Innovation Investment Fund 

Program Objectives

The objectives of the Innovation Investment Fund (IIF) are:

• To develop fund managers with experience in the early stage venture capital industry
• By addressing capital and management constraints, encourage the development of new companies which are commercialising research and development (R&D)
• To establish in the medium term a 'revolving' or self funding scheme
• To develop a self-sustaining Australian early stage, venture capital industry.

Program History

The IIF program was announced in 1997. It is a co-investment scheme whereby the Government licenses private sector fund managers and provides them with capital for investment which must be matched (at an agreed ratio) with capital raised by the fund manager from the private sector. Fund managers are licensed through a competitive merit-based selection process. They are responsible for all investment decisions, which are made on a commercial basis in accordance with their own investment practices, subject to the IIF program guidelines. Funds operate for a period of 10 years.

IIF venture capital funds invest in early stage companies commercialising Australian R&D and enable private sector investors to leverage off public equity capital. By demonstrating the returns achievable from investing in such companies, the IIF program aims to attract additional private sector investment in early stage venture capital.

The program is in its third round. Round one commenced in 1998 and licensed five fund managers, and Round 2 was announced in 2000 (commenced in 2001) and licensed four fund managers. Round 3 was announced in 2006 and has the capacity to license up to 10 fund managers. As of July 2011, seven fund managers had been licensed.

Round 3

In Round 3 the Government made $200 million available to create up to 10 new funds, with the Government capital to be matched on at least a one to one basis. Round 3 has involved tranching unlike rounds 1 and 2. In Tranches 1, 2 and 3 under Round 3, the Government’s commitment could not exceed $20 million for any single fund.

Tranche 1 licensed two funds - the $50 million Cleantech Australia Fund (September 2007) and the $40 million Brandon Biosciences Fund No. 1 (January 2008).

Tranche 2 licensed two $40 million funds - Yuuwa Capital Fund (November 2009) and OneVentures Innovation Fund (February 2010).

Tranche 3 licensed three $40 million funds in June 2011 - Brandon Capital Management LP, Carnegie Venture Capital Pty Ltd and Southern Cross Venture Partners Pty Ltd.

Tranche 4 was announced on 7 December 2011 and will provide $100 million (sourced from $60 million identified in the Round 3 Government commitment and $40 million from the IIF Revolving Fund) to license new funds. The limit on Government commitment of $20 million per fund is no longer applicable under Tranche 4. Applications for Tranche 4 will close on 2 July 2012. Further information is available at: www.ausindustry.gov.au/IIF

IIF licensed fund managers

Fund managers have ten-year licences and are selected on a merit basis including their experience in early stage equity investing and raising private capital. The fund managers are responsible for all investment decisions, which are made on a commercial basis in accordance with their own investment practices, subject to the IIF program guidelines.

Current program operational details

Details of both the IIF program and licensed managers can be found on the AusIndustry site.

Further information

Operational Issues

Phone: AusIndustry hotline, 13 28 46
Email

Policy Issues

Tricia Berman
Innovation Policy Branch
Phone: +61 2 6213 7444
Email