he says.<\/p>\n

\u00a0<\/p>\n

\u201cAs these startups expand, the whole industry will attract even more capital as investors see strong returns are possible.\u201d<\/p>\n

\u00a0<\/p>\n

Scoping the appetite<\/b><\/p>\n

\u00a0<\/p>\n

Victoria\u2019s government is running a trade mission to China to gauge the appetite for these visas. Dyson will be going on the mission, and says it\u2019s all about meeting with potential investors.<\/p>\n

\u00a0<\/p>\n

\u201cIt\u2019s about building sustainable relationships,\u201d he says. \u201cIf this is going to be a reliable source of capital that\u2019ll be really valuable for the innovation ecosystem in Australia we have to go out and build relationships.\u201d<\/p>\n

\u00a0<\/p>\n

But BlueChilli CEO<\/a> Sebastien Eckersley-Maslin says there are a number of other issues that need to be resolved in order for the SIV changes to be successful.<\/p>\n

\u00a0<\/p>\n

\u201cThe problem with the SIV is that it is only solving one part of the supply and demand equation, and doesn\u2019t address the key infrastructure requirements to support a sustainable ecosystem,\u201d Eckersley-Maslin says.<\/p>\n

\u00a0<\/p>\n

\u201cAn estimated $400 million is going to be deployed in to early-stage venture funds yet Australia lacks a comprehensive support mechanism to supply this demand with suitable volume of products \u2013 aka startups.\u201d<\/p>\n

\u00a0<\/p>\n

\u201cThis quality imbalance means that it will be relatively easy for bad startups to get funding, leading to poor returns in the VC funds.\u201d<\/p>\n

\u00a0<\/p>\n

He says it\u2019s important to focus on internal issues within the investor scene in Australia as well as looking to the international market.<\/p>\n

\u00a0<\/p>\n

\u201cThe SIV changes need to be balanced with investment in the infrastructure, supporting accelerators and incubators to provide quality startups, and encouraging \u2018smart money\u2019 in the ecosystem through tax incentives for angel investors at seed and angel rounds,\u201d he says.<\/p>\n

\u00a0<\/p>\n

Want to grow your business with Instagram?\u202fStartupSmart School can help<\/a><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"

Despite some initial fears, Australian investors say it\u2019s far too early to be worried that changes to the Significant Investor<\/p>\n","protected":false},"author":1,"featured_media":58220,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[8,9,11,1],"tags":[],"_links":{"self":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/54036"}],"collection":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/comments?post=54036"}],"version-history":[{"count":0,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/posts\/54036\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media\/58220"}],"wp:attachment":[{"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/media?parent=54036"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/categories?post=54036"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.startupsmart.com.au\/wp-json\/wp\/v2\/tags?post=54036"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}